Lecture Delivered At Harvard Business School In Boston, USA

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AFRICA IS RISING – VP OSINBAJO 

BEING TEXT OF LECTURE DELIVERED BY HIS EXCELLENCY PROF. YEMI OSINBAJO, SAN, GCON, THE VICE PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA AT HARVARD BUSINESS SCHOOL, BOSTON, MASSACHUSETTES, UNITED STATES OF AMERICA ON TUESDAY, 16 JANUARY, 2018.

PROTOCOLS

I am pleased to be here and I really mean that I am always most comfortable in a University, because however crazy your ideas are, someone will like it or even think that it is sound reasoning. Let me also commend the Business school on this very innovative course. With the fascinating – Africa Rising although, I must confess that when I got off the plane yesterday night at sub-zero temperatures coming from 28 degrees, I could only think of the Rising Sun.

The title of the course is “Africa Rising, Understanding Business, Entrepreneurship, and the Complexities of the Continent” is very apt and I will be speaking to you for a few minutes on some of the complexities and hopefully some of its opportunities. I know you will be talking more about the business opportunities, but I will be coming from the context of the opportunities. Thank you very much for taking the time to come.

It is a great privilege to be here to share some thoughts on a subject that has somehow remained intriguing for very many decades.

Until the turn of the century, no one would have used the word ‘Rising’ in relation to Africa. The 1980s and 1990s will be remembered more for dictatorships, coups, wars and largely unsuccessful economic adjustment programmes that manifested in the collapse of the growing middle class in many countries of Africa.

The 1990s were the decade that gave us the genocide in Rwanda, bloody civil wars everywhere from Liberia to Sierra Leone to the Congo and near-total anarchy in Somalia. Christopher Hitchens writing in Vanity Fair in 1994 declared that it was impossible to “find anywhere in the entire forsaken continent, anything like a success story.” There seemed, at that time, to be a justifiable reason for the pessimism about Africa.

But sometime in the mid-1990s, the narrative began to change. Democracy began to become the norm across the continent coup d’états were becoming a rarity. Nigeria, the continent’s most populous country, cast off sixteen years of unbroken military rule in 1999.

The stagnancy or negative growth of previous decades began to give way to spurts of growth.  To be fair, some of the growth itself was possibly on account of the contributions of the phenomenal rise in Chinese resource bullishness, the commodities boom, including new oil and gas discoveries in many African countries, and of course digital technology – mobile phones and the Internet.

Average economic growth rates on the continent exceeded 4% between 2000 and 2015. In the first decade of the twenty-first century, the African continent was home to six of the ten fastest-growing economies in the world. Indeed if you leave out Nigeria, Angola and South Africa which drive the current low aggregate growth rate narrative, you will find that Africa and most of the sub-Saharan growth rate is about 4% faster than 3.5% for the global economy.

Across the continent, we’ve been seeing the slow but steady maturing of institutions; press and civil society and most of them are boldly taking advantage of the empowering nature of the Internet; and an increasingly engaged diaspora.

In the last two years, we’ve had relatively peaceful elections in Nigeria, Benin Republic, Niger, Tanzania, Kenya, Rwanda, Liberia, and Ghana, to mention just a few. So Africa Rising is as much about improving standards of governance, as it is about an increasingly confident youth and civil society. It is also about businessmen and women who are stepping beyond national borders and going global.

NASPERs for example, the South African media conglomerate has done a good amount of expansion in recent years and is in more than 130 countries. Telecommunications giants like MTN and GLO are in many parts of Africa; banks such as Ecobank, Standard Bank of South Africa, Guaranty Trust Bank, Zenith Bank, United Bank for Africa; and agribusiness firms like Tiger foods, Cevital of Algeria and Flourmills of Nigeria. It appears the political pan-Africanists of old have given way in terms of prominence to the business pan- Africanists, the likes of Aliko Dangote, Issad Reb Rab (Cevital) Mike Adenuga, Kim Bello-Osagie, some of these people who abandoned academia and are making money. The Sawiris of Egypt and mining magnate Patrice Motsepe and various other businesses across Africa.

Dangote, I think is one of the examples of the home-grown African multinational with investments in cement manufacturing in 10 African countries and is about to complete a 650,000 barrels per day Refinery in Lagos Nigeria; the largest single line Refinery in the world and larger than all four of our government-owned refineries put together. He is also building a dedicated 550-kilometre subsea pipeline passing through several of the major gas processing hubs in the country and also bringing crude to the refinery. He is investing in a 3million Metric ton fertilizer plant in the same location; the largest single line in the world.

One of the interesting things about the likes of these businesses is that they are borrowing cheaper than government, which in a sense is not necessarily, a negative reflection on government but we say, it is evidence of the fact that they are trusted to deliver on the projects. It is a great encouragement also for the private sector.

Younger Africans and businesses are just as driven and ambitious. There is no sector of the economy that is immune to their creative disruption. Cars45 is a Nigerian start-up, founded in 2016, that carries out what you might be tempted to dismiss as the unremarkable business of buying and selling used cars. But by leveraging technology, it offers, in the words of its CEO, Etop Ikpe, “transparency, speed, convenience, and safety” in a market which is usually characterised by high levels of distrust and the absence of credible vehicle databases. In 2017 Cars45 raised US$5m in venture capital funding which is considerable given the fact that it only started business in 2016.

Tizeti, also based in Lagos, was founded in 2012 to supply affordable high-speed, unlimited, uncapped internet to homes, offices and businesses in Lagos. Its services are especially needed in Lagos, a city that is home to 15million people, and with a GDP that rivals the combined GDP of Kenya and Ghana. No offence meant at all, but Lagos does have a combination of both Kenya and Ghana’s GDP; my friends in Ghana absolutely hate this reference to these kinds of figures. In 2017, the same Tizeti raised capital, which it is investing in building solar-powered Wi-Fi Towers and creating a network of Wi-Fi hotspots across Lagos.

In broadband infrastructure, Funke Opeke’s Main One launched West Africa’s first privately owned submarine cable. The cable was built over a 2-year period and the initial investment of $240million was financed entirely by African investors and the project broke even just two years after launch.

Zipline is using drone technology to run medical delivery service and has overcome a lot of the logistical problems associated with medical distribution in taking blood and drugs to remote areas in Rwanda.

Agriculture, previously confined to smallholder farming, is witnessing the liberating touch of the digital age. Farmcrowdy is a digital agriculture portal that crowd-sources funding for farms across Nigeria. It works like a mutual fund; pooling together money from multiple investors to establish farms and hire smallholder farmers to cultivate them and then pay the investors dividends from the harvests from these farms.

In December 2017, it also raised substantial funding and it looks like one of those businesses on upward trajectory especially as there is a great deal of concentration on farming at this time in Nigeria.

In Kenya, M-Pesa has over the last decade transformed the face of banking, allowing millions of previously unbanked people to be reached. Today, it is the largest mobile telephony payment solution in the world.  African start-ups are now annually attracting hundreds of millions of dollars. Andela, based in Nigeria and Kenya, raised $24million in 2016 and an additional $40million in 2017.

There are some who have called the 21st century Africa’s century. The continent, many say, is the  last hope of a world plagued by an ageing and declining population; the last frontier for truly-rewarding trade and investment; and I speak only of the nice comments. Africa’s turnaround from a hopeless continent to a laboratory of hope has left us with some important lessons, some of which I’d like to highlight briefly:

Perhaps the most important lesson is that economic growth is not sustainable without Nation-building and even of greater importance, State building. Many of the ethnic and other parochial tensions that have tended to create insecurity and outright conflict time, and time again, are largely as a result of failure to deliberately undertake Nation – building efforts.  The elite, it appears, prefer the status quo which sets the lowest possible bar for political advancement – that is Identity. Where do you come from or to which religion do you belong and it is through that paradigm that most issues are analysed.

We’ve had in Nigeria frequent clashes, I’m sure that some of you are familiar with this, herdsmen and farmers ,a phenomenon that has stubbornly persisted for decades from Dakar to Djibouti and recently boiled over in the extremely horrifying and condemnable killings of villagers in the Logo and Guma by  herdsmen in Benue State of Nigeria.

The conflicts which are due mostly to population pressures and competition for declining foliage and water resources is being complicated by age-long animosities and retreat to ethnic and religious identities.  Similar, although a completely different situation, is the criminal insurgency of Boko Haram which happily has been largely curtailed and is now limited to opportunistic attacks using Improvised Explosive Devices (IEDs).  This criminal enterprise was also fuelled by the availability of a ready army of recruits who felt alienated from society and fell to the pseudo-religious lures of a lunatic fringe.

Politicians would like to mischaracterize it as a religious conflict. But the forging of a national identity and purpose, built around agreed values and principles is crucial for engendering commitment to national goals and sustaining peace and stability.  Concerning State building, to with the capacity of government to deliver on the rule of law, law and order, good governance and social goods.  It is clear that extreme inequality, weak systems of Justice, the absence of the rule of law, lack of state capacity to maintain law and order put nations constantly under a real threat of coming undone. The solution is in my view, the modern State; a merit-driven bureaucracy, a strong law and order architecture, the rule of law and an adjudicatory system that is well resourced and immune from manipulation.

Ultimately, continued nation-building and strong state capacities to handle inevitable tensions between various segments of society are required to maintain the upward trajectory of African development complicated by age-long animosities and retreat to ethnic and religious identities.  The task before us which we are taking very seriously is to re-build trust between communities through dialogue and transparent actions, while also finding mutually acceptable solutions for the management of increasingly scarce resources.

The second lesson is the benefit of discarding the error of African Exceptionalism – the belief that African countries are in some way exempted from the rules by which other countries and continents have succeeded; that somehow Africa may be judged by the standards and expectations that apply to it alone and not the same one that applies to other countries.

The result is that we were not asking the right questions nor learning from the development experiences elsewhere.   By the beginning of the 21st Century, a more positive dynamic emerged and this was in part attributable to visionary leaders in Nigeria, South Africa, Algeria, Senegal and Ethiopia coming together to create the New Partnership for Africa’s Development (NEPAD) and its accompanying African Peer Review Mechanism which established the basis for some of the positive changes in governance and the economy on the continent.

Even the African Union, once derided for being a mere talk-shop, has shown no tolerance whatsoever for unconstitutional changes in government and at several times, sanctioned some of its influential members where coups de tat occurred or unconstitutional changes in government occurred. Some would argue that one of the reasons why the Zimbabwean military hesitated to remove former President Mugabe in an outright coup was due to the fear of some of these consequences.

On the economic front, a healthy distrust of purist ideological prescriptions, in favour of a common-sense introduction of markets with a fair balance of state participation or intervention has shown interesting results. Take Ethiopia, this country which had become the byword for drought-induced famine in the continent became one of its fastest-growing economies (growing at double digits since 2004) with breath-taking improvements in agriculture and infrastructure and a steadily improving manufacturing base. Ethiopian Airlines, a middling government-owned airline, plodding along steadily became a global aviation player with a doubling of its fleet size and passenger traffic. It now goes to over 85 destinations worldwide.

It was also Prime Minister Meles, an avowed leftist, who personally invited Dangote to build a cement plant in his country.  He is also reputed to have invited Castel breweries to open a brewery in Ethiopia and upon being told that their real line of business was winemaking, invited them to find suitable land for growing grapes which he then got allocated with them.  I am reliably informed by those who indulge and should, therefore, know, that the resulting Rift Valley Wines are of good drinking quality. People like Meles who took strong ideological positions opened up to the common sense solutions to business and also kept a close eye on how state interventions and state participation could be balanced against the markets. This is one of the many interesting things we’ve seen with the way African governments have managed to present successes through the years.

The tried and tested principles for success are largely geography- agnostic,  be it Asia or Africa: honest and visionary leadership, good governance, providing the private sector and markets, the freedom to lead and innovate, breaking the dependence on commodity pricing cycles, embracing industrialization and developing human capital to the fullest extent, will always win. These tested principles work everywhere and surely in Africa as well.

The third lesson is that sustainable growth comes from productivity increases in the real sector.  Which perhaps explains the continued high unemployment in Africa even at 6% growth rates – the ‘jobless growth phenomenon.  Yes, the first step must be to invest in agriculture to ensure food security and gain a surplus that can be deployed to other parts of the economy. But the lure of an agro-centric development model must be avoided. 70% of African jobs are in agriculture, but the contribution of agriculture to GDP is quite small, ranging between 15% – 30% in Nigeria. Because agriculture provides so many jobs, it should be the focus of our economic policy is not entirely right and hasn’t proven to be the way for us.

To create well-paying jobs we must industrialize. Manufacturing is crucial. It is the learning centre of the economy and a source of better-paying jobs.  We cannot deal with the needs of a rapidly growing population without an industrial base. Africa’s economies must graduate from primary to secondary economies as did Asian economies as a precursor to their ascendancy. This is the tested way to develop the base to sustain a structure that would exponentially pull and continue to pull more of our populations into the middle class.

The thing though, is that the manufacturing sector is fiercely competitive and it is difficult to see how African economies can mirror the East Asian experience given that trade barriers have mostly been dismantled and the fact that China remains the factory of the world.

The solution probably lies in a combination of actions.  Protection and finance for priority sectors but also in becoming a destination for sunset industries especially from China but also from other parts of the world.  As Justin Lin keeps reminding us, there are 85 million jobs that China will have to shed as the wage gap between its unskilled workers and those in Africa continues to increase. We should be in a position to take advantage of that.

A major constraint to successful manufacturing in Africa is that many national markets are too small.  This makes regional integration essential.  Fortunately, there is a lot of on-going work to establish a Continental Free Trade Area, another change in attitude that will enhance growth. Private sector’s drive and vision has proved Invaluable and may become the enduring model in the integration story.

Mo Ibrahim, the Sudanese Telco entrepreneur, tells a story about his time at the helm of Celtel.  As he tells it, when they tried to do business in the two Congos, which are separated only by the river from which they get their name, telephone calls from one to the other had to be routed through Europe.  After a year of negotiations due to mutual suspicion between both governments, a microwave link was allowed which brought the cost of a one- minute call down from one dollar to twenty-eight cents.

Years before private sector players across West Africa intending to support sub-regional financial integration efforts, came together to establish what essentially was an ECOWAS Bank, named ECOBank. Ecobank has since grown to become a Pan African banking conglomerate.

A point which bears emphasis is the central role of the private sector, not just as investors but as active partners in policy development. We found out that in Nigeria, we need to have the Private Sector around the table even in developing policies. We constituted a Business Forum where we meet with major players in the Private sector, the National Industrial Council which I chair and involves a lot of interaction especially in policy making with the private sector.

The almost tired admonition to create an enabling and business-friendly environment favourable is still crucial, and this ought to be noticed. The first thing is to make the environment favourable to local businesses. If the local business can do well, Foreign Direct Investments will follow and cheaper. Easing up bureaucratic processes, pre-investment approvals should be seamless, approving agencies must be facilitators, not obstacles. Technology is helping a great deal, the more processes that can be done electronically the faster and more efficiently Government prose sets can be completed.

The fourth lesson is to do with the necessity of highlighting and encouraging African Agency; jettisoning the idea that the salvation of the continent lies outside.  The notion that we have to look outwards for aid, for handholding, for guidance. The truth is that nothing works faster than taking your destiny in your own hands when help comes it is useful, but it doesn’t determine your survival. This is the story of many of the emerging success stories today.

The fifth lesson is that we cannot underestimate the power of technology to fast-track the continent’s rise.  Emerging technologies have played extraordinary roles in every aspect of the continent’s most touted successes.

In coming up with M-Pesa, Kenyans essentially found uses for their mobile phones that the inventors of the mobile phone had probably not contemplated. Almost three decades ago, the birth of Nigeria’s Nollywood film industry was enabled by the abundant availability of VHS tapes – itself made possible by the fact that the rest of the world was beginning to shift away from VHS to VCD, leaving behind large stockpiles of relatively cheap empty tapes. It didn’t take long for the Nigerian merchants who imported these tapes to realise that they could improve the value of the tapes by loading them with film content. For this venture to be possible, the films had to be shot as cheaply as possible, which explains why historically the low budget at which was one of the defining characteristics of Nollywood.

Many people including otherwise savvy investors underestimated the potential of mobile phones in Nigeria and in many parts of Africa. They looked at per-capita incomes and came to the conclusion that there wasn’t a compelling enough business case for investment. Just as many are today liable to underestimate the transformative and commercial potential of several of what maybe cutting-edge discoveries in Artificial Intelligence, Machine Learning, Cloud Computing, Robotics, Genomics, Virtual Reality and the Internet of Things, etc. I believe that despite the fact that these are relatively new in many parts of the world, that there is so much innovation, there is today great opportunities to use them in various parts of Africa.

Imagine what we could do in our various countries, how we could disrupt dysfunctional –educational systems using inexpensive online learning? Or easier, using drones to deliver election materials or drugs in emergencies to far-flung rural hospitals; the possibilities are endless.

The sixth lesson and this has become something of a cliché, is that many – including Africans themselves – constantly need to be reminded that Africa is not a country. Policy-makers and development partners must understand that what worked in Rwanda or Zambia might not necessarily work in Ghana. We have to ask ourselves, why did M-pesa work so easily in Kenya but not in Nigeria?

Senegal and Mali are both majority Muslim countries in West Africa, with similarly-sized economies, but the radicalism that affected one country has largely failed to find roots in the other. We must be careful to ensure that the excitement of the “Africa Rising” narrative does not obscure the nuance and complexity of the continent; 55 countries, several hundreds of languages, varying colonial experiences, vastly varying geographical, climatic and cultural realities. It is important to bear in mind that Africa is diverse and our approach to it must be nuanced as possible.

As I close, let me say that there is no doubting Africa’s upward trajectory. Africa is surely rising. While we may not be where we ought to be, we must acknowledge that we are no longer where we used to be and a lot of that progress happened over the last 10 – 15 or so years. And yet, while we celebrate that progress, we must also not fail to critically examine the other side of the coin; the fact that the rising tide that we’ve experienced has somehow managed to leave a lot of boats untouched.

While global poverty has fallen dramatically in the last thirty years, the truth is that Africa’s numbers have barely changed for the better. Why? Take the example of Nigeria, which grew an average of 7 per cent per annum in the decade leading to 2014. Most of that growth failed to translate into commensurate levels of job creation. The oil price crash of 2014 brought that party to an end and made it clear that many of our castles have been built on weak foundations.

And so, the pre-eminent challenge that now confronts Africa’s leadership in our various countries is how do we translate economic growth into jobs and improved standards of living?  To bridge the yawning inequality gap. Markets have helped to free up ideas and attract capital. But the poor and vulnerable are in their millions. The imperative of a social State of sorts or at least safety nets is obvious. Our administration in Nigeria recognized this and put in place a N500billion ($1.5billion) social investment fund; the largest in its history. The programme comprises of N-Power which provides jobs for 200,000 unemployed graduates and an online training as part of the package; a conditional cash transfer scheme for 1million of the poorest – trying to effect that has proved to be a major challenge because financial inclusion is a major problem. Trying to reach the most far-flung parts of Nigeria where there aren’t banking platforms. Also, we have a home-grown school feed programme, but we are still a long way off an effective and safety net for those who need help.

We must combat the brain drain and spur domestic innovation.  We must keep our focus on building educational systems relevant and robust enough to assure jobs for a continent with the fastest growing youth population and quality healthcare systems for even larger populations.

Having spoken about the scourge of terrorism, I think that one of the critical issues to note especially with extremism in various parts of Africa is the alienation of young persons and makes them easier prey for extremist ideology. There are questions around how to de-radicalize the people and enforce messages that point people in the right direction.

Indeed, for “Africa Rising” to mean anything to the majority of our people, these issues must be fully addressed. And not on paper, not in classrooms, but on the ground in homes and communities; in the wallets and purses of our most vulnerable citizens. As President Buhari puts it, in September 2017 when the National Bureau of Statistics announced that Nigeria had emerged from the recession: “until coming out of recession translates into the meaningful improvement in the lives of our people, our work cannot be said to be done.”

We ought to say the same about “Africa Rising” – until our citizens have themselves acknowledged the rising especially in the quality of their lives, our work as governments and policymakers are far from being done.

I thank you for listening.