Africana Conference Of The Fletcher School Titled “Africa 2050: Making Growth Work”

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VIRTUAL LECTURE DELIVERED BY PROF. YEMI OSINBAJO, SAN, GCON, VICE PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA AT THE AFRICANA CONFERENCE OF THE FLETCHER SCHOOL TITLED “AFRICA 2050: MAKING GROWTH WORK” ON THE 15^TH OF APRIL, 2023

PROTOCOLS

It’s a pleasure and honour to join you today as part of the Africana Conference so thoughtfully put together by the students at Tufts Fletcher School. Let me thank Prof. Chidi Odinkalu, my longtime friend and brother for making sure that I am a part of the conference this year, and my warm regards to the students and faculty of this historic place of thought leadership in diplomacy and international affairs.

It would have been a great pleasure to have been with you physically on this occasion and I had indeed indicated that I would be but for a clash with the President’s travel schedule. And since both of us must not be out of the country at the same time, I had to step down my own engagement. I am nevertheless pleased that we are able to have our interaction through this platform.

I have been asked to speak today on “Africa 2050: Making Growth Work.”  This is a challenging topic to address in a short speech, but I will attempt at least to cover a few of the critical issues.

2050 is important in a discussion about Africa’s future prospects.  It is the halfway mark of this remarkable century which has in a few short years seen great advances in digital technology, a global financial crisis and a frightening pandemic. 2050 is also the target date that many countries in the world have set to attain net zero carbon emissions.

Also, when we discuss global demographics, 2050 is usually the reference date and Africa is expected to have just over a quarter of the global population (26.3%) up from 18.2% in 2020. It is also estimated that over half of the population, the largest number of young people in the world would live in Africa by that date. And as we know, population size is intrinsically linked to economic size and inherent in the very notions of poverty, per capita income and the size of the labour market which is related to growth.

But what must be done in Africa to make growth work? On the one hand, Africa is making steady progress on several fronts, despite the challenges, post-COVID-19, Africa is growing well compared to the rest of the world.  The IMF World Economic Outlook for October 2022 projected that Sub-Saharan Africa would be the second fastest growing region of the world at 3.7% compared to 4.9% in Emerging Asia, 1.7% in Latin America and the Caribbean, 3.6% in the Middle East and Central Asia, 1% in the United States and 0.5% in the Euro Area. (Of course, we can always make the counterpoint that sub–Saharan Africa is coming from a much lower base).

We have also seen appreciable increases in socio-economic conditions in Africa since the era of independence as well as improvements in economic conditions.  The GDP of sub-Saharan Africa was estimated to be about $31 billion in 1960 and is now $1.71 trillion, while life expectancy has risen from 42 years to 62 years in the same period.

On the other hand, partly due to the end of the commodity super-cycle in the earlier part of this century and also as a result of the COVID-19 pandemic, several African countries are facing debt crises.

It has been estimated that 60% of low-income countries, many of which are African, are either debt distressed or at high risk of debt distress.   The situation must be taken seriously.  For instance, Africa lost two decades of growth and development in the 1980s and 1990s as a result of being ensnared in the international debt crisis of that era.  If we lose two decades again, we are already knocking at the doors of 2050.

For growth to work in Africa it is important to build on the progress that is being made while averting another debt crisis.  The economic fallout of the COVID-19 pandemic worsened an already troubling debt profile in the continent. High inflation and interest rate increases in major economies have led to higher borrowing and financing costs in Africa thereby increasing their debt burdens.

The challenge though is that the old debt-management process of the 1980s and 1990s may not work in the current era in spite of initiatives put in place like the Debt Service Suspension Initiative (DSSI) and the Common Framework for Debt Treatments.

To start with, China, which is now a major creditor is not part of processes like the London Club and Paris Club.  Moreover, the structure of most public debt has changed, as much of it has resulted from borrowing in global capital markets, and the ownership of resulting debt instruments among private investors is quite varied. Imagination and political will would be required to help African countries steer their way through current macroeconomic challenges including domestic actions to rein in inflation and improve domestic resource mobilization.

There is certainly now a need for urgent action in framing a new institutional framework for debt restructuring that goes beyond the Debt Service Suspension Initiative and the Common Framework.

What is needed at this time is a new international framework for tackling debt issues along the lines of the Global Sovereign Debt Roundtable that took off at the IMF/ World Bank Spring meetings this week. This is a framework that brings together all those concerned with bilateral creditors including China, private creditors including bondholders, the multilateral development banks and indeed debtor countries.  This is surely the way to go to if we are to address the changed nature of the terrain in terms of new prominent players and new types of debt.

Let me speak a little about democracy and governance. In spite of recent reversals in a few countries, Africa has made steady progress with regard to democratic rule and improvements in governance such as multiparty frameworks.   For instance, the incidence of civil wars fell from as high as 18 in 1991 to 8 by 2008.  Military coups also showed a similar downward trend and there is a commitment to improving governance on the continent, perhaps best captured by the establishment of the African Peer Review Mechanism whereby African Heads of State and Government hold one another accountable for governance conditions in their countries.

It is encouraging that even where there have been democratic reversals, the African Union and regional groupings like ECOWAS have resisted such changes, imposed sanctions and insisted on a prompt return to democratic rule.  What is required in addition is for serious and credible leaders to live up to expectations by deepening democracy, upholding high standards of transparency and accountability and having an unwavering focus on improving the well-being of the African people.  And I think history and experience now teach us that democracy and its associated rights and freedoms must be fought for and defended at all times.

The issue of corruption is always the elephant in the room.  There is clear recognition that corruption not only siphons limited resources required for development but also that it leads to perverse incentives and undermines societal values.  The African Union Convention Against Corruption is a signal that leaders on the continent recognize the negative impact of corruption and this has been complemented in many countries by the creation of anti-corruption institutions.

In Nigeria for instance, we notably have the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission, EFCC, amongst others.  Official corruption will be reduced considerably with increased use of technology for government approvals and processes, removing discretion. Second, an insistence on accountability and punishment of impunity.  It may seem hard to do but the evidence from all over the world is that with decisive and committed leadership, corruption can be tamed.

It is also evident as Muna Idrissu said in her presentation for growth to work in Africa it must create jobs and provide economic opportunity.  As we saw during the commodity super cycle in the early part of this century, several African countries were growing quite rapidly without an accompanying increase in jobs or marked reductions in poverty.   Ensuring job creation going forward will be even more challenging because we have to ensure that digitalization does not lead to job losses.  This was already a challenging prospect in the past when word processors displaced typists and automated teller machines displaced bank cashiers.

The prospects are even more ominous with the Fourth Industrial Revolution where Artificial Intelligence and Robotics can put millions of jobs at risk at a time when the labour force is increasing.   We already know that robots have displaced workers in manufacturing assembly lines, more ominous is the likely impact of Artificial Intelligence.  A recent study by Goldman Sachs showed that AI tools could impact on up to 300 million full-time jobs worldwide.  Some of the jobs said to be at risk from ChatGPT alone are in areas like technology, media, legal, accounting, teaching, finance and trading as well as graphic design.

Indeed, the very coders who create the AI may find themselves soon displaced as AI which uses iterative learning might work faster and cheaper than them.

What this means then is that we have to spend time designing educational curricula in which young people and the current workforce learn to work with and complement AI in a manner that increases productivity.

Climate change and climate action. Like the rest of the world, Africa has to find a pathway to growth that is sustainable in light of the climate change crisis.  The continent however faces a conundrum in that it is rich in fossil fuels including natural gas but is energy poor.   In other words, Africans do not have power, despite the fact that they have fossil fuels.

So, while the world is saying the safest thing to do is decommission all our fossil fuel projects, and have only restricted use of natural gas, we are saying that there must be a better way to undertake this transition especially as gas is not as polluting as crude oil or coal and is still essential for the purposes of industrialization and even clean cooking. While Africa must insist on climate justice in the sense of common but differentiated responsibilities, it should also agree that there is a new way by which it can benefit from the process of adapting to climate change.

Africa has the potential to become the first truly green civilization – the first civilization on earth to use renewable fuel for purposes of a transformative economic journey.  Since it has the lowest carbon emissions, Africa can develop by deploying and using green energy effectively and by mobilizing its young population to promote green manufacturing on a scale that would make it a global green factory of the world.  We can and, indeed, must do something revolutionary and different.  In other words, Africa can use climate action to underpin an increase in productivity and to create jobs. For growth to work in Africa it must be equitable but right now eight of the most unequal countries in the world are in Africa.

It is important to reduce inequality because it is negatively correlated with medium-term growth.  Similarly important is the need for greater gender equality.  The global gender gap index shows that an average female in Africa is 32% less likely to have the same economic, social, legal and political opportunities as a male.  It would be important therefore for African countries to prioritize the advancement of women by giving them greater economic opportunities and access to cutting-edge educational and health facilities.  One area in which equality is important is in giving women voices, especially through political participation.

It is encouraging to note in this regard that an African country like Rwanda is the first country in the world with a female majority in parliament with 61.3% in the Chamber of Deputies.   These things are important because Africa trying to develop without its womenfolk is like tying one hand behind its back while trying to climb a tree. Regional integration is important for Africa to overcome the limitations of its small, fragmented economies.

The take-off of the African Continental Free Trade Area in January 2021 is a step in the right direction.  The AfCFTA is expected to create a $2.7 trillion market by eliminating trade barriers and enabling economies of scale on the continent.  This arrangement should be exploited in full to enable African countries to make gains from trade not only in goods but also in services.

It is also encouraging that the AfCFTA is being positioned to drive industrialization in Africa by promoting the development of regional value chains.  The process, of course, will be aided by putting in place the necessary infrastructure to underpin production as well as an efficient payments system that overcomes the need to purchase third currencies before a trade can take place between African countries.

Another great resource that will enable Africa to make the most of its growth is its Diaspora. Instead of lamenting the brain drain (which is admittedly costly), Africa should organize itself to take advantage of its Diaspora.  In addition to remittances which rose from $ 37 billion in 2010 to $ 96 billion by 2021, the African Diaspora is a significant source of strength.  They have established businesses in various sectors, offered themselves for public service and provided cutting-edge services in fields like medicine and surgery.  Indeed, the Diaspora is Africa’s vanguard for keeping up with the rest of the world.

Apart from the serendipity of getting the right leaders at the right time, the things I have spoken about fall within the purview of national governments.  The reality though is that getting the right mix, timing and sequencing of development policies and implementing them successfully remains a major challenge.  As Nobel Laureate Robert Solow is reported to have said “ingredients do not make a dish.”

One thing that also matters in the drive for growth but is not under the control of domestic authorities is the external environment.  The global economic order matters because it frames the trade and development policy options available to developing countries.  I would aver that the unparalleled success of countries like Japan, South Korea, Malaysia, Indonesia, China and increasingly India and Vietnam are an outcome of the liberal international economic order put in place by the victorious powers at the end of the 2nd World War.

The liberal international economic order allowed for the exchange of ideas, technology and know-how across countries and could be said to have peaked with the globalization that started in the late 20th Century.  The claim has been made that more people were taken out of poverty in the post-Second World War period than in the preceding 500 years.

This is not so difficult to believe if we consider the remarkable transformation of China and India.  China is reported for instance to have lifted 770million people out of poverty over a forty-year period while India is said to have lifted 415million people out of multi-dimensional poverty over the last 15 years.

Since we are in a notable centre for the study of global affairs, I think we should ponder a bit on the global economic order and ask ourselves whether the conditions under which recent late developers grew fast are still available and would still be available to support Africa’s quest to make growth work over the next 27 years.

To be candid, the omens do not look good and it seems to me that those of us with an abiding interest in international relations must work together to ensure that it continues to enable global peace and security as well as economic progress. Indeed, the ability of Africa to make the most of growth depends a great deal on peace and security in the rest of the world and within the continent.  The Russian invasion of Ukraine has upended the era of peace in mainland Europe which many of us had taken for granted.

The outbreak of that war led to huge increases in the prices of food, fertilizers and fuel which are required to feed people and power growth and development.  Equally troubling is the fact that the resources being used to prosecute the war detract from resources that could otherwise have been used for development assistance or debt relief which have a role to play in propelling growth in Africa.

On the domestic front, Africa continues to struggle with imported terrorism.  For instance, the 2022 Global Terrorism Index reports that the Sahel region of the continent has become home to “the world’s fastest-growing and most deadly terrorist groups” and that sub-Saharan Africa accounts for 48% of global terrorism deaths.

Given the scale of the problem and the fact that the threat of terrorism anywhere on earth is a threat to the whole of humanity, I think it is time for the global community to treat the menace of terrorism in the Sahel as a common challenge.

As I have stated on several occasions, this is one area in which the great powers and emerging powers can put aside rivalries and work together with ECOWAS and the African Union on an initiative to stamp out terrorism in Africa, especially in the Sahel.

Let me conclude by saying what I think is somewhat cliche in discussions on governance, leadership is key. Africa’s growth ambitions will surely need knowledgeable leadership committed to good governance.

Thank you for listening.