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Africa can benefit from Chinese investment but it must learn from India's growth model, says Jim Goodnight, CEO, SAS.
 The theme of the World Economic Forum on Africa is “going for growth.” What are your objectives for this meeting, especially in your capacity as Co-Chair?
There is a Swahili saying: “When you spread it in the sun, it becomes dry.” Meaning that one must have a frank and open discussion about problems in order to discover solutions. My objective in Cape Town is to roll up my sleeves and actively engage in candid and fruitful discussion on Africa with others that are committed to positive change and engagement in the region.
Africa is 800 million people in nearly 50 countries. The average life expectancy has fallen to 46 years and one child in six dies before the age of 5. There is a general consensus about what needs to be fixed: access to education and healthcare, improvements in good governance and transparency. Less clear is how to go about solving the problems while making Africa a competitive market for investment. In Cape Town we will address some of the challenges for Africa and figure out ways in which we can work with Africans to make a difference.
You were Co-Chair of the Forum’s meeting in India last November. What parallels do you see between India and Africa’s growth strategies and what lessons will you take with you from New Delhi to Cape Town?
If I could, I would bottle the excitement and enthusiasm in India and bring it not only to Cape Town, but to Europe and the US, as well. |  |
"The hunger of China and India for commodities is an opportunity for Africa to create significant wealth in that sector."
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There is such a “can-do spirit” in India; a willingness to work hard to better your life. Education has been key to India’s success—the focus on math and science has driven the IT boom in India. Indian entrepreneurs have shown vision and unbridled optimism in creating a boom in IT that is flowing to all parts of the economy.
To what extent can India’s private sector-led growth be a model for Africa?
India’s growth strategy has been fuelled by sector-specific growth, namely in the IT sector. The wealth created in this sector has spawned a number of international players—Infosys, Satyam, Tata—that are not only leading the way in India, but have also contributed significantly to global best practices in the sector.
The presence of these global companies has also contributed to the positive evolution of the legislative landscape—the government has made commitments to tackle corruption, increase access to education, cut down on bureaucratic red tape, enforce existing rule of law and provide greater protection for intellectual property. All of these are important for the continued transformation of the economy. Africa will need to implement similar measures to attract investment and retain talent.
With China fuelling a significant part of Africa’s recent growth, what are the opportunities and the risks for Africa and its investors?
The hunger of China and India for commodities is an opportunity for Africa to create significant wealth and global champions in that sector. The risk is that African countries that are currently benefiting from the demand will not invest current profits in long-term priorities—education, health care, infrastructure. Commodity prices will eventually go down and Africa needs to prepare effectively for the downturn.
For example, if Africa invests the money earned today in producing well-educated engineers and software developers, there will be the same opportunity to generate India-type growth in the IT sector. As is currently the case for India, North American and European IT companies will look far outside their own continents to gain technology services—if the necessary skills are readily available. It’s important for Africa to ensure that the education and skills necessary for other key growth areas are in place prior to the downturn in demand.
Should the Chinese and commodity-led growth be underpinned by investment in services and IT?
By incorporating new technologies, African companies can differentiate themselves by wiring from the ground up to be more agile, more innovative, and more intelligent than their so-called first world rivals.
Having said that, interconnecting everything is not the solution; instead of bridging the digital divide, Africa needs to focus on the “refrigerator divide.” Closing that gap is far more important.
We need to be careful that IT is not seen as the panacea for Africa’s challenges. Because India built its current boom on IT, does not necessarily mean that it’s the best solution for Africa. Education is universal; it underpins growth in all sectors. Perhaps wealth generation in Africa will be in another sector—the key is to educate, focus on alleviation of poverty and create a business climate that fosters innovation and growth.
Aristotle said “Hope is a waking dream.” It’s time for Africa to seize the opportunity for growth and prosperity. |
