Leading Africa

 





12 August 2020

African Leadership

Leadership - to turn Africa to Hi-Speed development


Africa discussion paper #2

By: Karsten Riise







In my previous Africa discussion paper (#1 from 27 July 2020), I presented figures which demonstrate the enormous developmental Challenge which Africa faces from Asia - indeed, from all the rest of the world. 

https://changenews-en-africa.blogspot.com/2020/07/discussion-how-does-africa-transition.html

Accepting that Africa has this Challenge is key. Only by Africa taking the Challenge, can we set in motion African solutions. African solutions ARE achievable - but what is needed?

The last 10 years, Ethiopia increased real GDP per person by 7.7% - every year. In just 10 years, Ethiopia's soon-to-be 100 mio. people have simply doubled their income. All of Africa must do it - every decade more than doubling the material level of living.

Ethiopia proves that Africa CAN implement an African version of the  "Asian" model - with decade-upon-decade of constant export oriented growth. Ethiopia has no raw materials. Instead, Ethiopia walked an arduous, but promising road with lots of hard work, profitable, business-minded investments with external cooperations - but quite few prestige buildings and public jobs with glamour. Ethiopia's success has gone on-and-on for 25 years, since the 1990'ies. This is very much down to one visionary and daunting African leader - Meles Zenawi - whose policies are still continued in Ethiopia.  Meles' policies set-on this deep transformation of Ethiopia, from a starving, war-torn "failed-state" to a great symbol. Yes - Africa CAN and will do it!  

We must strive even higher - for around 10% multi-decade yearly growth - per person. Like China. This high, that is the sustained speed, we must aim at. And no part, country, region or population segment of Africa must be allowed to stay behind. Too many Africans have become poorer the past 60 years. Too many decades lost on disruption - not only wars, but also waste and failed policies. Big countries like Nigeria, South Africa and even Egypt still tend to stagnate, 60 years after 1960, the great year of African independence. Countries like Ghana, Kenya, Tanzania, Mozambique and Rwanda were too long moving too slow, and even now with 3½- 4½% growth per capita the last decade, these more successful African countries still need to grow quite a lot faster.

Unite and act upon the fact, that thy neighbor in Africa needs success too, also for you to succeed. Unite for much more African collective action, also in security with co-development (making western and UN "support" superfluous).

Why does Africa, as I argue, need to move SO extremely fast? First, because Africa CAN do it - and second, because Africa simply has little choice.

Doubling the size of poor African populations every 20 years was only "possible" in the past, because overall, Africa used to be thinly populated with lots of unused fertile land and small cities. Not so anymore. African population pressures for good living have already become near unsustainable in many places, and will become enormous the next 10 years. And from outside, an unrelenting international pressure may build up against Africa: As Asia grows, Africa is falling more and more behind in a stronger-and-stronger armed, powerful and fiercely competitive world.

Despite often hypocritical words about "solidarity" with Africa, an often ruthless world has an insatiable desire to put hands on Africa's resources. Handing out pebbles like a few wells and remote schools to keep Africans were they were, preaching a gospel of ever-happy "pro-poor" and "sustainability" while keeping Africans rural and poor. There will be unbearably more intervention in African affairs from outside, and more African families failing to see their children prosper, if Africa lingers on too low a growth-speed.

ALL depends on Africa's WILL to GROW. 

This was already pointed out by legendary Afro-Caribbean economist Arthur Lewis. No-one in Africa listened to Arthur Lewis in the 1960-ies - time to listen now. The will to grow is simply the real "secret" behind the astonishing growth success all over Asia. The will to outgrow the west started with Japan (read Chalmers Johnson's definition of  the "Developmental State"), it spread to Korea, Taiwan, Singapore, Malaysia, Indonesia, China, Thailand and later India. Today, nobody in Asia wants not to grow fast. All Asia WANTS to grow - and therefore they do it. Simply.

Africa must take on the WILL to grow fast - for at least the next 50 years. 

Looking at Asia, I posit that the following constitutes important practical keys for Africa to work on:

1. Ambitious leaders, competing for Africa's success. 
   
   
2. An élite which is capable of guiding strongly, and not of stealing.
   
   
3. Small public employment (!)
   
   
4. Export driven (private and private-public) business (incl. agriculture!)
   
   
5. High savings (=delayed consumption) ---> high investments.
   
   
6. Unrelenting drive for ever more education. Illiteracy is a shame for Africa and must be outlawed now - put 100 pupils in the classes, if necessary. Copy foreign university books and knowledge sources, if necessary (all others do it !!).
   
   
7. Constant, never ending upgrade of quality and knowhow. Low emphasis on boasting empty prestige. Demonstrate results.
   
   
8. Low import of consumption goods - high import of know-how for investments.
   
   
9. A "managerial attitude" of the state-élite towards all sectors, including private agriculture and business. All Asia has that. All the West too, in spite of their preaching of "free private initiative", is centrally guided.
   
   
10. Don't squeeze farmers in order to let them pay for city-dwellers - develop all stages around farming as a productive resource - and connect farmers and village business to well-paying markets in cities and overseas.
    
    
11. Work with those business leaders in Africa, which succeed. Fix it, when any business sector in Africa doesn't move fast enough. If needed, merge or split up private businesses - change the hands on slow-moving business, control finance, and strengthen business achievers big and small, also in farm and village businesses. 
    
    
12. Actively develop and manage (!) city & business zones. Learn from how Chinese provinces skillfully manage their Special Economic Zones (SEZs).
    
    
13. Invest in connecting infrastructure - transport, tele, banking, airports, ports, logistic hubs - everything. African coast countries must exhibit solidarity and strengthen African peace & happiness by connecting landlocked neighbors with links to their own harbors.
    
    
14. Not only ports, but also airports are vital, for successful international business. Successful Africans have been neglected. Africans who successfullly earn their way up are a resource - they carry symbols, they give Africa national and international prestige of achievement, they have education, and they are a test market for advanced African export-products.
    
    
15. Be careful to avoid the potential destructiveness from all the common-sense macro-economical imbalances (debt, inflation, trade-minus, too strong currency). The success of North-East Asia was driven by public managers and engineers - not by western educated economists. Do NOT to buy into all  western economic "truths" - it preaches too much bogus. Regulate international financial flows (hot money).

Last but not least - remember that high-growth has historically ALWAYS has carried a destructive force on the web of societies everywhere. Culture and environmental heritage are not a museum - they are sources of energy, stamina and true happiness. Therefore, as growth changes Africa, put extra efforts into nursing Africa's families, historic values, handcraft, cooking, housemaking and living traditions, religions, languages (of which many are threatened by extinction), tales, stories and music - and protect Africa's environment while doing all this. 

Manage expectations. Tunisia was actually prospering, when the "Arab Spring" disrupted a lot of positive developments. Because "more wants more", and people's expectations (also non-economic) began to grow faster than delivery. The same happened all over Europe in the revolutionary years of 1848 and 1968. Upheavals due to success is a possibility also in Africa, so always look in advance how to match this process. The more people are removed from hunger, the more they on one hand often sadly forget about basic religious truths, but on the other hand also strive for other ideal needs. 

Never play the game of the west - in no area. Counterplay their game and fight for your own populations' needs.

Africa can do all this a LOT better. Also Ethiopia - Africa's current best-achiever - can do it even better, incl. the management of land-rights, city planning and workers' and farmers' needs for a full life. Be ever careful about the needs of every population group (groups defined no matter how, be it religious, tribal, regional or however). This is not "just" an ideal human requirement, it is also a practical necessity to safeguard the sustainability of success. 

Be even more ambitious on fast upgrading know-how and value-added services and products - incl. unique African culture elements to the world, like music, African food, patterns, clothing, consumer goods - and spirituality.

Be obsessed with upgrading African knowhow, skills, capabilities and achievements. Sweat-shop factories with low-wage labor "Asian-style" must be accepted as a lesser evil compared to poverty - but reduce reliance on low-value-adding sweat-shops by investing in a focused way to turn valuable African design, tech knowhow etc. into exports.  

Legitimacy of leadership is not a simple question about elections (often manipulated).

African leadership now needs to start demonstrating RESULTS. 

Above just a quick draft - I have much more to deliver.


Karsten Riise
Partner & Editor

CHANGE NEWS &
CHANGE MANAGEMENT

How does Africa transition to Hi-Speed?

27 July 2020

AFRICA - Cutting a Straighter Path

Africa discussion paper #1

By: Karsten Riise




This paper will discuss how Africa can cut a straighter path and bring Africa's development up to Hi-Speed. 

Africa has made a lot of progress. Yet, 60 years after most of Africa gained independence, it is rather safe to say that Africa has not come as far, as the men and women who fought for African freedom hoped for at independence in 1960.

It is time for Africa to compare and learn from different paths taken since 1960 - not only across Africa, but also in places elsewhere.  We must dare talk in an open way about these things: In 1960, most Asian countries were at a starting point like Africa. Today, much of Asia is in many ways on a much higher path than Africa. We have a lot to learn.

Material improvement is vital. Money (=GDP) is needed to feed people, provide water, sanitation, nice housing, health, long good life, education, technology, investments, improve culture & leisure, and to protect the environment. A prosperous (and stable!) economy (=GDP) is also needed to give Africans freedom - the power to stay free from outside control. Also, where GDP-growth is not strong and solid in Africa, it is a good indicator of other problems to address.

In 1960, Korea suffered from a war with 5 million dead, and Korea's GDP per capita was around half of Ghana. Though burdened with high defense costs, South Korea has today long since passed Ghana, and South Korea has even reached the level of Africa’s colonizers, the United Kingdom (and France) - see Figure 1. In her steep path, South Korea even preserved a social balance, the environment and improved farming. 

In Figure 1, I compare South Korea with the biggest African societies, which represent a picture of Africa’s diverse development since 1960. No African country has achieved anything comparable with South Korea.

Figure 2 demonstrates, that many Asians now follow South Korea on a path surpassing much of Africa. In Figure 2, South Africa represents the "richest" part of Africa, Kenya represents Africa's "middle-level", and Burundi represents Africa's "basic" level. Many Asian countries are about to cut their way up through all of Africa's levels - from "basic" to "richest" - ref. Figure 2.

Asia (Figures 1 and 2) proves that a MUCH faster & better African development IS possible - and even necessary for Africa to be prosperous and free in a more competitive world.

With Fig. 1 & 2 as a starting point - let’s discuss how Africa cuts a path to Hi-Speed development. 


Karsten Riise
Partner & Editor

CHANGE NEWS & 
CHANGE MANAGEMENT


Changemanagement.dk@gmail


www.Changemanagement.News

www.Karsten-Riise-Music.Live


Figure 1:

Figure 2

Africa City Initiative

9 October 2017

Africa – City Zone Initiative

Private-public investment & development initiative for livable cities with production, services and export in Africa

By: Karsten Riise

Africa’s cities will more than double – livable cities must be established, and 14 million city-jobs must be created every year the next 20 years. In this paper, I propose how the EU in cooperation with African countries, with an invitation to other parts of the world, can jointly pursue private-public city-development in Africa. Denmark/EU and Sierra Leone can create the first city/production zone of this kind, to lead a new way.


A success Concept - coming to Africa

China started its economic miracle by establishing Special Economic (export) Zones near the coast. Capitalists from Hong Kong og Taiwan were the first to be attracted, and together with many more global capitalists who followed, they established export companies in these Zones. Right from the beginning, the Zones had a great deal of autonomy, a mixed public-private economy including state-owned companies, and they were excellently managed by regional authorities.

At the beginning, low wages (with stability) were the main attraction for global capitalists. Soon, value-creation, skills, and wages increased (and stability remained). As the Zones grew, they also multiplied into the interior of the continent. Regional authorities remained in control, and they have done a fantastic job. India is now doing it fantastic too. By learning, also in housing, transport and clean air, we can do it even better in Africa.

In Europe after 1990, a comparable development took place. In the three Baltic countries which were not wealthy in 1990, private investors, especially from Denmark, Finland and Sweden made major investments in business and jobs. Similarly, a larger country like Germany invested in business and jobs in a larger country such as Poland, but also in a medium sized country like the Czech Republic. Note, how smaller rich countries like the Scandinavian to some degree felt more comfortable to invest in smaller growth countries. Larger rich countries can more easily invest in larger growth/developing countries. Only a tendency, because specialized industry clusters emerge, attracting investments across this pattern.

Let us all – African countries together with the world – design and spread out a similar city-business-development in Africa.


Private investments with public planning in Africa

Let us develop city-locations in Africa for efficient business.

With city-planning carried out by for instance the Municipality of Copenhagen (with external assistance), Denmark could create a generic city-plan proposal for a Zone with factories, commerce, housing, infrastructure and banking facilities for “a location near a harbor” in Africa. 

This planning must include a basic concept for public administration and development of the Zone, companies and population, and with basic administration rules. The Zone must be planned with all the basics for international export companies to establish at low overall costs. There must be thought of both business and people.

The cost of this work should be shared by a fund with public-private participation, including pension funds and larger companies, including banks and international logistic providers (shipping and port management). The private sector defines what they require for the Zone to become economically attractive, banks supply financial networks, and shipping & port companies connect with logistics from Africa to Europe and other large markets in North America, the Middle East, and Asia. International airlines should be involved in coordinating air connections for business travel. Hotels will be built, and with more and better air connections, this will eventually also open the door for more tourism to Africa – and extra win.

The initiating State (I here propose Denmark, but others could take the lead) and the EU inquire in advance, which countries in Africa would be interested, and work with African partner countries in the process. A group of EU and African countries will be established which will provide input and follow the process.

Because the Zone will be attractive for the establishment of export companies, the Zone will also earn “hard” currency - this can pay for needed know-how, including infrastructure such as power supply, telecom, logistics, etc. As part of “infrastructure” we must include the establishment of reliable bank services networks connected with world financial markets.

And because EU capital co-invests in African Zones, there is a healthy EU incentive for each Zone to become a success with exports. The EU has plenty of special knowhow for export for benefit Africa. But Africa should not simply export unfinished natural resources. Export of manufactured goods and services from Africa must become the way for Africa to pay for more needed high-tech imports. And imports should be mainly for what cannot (yet) be made profitably in Africa. Many high-quality products for consumption and investment must be manufactured in Africa by prestigious competitive African companies, and not just imported. This is a win-win formula – and business interchange between Africa, the EU and other world markets must increase to achieve this. South Korea (which has no minerals) did the same thing in relations with the USA: Starting as a poor, devastated country, South Korea exported increasing volumes of manufactured goods to the USA - and this export in turn paid for import of needed high-tech from the USA. This way, countries like South Korea, Taiwan, Singapore, Malaysia, Indonesia, the Philippines, China, India, Bangladesh (and many more) climb the ladder of technology-design & services, and are today all global high-tech exporters.

Africa can do the same – and the EU must in trade, investment, knowhow and cooperation support this for Africa.

Infrastructure investments and the entire business structure in the Zone should be organized so that Danish/EU-partner participation provides the greatest possible multiplication effect for African business, jobs and authorities. For instance, Danish companies can make infrastructure projects, where they provide limited, but strategic products and services, while the rest is supplied in Africa. African companies for export, construction, trade and services should grow.

Africa has attractive locations for exports - the sailing time to wealthy markets is short - wages are low - and skills are rising.

Business friendly Zones can accelerate this potential.

A starting partner-country in Africa might be Sierra Leone, which has a size that matches Denmark (ref. the experience in the Baltics above). Denmark has 5.7 million people, Sierra Leone has about 7.3 million. Sierra Leone has one of Africa's largest and best-located natural deep-water ports: The sailing time for export goods to Europe and the USA is very short – this is a strategic advantage.

Focusing on one African country which is not too large, Denmark is better able to start a strong long-term development, and enter into priority long-term cooperation with government, province and city authorities. Several Danish and other companies investing in the country may share their experience, together with Danish institutions and organizations.

Together, we can create an African “Singapore”, in a decade.


New Private-Public development concept

All the competencies of a country like Denmark can be bundled together in much better ways, if they focus on one or a pair of not too big African countries in cooperation with business: Education, urban planning, health, water/public supply, human security as well as public services and administration know-how, IT skills, design skills, film & music, architecture, engineering, artisan production, and product quality management. All Denmark’s national competences can much better be merged together into a fantastic package when combined in one African country, instead of being “spread-out”. Between EU and other countries “centers of competence” will emerge – as each country has some fields where their competences are especially well developed.

Denmark knows a lot about farm-development, farm-cooperatives, and food business for a new African food-export-sector. Denmark also knows about quality control for a long range of products, as well as food safety, which is necessary for Africa to access the EU with export products that meet EU specifications. Denmark has architecture and construction know-how in areas with water and mud (relevant in Sierra Leone). Denmark also knows something about tropical medicine.

If it works well with Denmark and for example Sierra Leone, the experience must be multiplied. Finland with neighboring Liberia, for example. Or Germany with Tanzania, Burundi. Portugal and Spain (or Austria, why not?) with Mozambique. France with Côte d'Ivoire. Denmark and France with Guinea Mali and West Africa.

Are these suggested country-combinations good or less good? Europe has a sad colonial legacy in Africa – and I have tried to mention some combinations to address this. Here is a chance to do something good on a large scale. Also in the EU, there has been a lot of sad experience between countries - but these countries have become close partners today. African experience with European languages and cultures can be to Africa’s advantage and tap into Europe’s markets and knowhow.

Everyone will be free to advance specialized industry clusters. For instance, Danish or Swedish companies in the automotive supply-industry might prefer a to invest in clusters in Morocco or Ghana, which already have automotive industries. Danish pharma/biotech-companies might for similarly reasons prefer the Grand-Bassam tech-Zone with Indian participation in Côte d’Ivoire, not so far from Sierra Leone.

Foreign investment and Special Economic Zones have strengthened China's economic independence - China has retained control. Foreign investments have strengthened the independence of the Baltic countries, Poland or the Czech Republic after 1990. We must find forms of cooperation with African countries, which both guarantee private investors, and safeguard the independence of African countries.

To achieve long-term success, these sensitive issues should not be avoided, but be discussed in advance.

If Denmark has many investments in export-industries in one particular African country (like for instance Sierra Leone), and if Danish companies even depend on supplies from subsidiaries and African partner-companies in Sierra Leone, then Denmark will have a healthy incentive to act as "goodwill ambassador" for Sierra Leone (as an example) in its trade relations with the EU. New partnership perspectives open-up this way.

As Denmark establishes a special, deep relationship with one (not too large) African country, larger African countries might want to create similar arrangements with larger EU-countries.


Land and Zone administration

Social justice is important to avoid long-term problems. The land for the proposed Zone must in a socially just way be transferred from farming to a Zone Fund or similar company, which will set-up and administer the Zone. The Zone Fund (or company) must have part-ownership of the African state, perhaps part-ownership or a special obligation to former farmers or village collectives which delivered the land, as well as equity ownership from foreign private Zone-investors (for example pension funds). The Danish state should participate and act as a sort of broker to help bring all parties together.

State-to-state relations can be good for the general public and all private parties. It can motivate the social responsibility of foreign private companies acting in the country of operations. It can also help protect investors acting in good faith in case of legal injustice or other turbulence.

The land should preferably not be resold but only rented out, for example for 30 years at a time – perhaps with a lease-hold transfer right (incl. buildings). New tenants may pay a higher rent, as the land value increases. Public housing and shops should be constructed, owned and let to families and individuals. A local food-market and/or food-logistics-chain for farms around the Zone will be established. Rent from export companies could (should) be in Euro, and rent from public housing and shops should be in local currency. These details should be planned. Such an arrangement could give the Zone a rising rental income, and thus the Zone will benefit from the nearly inevitable value-increase of the land over the long term. Worker skills (for instance in quality, machine use, procedures or even IT) can be trained by the Zone, paid for by the private companies. This way both companies and workers earn more and stay competitive over time. Win-win. Denmark has a tradition for that, which can be used.

The rising income from rent will be used by the Zone for better housing, infrastructure and services (perhaps including security) – plus expansion of the Zone-area or setting up a new “sister-Zone”.

This model could pay-out foreign Zone-investors over time at a reasonable and perhaps pre-fixed price, so that the African national or local government could take-over the Zone after a number of years, without being forced to pay foreigners out by means of public funds.

The African host country undertakes to implement necessary special legislation. Necessary stability is ensured by the host country with possible Danish-EU support. A law on Special Economic Zones exists in India – such an existing law should not be copied, but used as a reference for inspiration and practical experience. Learning from India and China’s wide experience, the Danish state could work with the African state to formulate a Special Zone Legislation there. The Special Zone Legislation should balance all stakeholders' needs, including the need for good administration & governance, careful (international) supervision, auditing and a staffing-committee to minimize corruption.

Zone-administration must be kept lean and efficient – not become “swollen” up with inefficiency and nepotism. This is VERY important for success.

The framework should facilitate a public-commercially balanced Zone development for decades to come. This model could give foreigners investing in the Zone development a rather safe pay-back. More safety for investors translates into lower capital costs for investments in Africa.


Start-up

Once state-to-state cooperation is established, the Zone plan is designed, the legal framework is defined, and the investor-group created, land-rights have been obtained, communicated and a fair compensation scheme laid out, and an operating plan agreed upon, the Zone Fund will be created with an initial amount (the rest to be supplied in time as needed according to prearranged agreements).

The Zone Fund in cooperation with the African state, the EU, Denmark, and public and private participants will then sell rental-contracts to private EU, Danish and international companies wanting low-cost production in Africa, at a well-managed and adequately serviced location with reliable communication (air, land and sea) and constantly increasing labor skills, facilities and infrastructure.

Like when you have projected a large “shopping-mall”, and enter into agreements with the public, with investors and executives, you will want to rent out as much as possible of the planned areas beforehand, before construction. Here the project is just not in greater Copenhagen or Rome, but in Africa.


Taxation and financial rules

The primary objective of creating Special Economic Zones is to create business-friendly centers of growth. Tax, customs, administrative procedures and bank-rules should always be business friendly – but this is a general issue for whole countries, not just for Special Economic Zones. However, to make a Special Economic Zone concept complete, this must be in place too.

Especially Ireland, Switzerland, Singapore and China including SAR Hong Kong have a lot of insights in this domain, which should be involved for setting up rules to attract stable international business (including banking) to Africa.

Currency and banking rules must be designed carefully to attract international business, keep banking secrecy, while at the same time protecting the stability of the developing African economy.


Traditional Development Assistance - and “Stabilization”

Some have proposed that official development assistance should be diverted to business credit guarantees and the like – this, however, is not a good idea.

Traditional development assistance can complement private-public partnership for private Zone investments in two ways: First, traditional development assistance can strengthen education and other basic functions. Second, traditional development can help those poor townships and villages who are not (yet) benefitting from economic growth. Humanitarian Aid can help get society up and going again, if a mudslide, epidemic, drought, conflict or other catastrophe occurs.

Traditional development assistance with health care, education and humanitarian aid help stabilize the society, prevent hunger, epidemics and civil strife – and can strengthen education and self-governance. This way, traditional assistance can help to bring about the preconditions for making the country attractive for business investments, thus making economic growth durable, and shorten the time until the country is rich enough to provide these services itself.

So called security “stabilization” is a problem. Potentially, it can help to create or keep a peace, where business and economic growth can prosper. This, however, has too seldom been demonstrated in practice. USA “security” was a disaster for Nicaragua. In Afghanistan, combined military-development projects have largely disappointed. The western “stabilization” bombing Libya simply made the country collapse. A totally new ideology and approach is badly needed, otherwise Africa will risk more destruction than “stabilization” this way.

Security may eventually have to be one of the services to be delivered by the Zone, and Denmark and other EU countries have competence and capacity to assist – but better concepts are needed.


Many City-Zone investment projects with Africa

When the first Zone project is a success, the program must be expanded and adjusted to several African countries, in cooperation with EU and other countries. Initially, the Zones will be situated at Africa’s coast, but development corridors along the high-ways will soon create links to new Zones inside Africa.

First and foremost, we must establish cooperation from the EU and other countries, the African Union, the UN, the World Bank, the African Development Bank and the International Monetary Fund, the OECD, and the World Trade Organization. China, India and the ASEAN-countries have a lot of needed experience (and capital to invest).

Establish the program as an EU project together with Africa. Denmark will work with France, Germany, Spain, Portugal, Italy and all interested countries in a partnership with Africa.

Let us not just talk - but agree on steps to put this into action.


Karsten Riise
Partner & Editor


CHANGE NEWS &
CHANGE MANAGEMENT

Morocco Gateway

5 May 2017

Morocco – gateway to Africa

By: Karsten Riise

Morocco has the economic advantages of Europe and Africa.

For efficient export to Europe (and even the USA), Morocco has the advantages of East Asia, skills and infrastructure at competitive costs, but with a closer cross-cultural tradition, and at a 100 times closer logistical position. It if takes 3 weeks to sail goods from Hong Kong to Antwerp, from Tangier, it will probably take less than a week. Time is money, and companies need to adjust their deliveries fast and stay close to their customers, also in Europe.

Morocco as part of the Arab world has a great indirect business importance. Wider than Arab, it is also as a Muslim culture, connecting Morocco with Arabs as well as other Muslim people all the way across Africa, Turkey, Central Asia, Persia and all the way to East Asia. Morocco has probably in a good way has also absorbed ideas of the French tradition of a non-religious state (laïque). However, Islam is not only a world religion, Islam is also a world culture – a uniting community with a lot of warmth.

Today, European countries probably mostly perceive the Arab (and most of the Muslim) world more as a security risk, and sadly not so much as a growing region for investment. However, very many Muslim and Arab countries are growing in economy as well as and in education for all people. But as a paradox, the difficult situation perceived in some other parts of the Arab (and Muslim) world, makes Morocco one of the very most important allies, not only to France, but to the USA and all European countries – including Denmark. All European countries need Morocco to increase her social and economic success as an Arab (and Muslim) partner close to Europe.

European security services have an interest to support Morocco to obtain even more successful business and western government contacts, to promote your development.

Africa is Morocco’s ultimate card.

A continent of 1 billion people is about to become 2 billion in just 25 years. Germany, the EU and all the G-20 countries incl. USA and China, want to vastly increase money investments for business development in Africa. It will happen. Big money will start to flow into African business. And Morocco is first stop for business going from Europe to Africa. So Morocco is right to promote Morocco as a hub, not just for business from Morocco to Europe, but also for investments going from Europe into all of Africa. Develop a “Singapore” model for Morocco in Africa. Singapore is a transit harbor, unloading and reloading goods going to Europe. Singapore is financial hub for money invested in Asia. Singapore has the Asia air connections, the best investment climate and highest educated population in Asia. Last but maybe most important, Morocco can be the place in Africa to go for westerners, who need partners with knowledge and connections about how to do business in the rest of Africa. The more Morocco itself integrates into Africa, the more you can promote Morocco as a place to start doing business in Africa. Banks are excellent for this role, because good banks not just have money – good banks combine knowledge and human networks with money and investment opportunities. Morocco should build banks, too.

It seems clear, how the South is important for Morocco. Morocco needs a land-bridge to Mauritania, Senegal, Mali and West Africa. How to solve this politically, I cannot say – a union, perhaps. Membership of the African Union was a great and absolutely necessary step to integrate Morocco into Africa. Morocco already have great physical connection over water to the North - to Europe. In addition to your excellent water-connectivity, Morocco also needs an excellent physical connection on land to the South – to all the other parts of Africa.

Promoting Morocco as European gateway to Africa will give Morocco friends in Europe and Africa to lift Morocco up as one of Africa’s best connected business centers. If Morocco can convince African countries, especially in West Africa, that Morocco as a leading African business center can help attract business for the benefit of all West Africa, then other African countries see an interest to work in business, diplomacy and public relations, together with Morocco, to make more promotion for Africa. And within this African context, of course, also for Morocco.

Morocco can also increase contacts with Germany. The Africa- agenda of Germany makes Germany want to assist Morocco to be connected - even in Denmark. Germany is Denmark’s most important European partner – Denmark’s government, business and banks listen to Germany. Germany needs Africa to become a social and economic success – make this a part of your global advantage. In the short time-span of only one year, 2016, Germany took in about 1 million refugees from Africa and Syria. Germany doesn’t want to do that again. It became a big issue in Germany, and Germany cannot do it again. But even though Germany is rich, Germany alone is of course not rich enough to lift-up all of Africa. This is why Germany needs the cooperation of the other G20 and EU-countries, including Denmark, that together they can invest the very, very many billions of Euros which must go into Africa every year: To create enough jobs in Africa, so that 2 billion Africans in 25 years can be happy in their own region, instead of migrating to Europe (via Morocco).

The more Morocco becomes a gateway for business going into Africa South of Sahara, the more Morocco will become a Number One European partner.

Karsten Riise
Partner & Editor


CHANGE NEWS &
CHANGE MANAGEMENT

Plan Africa

18 April 2017

Plan with Africa
Africa must become The Place to be

By: Karsten Riise


Africa moves to a top position on the global Agenda

As one of the world's leading industrialized countries, Germany has made a right decision to push for a new kind of large-scale, longterm cooperation with Africa. To involve global actors with Africa (states, organizations, companies and individuals), Germany has issued an open document with ideas: "Africa and Europe - A new partnership for development, peace and a better future". The initiative is good - but fundamental changes are needed.

http://www.bmz.de/en/publications/type_of_publication/information_flyer/information_brochures/Materialie270_africa_marshallplan.pdf

Africa is on way to become a continent of 2 billion people. Cities are growing immensely, and both new and existing cities require enormous resources for planning and development.

The German paper points out that 20 million new African jobs must be established every year, to keep Africa on track. But the German paper only discusses agricultural jobs, omitting the fact, that the majority of new African jobs (perhaps nearly all), must be established in cities. Unwieldy, poverty-ridden African mega-cities, like we have seen in other places of the globe, must be avoided through broad and persistent action now.

The fact, that Africa must focus on city jobs requires a fundamental break with how African development used to be carried out. Instead of rural farming projects, digging wells and setting up small schools in villages etc, future emphasis in African development must be placed on boosting manufacturing (key to industrialization and exports to pay for high-tech imports), knowledge and services, including tourism.


Urbanization in Africa

Africa's total population is by the UN expected to increase from 1,166 million in 2015 to 1,812 million in 2035 - a total increase of 645 million people in 20 years - see figure 1.

Using data from the UN World Urbanization Project, it becomes clear, that 65% (two thirds) of Africa's population increase will happen in the cities. This is due to the natural migration of people from the country-side to cities. While Africa's total population will go up by "only" 55%, Africa's overall city population will double (up 89%).

In a middle band across Africa, consisting of Western, Middle and Eastern Africa, city populations will increase by 100%-126% (fig.1). This is, however, only the average: City-population in for example Niger will more than triple. Niger will be one of the cross-roads for African migrants to the EU, Turkey or the Middle East.

Figure 1

Population	2015			2035			2015 - 2035  Increase
Millions	Total	Urban	Urban%	Total	Urban	Urban%	Total	Urban	Total	Urban
Northern Africa	217	112	52%	281	162	58%	63	50	29%	44%
Western Africa	350	158	45%	583	329	56%	233	171	67%	108%
Middle Africa	143	63	44%	235	126	54%	91	63	64%	100%
Eastern Africa	395	101	26%	645	228	35%	250	127	63%	126%
Southern Africa	61	38	62%	69	48	70%	8	11	13%	28%
Africa	1,166	472	40%	1,812	893	49%	645	422	55%	89%
Source: Author's calculations based on UN 2014 World Urbanization Project - figures rounded

Africa's fastest growing cities are only 2,800-4,700 km away from the EU and Turkey.


Africa's active population doubles in cities

Africa's city-development is even more challenging than figure 1 shows. Not only is Africa's total population growing - the percentage of Africa's active population (15-64 years) grows too. The combined effects of total population growth, an increase in the share of active people, and migration to the cities, will put an enormous stress on Africa's cities.

According to IMF (Working Paper WP14/143, August 2014, figure 1), Africa's working age population is expected to increase from about 55% to 59% the next 20 years. These percentages are approximate, and vary from country to country, but they are indicative. To demonstrate the severe effects from the combination of population growth, urbanization, and growth in active working population, I have made a simplified model-calculation, se figure 2:

Figure 2

Population	2015			2035			2015-2035 increase
(million)	all	active	active %	all	active	active %	all	active		all %	active %
Urban	472	259	55%	893	527	59%	422	268	63%	89%	103%
Rural	695	382	55%	918	542	59%	224	160	37%	32%	42%
Africa	1,166	641	55%	1,812	1,069	59%	645	427	100%	55%	67%
Source: Author - indicative model calculation on UN data - actual figures will vary

Africa's total population increase of 55% may not seem alarming to some at first glance. But Africa's active city population is likely to increase by 103%, and the geographic effect of this will happen in the middle-band of Africa.

The total increase in active population is calculated at 427 million over 20 years (fig.2). Divided over 20 years, the 427 million translate into an average of 21.4 million more active Africans per year, who will need either job or education. My overall figures thus correspond with Germany's figure of 20 million new African jobs per year. But my figures demonstrate that out of the total increase of 427 million active-age Africans, a vast majority of 268 million (63%, two-thirds) will be in the cities. So out of the needed creation of 20 million new African jobs per year, at least two-thirds, or 14 million jobs per year, must be city-jobs. Multiply the 14 million jobs with the investment needed per city-job, and Africa needs a very high billion-investment - every year. On top comes more billions needed for a big increase in Africa's capacity for primary, secondary and tertiary education.

As things develop (war, climate, desaster - or better connectivity), the migration-speed to cities may be much faster.


Help African farmers - by developing cities

It is an old failure in development-efforts, to focus too narrowly on farming. If people do not migrate in a steady flow from farms to the cities, population increase in the country-side means that farmland will have to be divided into ever smaller, un-economic small pieces. That trap must be avoided. Farming needs higher earnings for better methods and efficiency, to produce more food and better living for farmers. Better farm-earnings can also moderate the speed of migration to the cities. One of the best ways to help farmers earn more, is to make cities richer. Farmers can profit when African city-consumers become more numerous, and can pay more for better food. Richer cities also mean, that more sons and daughters of farmers, who went to the cities, can send money back to their families in the village.

Develop connectivity, so that farmers can sell into the growing cities. Invest big-time in the African food industry, marketing and distribution, and high-quality exports.

Achieve 90% reading-skills - in ALL generations

Germany historically took a lead because of superior reading skills. The same in Asia. Fast achieving 90% reading skills is necessary for development and change in population growth. But reading skills are also a key to ideological upheavals, and a separation of young reading people from the tradition.

To stabilize Africa's social network, the adult generation, mothers and men of traditional authority, must just as fast learn to read and use the internet.


Make Africa good for finance

The German paper criticizes that a lot of money leaves Africa. They propose more control. But Germany faced the same problem after the war - what did they do to rebuild? Germany after the war chose to hold on to bank secrecy, and accepted that a lot of money was not taxed - to keep business money in Germany. Africa should do the same, to make African money return.

Finance structures must be built to combine public and private African money, and attract foreign equity investors (not foreign loans) to chaebol-like industry hubs, like in Korea and Japan. Investments in infrastructure must be multiplied - rich countries must fill up the African Bank for Development.

A secure African currency is needed. Small currencies are too easily manipulated (remember the Asia-crisis, 1997). In West Africa, 8 countries share the "CFA Franc", backed by the Euro. Change the currency's name to "Nkruma's" (after a first pan-African leader), and offer that currency as a pan-African currency which all African countries can use. This will improve trade between African countries, reduce finance risks, and create a stronger market for African manufacturers. Do not use Official Development Assistance (ODA) to "insure" private investors. Use ODA to improve the business environment, for education, infrastructure and so on.


Africa means change in rich countries

Manufacturing, knowledge and tourism must grow big-time in Africa. Rich countries will have to restructure their own economies and adapt their ecological footprint to take-in big imports of commercial goods, food, tourism and other services, as well as knowledge-products from Africa. Don't expect Africa to take the lead in environmental or social protection. Recycling requires infrastructure and is often not an option in Africa.

Instead, Africa needs absolutely biodegradable packaging. There are lots of new products that rich countries can export to Africa, if rich countries open for more manufactured goods from Africa.

Expand the international news services on Africa, with all kinds of stories, so that business people and consumers in rich countries can feel that Africa is a familiar part of their world.


Invest in Africa, as she is

Too often, rich countries put blame on Africa's own governments and culture, including gender-relations. Don't expect Africa to become like Europe - it will never happen. Criticizing Africa is a bad excuse for holding back. Rich countries have invested all over the world without qualms about corruption or type of government. Many African countries (also many with few natural resources) have already proven their ability of long-term growth. Africa has great potential for manufactured exports. Now is the time to develop business in Africa.

Do not expect even development. Succesfull places spur the others. Rich Africans will become a home-market for advanced African goods - for Africa to export later. Africa will become the place for all the world to be active in.


European security risks - if too little is done in Africa

A minimum of 14 million new city-jobs plus education must be created every year - or else unemployment and poverty can turn into large-scale war and desaster among 1-2 billion people, living at the door step of Europe and the Middle East. An increase in Africa's active population also means an increase in people who can fight or migrate. The Munich Security Conference, 2017 documented that refugees travel further and further. Already, distances of 3,000 km are travelled to reach Europe. A tsunami of refugees from Africa can create chaos in Europe and the Middle East, if too little economic improvement is achieved. Africa also needs to develop its regional security structures. If African countries want it, Europe must spend much more efforts to support them in this.

Condoms will not prevent the spread of AIDS in the future. More Europeans meeting Africans, means more Europeans having sex with Africans - also in relationships where condoms fail or are not used. With a new level of tourism, education and business visits between Europe and Africa, AIDS threatens with a global epidemic - therefore AIDS must be eradicated. Malaria must be eradicated too.


Karsten Riise
Partner & Editor


CHANGE NEWS &
CHANGE MANAGEMENT