SA's future is tied to Africa's rising - Moneyweb, 23 April 2017

By Rabelani Dagada 

South Africa’s economic development will rise on the tide of Africa’s socio-economic development. My assertion is based on the forecasts of Klaus Schwab in his latest book, The Fourth Industrial Revolution. The book argues that Africa will benefit immensely from the consequences of the ageing, and declining, populations of Europe, North and South America, the Caribbean, Asia (including China), southern India, and some Middle East countries. This assertion is supported by the African Development Bank’s 2011 report, “Africa in 50 Years’ Time“, which predicts that, of the continent’s likely total population of three billion by 2050, 1.87 billion people, or 74%, will be people of working age. 

In addition to the rise in nationalistic sentiment across Europe and the United States, Europeans have been tightening immigration regulations, a consequence of which is that, instead of importing skilled labour, many firms have relocated operations to countries that have such labour. In the past century, East Asia was the biggest beneficiary of this kind of direct investment. However, due to Asia’s own ageing populations, investors can be expected to move their manufacturing plants to Africa, where there will be guaranteed abundant labour, and consumers for their products.

According to the African Development Bank, Africa has experienced huge declines both in the child mortality rate and deaths caused by HIV/AIDS-related diseases. This is a significant factor in Africa’s population growth.

Another crucial factor in Africa’s immense potential for economic growth is that the continent possesses half of the world’s arable land. This will lead to massive investment in agriculture, and the prospect of Africa’s food production feeding the whole world. This view is supported by the World Bank, which predicts that Africa’s agriculture and agribusiness markets are destined to top US$ 1 trillion in 2030.

According to Professor Calestous Juma of Harvard’s Kennedy School of Government, new technologies likely to be deployed to boost agricultural output in Africa include Geographical Information Systems, nanotechnology, biotechnology and mobile-technology. In The Fourth Industrial Revolution, Schwab mentions four technological megatrends – autonomous vehicles, 3D printing, advanced robotics, and new materials – as being among likely prominent factors in driving economic development in the near future. Africa will be the biggest beneficiary of these technologies.

Infrastructure development is another anticipated benefit. As things stand, one consequence of the inadequacy of infrastructure in the form of roads, rail, border posts, airports, seaports and so on is that, for example, it is cheaper for Nigeria to import food from Peru than from Cameroon. However, as investment in Africa by, say, German, Chinese and other investors, increases, it will be in their best interest to establish partnerships with African governments in building infrastructure to service their operations and transport their goods.

In some instances, the public – consumers – will also have to contribute in the form of taxes, and payments such as tolls. My advice is that South Africans, and other Africans, should get used to tolls.

Currently, due to the lack of infrastructure, trade among African countries is very limited. By 2050, however, intra-African trade will have increased substantially due to the growing regional connectivity that will result from the massive construction or enhancement of infrastructural projects. This, combined with the injection of investment, and new economic activity, will inevitably lead to freer labour movement, one of the advantages of which is that it will increase the flow of remittances across African countries.

The incremental growth of populations, industrial production, agricultural activities and mining will require huge quantities of water. In certain parts of Africa, there is a lot of water in the ground, and technology will be employed to extract it. Technology will also be used to harvest rain water. Africa is surrounded by two oceans, the Atlantic and the Indian, and technology will be employed to extract water from these oceans and make it consumable. Moreover, technology will play a critical role in recycling water. (It can be anticipated that most production activities in manufacturing plants will use less water.) Technology will play a critical role in promoting intra-continental trading and supply of water. 

There are still vast quantities of mineral resources beneath the African soil. Intensive exploration will unearth these minerals and oil-related resources. This will increase trade between Africa and other regions. It is on this premise that I have absolutely no doubt that Africa is the future. 

Although the South African population is not expected to grow rapidly, South Africa can become the biggest beneficiary of African growth. However, the benefits are predicated on South Africa cultivating better relationships with other African countries, putting a stop to xenophobia, and ceasing to treat fellow Africans with arrogance and condescension. In the absence of anything like the huge population typical of other African countries, South Africa’s strength will be to continue to serve as a gateway to the continent, and a regional financial hub. South Africa should actively use its Brics membership and access to the G8 to assert its role as a representative of and mouthpiece for the whole African continent.

We should also be more strategic; for example, there were no plausible political or socio-economic reasons for insisting that Dr. Nkosazana Dlamini-Zuma become chairperson of the African Union Commission. It was also a huge mistake for President Jacob Zuma’s administration to allow NEPAD (New Partnership for Africa’s Development) to flounder. NEPAD had arrogated de-facto leadership of the African renaissance to South Africa.

South Africa should also give attention to the suggestion by Greg Mills of the Brenthurst Foundation to suspend visa requirements for citizens from all high-income countries. One country that is already doing this, and benefiting immensely in terms of tourism, is Georgia.

In my view, South Africa should take a radical step and remove tourism and business visa requirements for all countries. As we move towards 2050, the free movement of legal immigrants and tourists into the country will increase the densities we require to spur infrastructure development and attract direct foreign investment.

Of course, we should still document foreigners entering the country, and retain the right to refuse entry to anyone whose presence may not be in our best interest – but if South Africa is to benefit from Africa’s rising, these are some of the measures that must be taken.

* Rabelani Dagada is a Policy Fellow at the IRR, a think-tank that promotes political and economic freedom. 

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