Friday, September 30, 2022

How ‘poor’ Africa treads on wealth

To know where Africa is going means its countries will respond better to aiding growth for the continent and its members

It might be beneficial that Botswana as part of Africa takes heed of where growth of the continent will come from, particularly that effort continues to be made for the country to penetrate the regional markets.

An analysis from Standard Bank subscribes to the narrative that managing risk and driving trade will shape the next chapter of Africa’s growth story. Botswana Investment and Trade Centre (BITC), through its export development mission takes Botswana companies to regional events to assist them in identifying growth opportunities in external markets. One could be led to think that such a mission will make better sense if Africa’s growth direction is known.

If it is true that “Africa’s future potential remains far larger than its past achievements” as boldly posited by Head of Transactional Products and Services Africa, at Standard Bank, Vinod Madhavan, then it makes it fitting to consider whether such a narrative will accommodate the nuances that often undermine that potential.

Madhavan offers, however, that it is possible to harness the potential “especially when one considers the growth potential latent in the continent’s current low levels of intra-Africa trade.

“Currently hovering around only 12 percent, these intra-African trade levels offer great head room for growth,” Madhavan says.

According to the Bank, forecasts for 2016-2020 place Africa as the second fastest growing region in the world (at a CAGR of 4.3 percent), just below emerging Asia.

Madhavan argues that the figures cited by the 2015 ICC Trade Register study, conducted amongst 23 banks around the world jointly accounting for 60 percent of global market share, depict the practicability of tapping into the growth opportunity, thus negating the perception that Africa is too complex and high risk.

Madhavan is not the only one who believes in Africa’s growth story. Imagine Africa, a book released last month by Lazarus Takawira, a Zimbabwean native, speaks to the new thinking that the current crop of Africans ascribe to of an Africa that is not all gloom. The book observes the current social and political issues that appear to have influenced the perception of Africa to outsiders of a poverty-gripped and war-torn continent. It also challenges those inside the continent to start shaping an Africa that is poised for tapping into its full potential.

A chapter on ‘poor’ millionaires seeks to relate the resource of riches of the continent to the prevailing socio-economic conditions prevalent in people’s lives; whether the two represent a matching reality.

“Since the Middle East countries discovered vast oil reserves, they have worked together using this wealth to transform themselves into global economic powerhouse, not forgetting the increased literacy rate and life expectancy among many societal improvements as a direct result of their oil reserves. However, in Africa, since the discovery of diamonds, among many other important minerals, we have fought each other very hard until our diamonds are sold for shockingly low prices simply because they are ‘blood diamonds,’ Takawira opined in his book.

He also presented statistics on the diamond industry, citing that Africa produces 65 percent of the world’s diamonds production and Botswana is the biggest diamond producer in the world ahead of Russia and Canada, a share of which he highlighted generates $8 billion.

Takawira posits that the $8 billion can be an “economic game changer on the continent”. He also goes on to indicate the potential in other rich resource areas which include oil, gold reserves and platinum.

Takawira makes an interesting analogy of Africa to a blindfolded man who walks on a goldmine picking up rocks and throwing away the gold, which he professes, is the reason Africans have remained poor because they are yet to fully realise the wealth that is their possession.

Intra-trade activities offer an opportunity to companies in Botswana to expand into external markets and as a result contribute significantly to the development of the country, but that will depend on whether Botswana manages the risk that come with new territories. This could serve as an example of Africans shaping the continent for the better.


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