This article originally appeared on my LinkedIn page.
Good economic news has been in short supply for South Africa in recent months. From shocking allegations of state capture to the second cabinet reshuffle in less than two years and stagnant growth. A ratings downgrade proved inevitable in 2017 but there was a glimmer of hope with cautious reports of in September of green shoots emerging.
In continental news Egypt was named Africa’s top investment destination by RMB, knocking South Africa off the top spot for the first time in the seven years of the rating. South Africa and Nigeria continue to tussle for the title of Africa’s biggest economy but with a larger population and better overall growth prospects, the odds are in Nigeria’s favor. The news is not great either when you look at South Africa’s ranking in the 2017-18 WEF Global Competiveness Index (WEFGCI) or the World Bank’s Ease Of Doing Business Index.
This is by no means strictly a South African story, look at any African country and you will find they are struggling with at least one index or another. But what if we looked at things differently? What if instead of focusing on who is the best African country, region or city we looked at how through cooperation, African countries, regions or cities can overcome their individual weaknesses? It makes no sense for the African Union to trumpet African economic integration but in practice intra-regional cooperation has been woefully slow, for example, SADC’s intra-regional visa is still a dream after more than a decade of negotiations despite obvious economic benefits. It also makes no sense that a continent endowed with incredible resources competes for global investment and countries find themselves in a spiral to the bottom trying to attract foreign direct investment by giving up non-renewable resources that could fuel long term growth through beneficiation for immediate gain, the trade in unexploited oil blocks all along the east coast comes to mind.
Intra-Africa trade has only increased to 15% of total African trade in the period 2010-15 after languishing around 8-11% for the prior eight years due to numerous logistical and political bottlenecks. There is, however, hope that the fourth industrial revolution (4IR) will usher in ways to circumvent many of these bottlenecks as red tape lags behind technological advancements such as blockchain and industries now possible thanks to increasingly ubiquitous high speed internet. Faster internet speeds, rapidly mushrooming local content across all online platforms, increasing inward as every country has at least one international airport and growing intra-Africa travel is showing we Africans, are all the gateway to Africa. With blockchain cumbersome foreign exchange regulations that have long hindered intra-Africa trade could be a thing of the past. Couple this with high speed internet, one is now able to have cross-continental teams across all sorts of industries working simultaneously on the same project and not having to wait an eternity for payments or juggle exchange rates.
Blockages that have existed for decades are set to be overtaken by a new breed of entrepreneurs who do not see borders and lethargic legislation as they lead Africa’s resurgence. Cooperation, not traditional ideas of competition, is how Africa’s much talked about youth dividend will be realized. Rather than aspiring to be Africa’s top -insert favorite index here-, in the next thirty years national borders will give way to regional economic blocks anchored by mega-cities modeled by unique population growth, migration and urbanization patterns. Governments will focus on facilitating this cross-border entrepreneurial spirit through relevant educational systems, infrastructure development projects and meeting their developmental mandates.