I am on my way back from the joint AU/UN ECA Conference of Ministers of Finance and Economy. It was a remarkable experience watching Ministers engage in debates between peers. They were robust, well-informed and highly energized. Thanks to the influence of the World Economic Forum format of 'no speeches' and short inputs facilitated by a skilled moderator, the usual wasteful meaningless pomp and ceremony was hardly present (except when President Goodluck Jonathan's brass band started up as he came in and before his speech).
Anyway, there is clearly a new orthodoxy being orchestrated to back up what is called Agenda 2063. I can identify two really influential centres – UN ECA itself (based in Addis) led by Carlos Lopes that is pushing the ‘industrialisation of Africa’ agenda, and an outfit run by the former Executive Secretary of ECA called the African Centre for Economic Transformation based in Accra. ACET has just published what it calls the African Transformation Report. Many referred to this report and a quick read has confirmed that the themes it addresses where often repeated during the meetings these last few days.
The green economy agenda is a minor discourse, but pushed by influential players. The storyline is quite simple: Africa’s installed energy capacity is equal to France and its population is over 1 billion. If it continues to grow like it is now, it will require an energy boom commensurate with what China has gone through over the past few decades. There are two issues this raises: if Africa uses BAU technologies, this will cost more and be less reliable than renewable energy alternatives which are plentiful and easy to access (especially hydro, but also geo-thermal, wind, solar). All the calcs have been done by the International Renewable Energy Agency which is run by a Ugandan called Amin. The second issue is that Africa energizes itself using BAU technologies, this will ensure that the world never achieves its global warming targets, i.e. the world has an interest in funding Africa’s low carbon technology options. Put together, the business case is clear. What goes against all this is the growing number of oil and gas discoveries across the continent. But none of this is part of the Africa Transformation agenda. For those who like this argument, the African Transformation agenda creates an opportunity for installing massive renewable energy capacities to drive the African industrialisation process. However, there was very little reference to all this in the plenary sessions addressed by Ministers.
Another strong theme was 'it is not a matter of the market versus the state'. Everyone seemed to agree that the state must lead and that institutional capacity needs to be built. The Asian and Brazilian models were often cited as models of how the state can lead, but only if policies are credible and coherent.
The most sensible cautionary notes came from two sources: the South Centre in Geneva whose chief economist argued that Africa is doing well because of the commodity boom. Has it learned the lessons of the last commodity boom in the 1970s, he asked. The lesson is that if you do not re-invest resource rents into non-commodity sectors to sustain growth, the end result will be a crash. He seems to think Africa is doing better than Brazil. The other was Thabo Mbeki who heads up the High-Level Panel on Illicity Financial Flows out of Africa. He presented a report that suggests that $50-$60 billion flows out each year and that 60% of this is because of how transnational corporations manage their internal financial flows to the detriment of Africa. His point was that Africa needs to jack up its institutional capacity to manage its resources and negotiate contracts with corporations.
All very interesting stuff. Africa is such an exciting place to be at the moment.