Africa needs Marshall plan to jump-start growth

By Tony Elumelu

Among Africa’s many challenges, unemployment, independent of any other factor, threatens to derail the economic promise the continent deserves.

It’s a time bomb with no geographical boundaries: Economists expect Africa to create 54 million new jobs by 2020, but 122 million Africans will enter the labour force during that time frame.

Adding to this shortfall are tens of millions currently unemployed or underemployed, making the human and economic consequences nearly too large to imagine.

Enlightened policies

Thus, even with the strong economic growth we have seen over the past decade, job creation in Africa remains much too slow. Africa needs a comprehensive, coordinated approach akin to America’s “Marshall Plan” in Europe after World War Two.

Africa’s Marshall Plan should prioritise three interdependent “pillars” of development, which all work together to form a virtuous cycle of growth: policy reform and a commitment to the rule of law; investment in infrastructure, and a commitment to developing Africa’s manufacturing and processing industries.

First, we need enlightened government policies that help reduce administrative and operating costs for investors and businesses. We must streamline licensing and permitting processes, reduce import duties and tariffs and ease visa restrictions, among other reforms.

Enlightened government policies in Kenya and Nigeria have already helped to advance the information technology and financial services sectors.

Microsoft’s pilot project to expand broadband access in Africa depends on government policy that frees up unused “white space” in the TV and radio broadcast spectrum. Financial services reform across several African nations, starting with Nigeria, enabled United Bank for Africa to grow into a pan-African financial institution.

Infrastructure

The second pillar of Africa’s development programme must be infrastructure investment, particularly in power and transportation, without which business cannot function. Today, more than 70 per cent of sub-Saharan Africa lacks access to electricity and every one per cent increase in electricity outages reduces Africa’s per-capita GDP by approximately three per cent. Transportation infrastructure promises to have an equally transformative impact: roads, railways, waterways and airways are the backbone of a thriving commercial economy. Projects like the toll road between Entebbe and Kampala, and the Kenya-Tanzania highway will facilitate greater trade of agricultural and manufactured goods within Africa.

Manufacturing

Africa’s third development pillar must be building our manufacturing and processing industries. Africa lacks the capacity to process and refine its own natural resources.

Raw materials such as oil, cocoa and gold are shipped overseas, where they are processed into high-margin products and often re-imported into Africa — costing both jobs and hard currency.

For example, Nigeria exports raw crude oil and then imports expensive gasoline, when the country should be able to refine the oil itself, supplying not just its own market, but also other markets across Africa.

This inability to create finished goods at home, and trade them with other African nations, drastically limits the continent’s growth potential, and thus its ability to create businesses, jobs and wealth within Africa’s own domestic economies.

I believe we can solve Africa’s employment challenge, but only if we focus on these three development pillars with great urgency, and accelerate current investment and business trends.

Many of Africa’s stock markets are delivering stellar returns, while institutional, retail mutual fund and private equity capital is flowing rapidly into African markets. Many multinationals and African conglomerates are investing heavily in Africa.

Despite such investment and economic growth, however, Africa is not creating nearly enough jobs. According to demographics, time is not on our side.

But with a coordinated jobs plan for Africa, we can secure a productive, economically independent future for the continent and its people. — Reuters