By Elton Plaatjes
VENTURES AFRICA - A Focus on the constraints of Africa for the small business owner and identifying the role of government and the services needed to project the African continent – back to the future remains a constant Achilles heel.
Now that China and India have found ways of growing out of poverty, attention has again turned to Africa. The focus of my thoughts is to explore which engines of growth can be activated in sub-Saharan Africa today.
- Real GDP rose by 4.9 percent a year from 2000 through 2008, more than twice its pace in the 1980s and ’90s.
- Telecommunications, banking, and retailing are flourishing. Construction is booming. Private-investment inflows are surging.
- Africa’s collective GDP, at $1.6 trillion in 2008, is now roughly equal to Brazil’s or Russia’s, and the continent is among the world’s most rapidly growing economic regions.
- Soaring prices for oil, minerals, and other commodities have helped lift GDP since 2000
Critical research is needed to determine the extent to which Africa’s increased economic momentum is sustainable, as its sources and likely staying power are less understood.
The role of the governments’ leadership has been misleading whether due to ignorance or an unknown illness – Africa is trying to skip the part of becoming an industrialized continent and moving straight into becoming a continent ready for the information age. Africa has development theory and is not implementing the theory into models for testing. The process of developing models to test in industry will cost the continent much less than jumping straight over in the information age – where 80% of the continent population cannot access such technology.
To prove this point, take a look at Africa – as picture from space – www.greatbluemarble.com
How can a continent skip industrialisation, as the most labour intensive sectors? Of what benefit can the age of technology be for Africa where. Africa accounts for over a sixth of the world’s population, but generates only 4% of global electricity. The World Bank reckons that 500m sub-Saharan Africans are without what it calls “modern energy”.
Enter Africa into BRIC(s). To date South Africa is not seen in the top 15 countries based on USD GDP. Let’s not over-emphasize.
Africa has benefited from the surge in commodity prices over the past decade. Oil rose from less than $20 a barrel in 1999 to more than $145 in 2008. Prices for minerals, grain, and other raw materials also soared on rising global demand.
Yet the commodity boom explains only part of Africa’s broader growth story. Natural resources, and the related government spending they financed, generated just 32 percent of Africa’s GDP growth from 2000 through 2008.2 The remaining two-thirds came from other sectors, including wholesale and retail, transportation, telecommunications, and manufacturing (Exhibit 1). Economic growth accelerated across the continent, in 27 of its 30 largest economies. Indeed, countries with and without significant resource exports had similar GDP growth rates
Let’s have a look at a macro to micro solution as a starting place for remedy!
1) Governments in Africa need strong economists for research and analysis
2) Macro-policy should be focused on industrialization as a means to pay for systemic-continental (yes, I just made that up) growth in the energy and related sectors
3) Strong institutional support through business development services based on management consulting from both the public and private sectors.
4) Business Development Services that deal with current economic conditions in a specific country.
What we are likely to find is a large micro-business sector (Informal), followed by an average small and medium business sector balanced by an even smaller big business sector that makes up the greater percentage of TAX REVENUE.
There is no reason why Africa should be the world’s suppliers of cheap commodities and in some cases very expensive natural resources and yet remain a vast market dependent on the outside world for most of her consumption goods”
A Framework for Small Business Development Services sector:
The growth engines for Africa can form the foundation for growth through;
1) Small and Medium businesses – where areas of focus remain on industrialization and Agricultural and Tourism sectors. Strong Supply chains need to be promoted, supported and enhanced.
2) Support for sustainable Private Sector development
3) The promotion of Social Entrepreneurship as a sustainable option for Africa, given the social needs legacy ‘She’ carries.
The International Labour Organisation (ILO) has been pro-active as a development mechanism for sustainable growth of the small and medium business sectors, but governments have opted to instead opted not to use the highly sort after tools and expertise of the ILO, for economic development.
In conclusion, Africa has been misled into thinking that we need to follow the information age and that we can skip the industrial revolution we so badly need. Technological Innovation, as we know it from the US and Europe, tends to feed consumerism in Africa, not employment.
Image via cooltown