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World Economic Forum

Putting issues that matter most under the radar

Once again, World Economic Forum will discuss on agendas larger than the continent Africa is now   

Hone Mandefro

After successfully hosting the 16th edition of ICASA, Addis Ababa will be hosting the World Economic Forum for Africa from May 9 – 11, 2012. The forum is scheduled to convene on a number of critical issues for Africa with a theme of “Shaping Africa’s Transformation”. Giant issues such as Africa’s innovators, advancing Africa’s trade agenda, fostering political stability, and transforming Africa’s agriculture, and many more are set to be thrashed out by leading economists, business people and policy makers from all over the world. 

Democracy tainted

Africa is rising

Undoubtedly, African Leaders will convene in this year’s edition of the forum with a sense of triumph. Economically, there is too much good news emanating from most countries in the continent. The World Bank in its recent report declared “African countries are back on a path of strong growth”.  Last year, it has reported “Africa could be on the brick of an economic take off much like China was before 30 years ago and India 20 years ago”. Every data available grades African economies are among the 10 fastest growing economies in the world.

Economic statistics in the last three years indict that the continent’s economic potential has come more evident over which the Western and the Eastern world are so desperately scrambling.

According to a 2011 report from Ernest and Young on Africa’s Attractiveness, Africa, next to Asia, is registering the best investor perception in the world. The competition to invest in Africa, which partly is motivated by the growing of the middle class in most countries, is estimated to reach a US$ 150 bn in 2015, albeit still less than 5% of the global Foreign Direct Investment (FDI).

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This is despite the fact that “Executives in developed Economies tend to be less positive than their peers in Emerging economies” according to Ernst and Young. It suggests that if African governments intensify marketing activities and image building, the continent could snatch more FDI than predicted.

Politically too, the continent has demonstrated the power of its masses when revolutions swept through North Africa which resulted in the abolition of three of its long serving autocrats.

But this bundle of good news should not be used as good excuse to cover up the mammoth challenges the continent is facing. Needless to say, Africa is still characterized by high level of corruption, poor governance, and crippled democracy.


“Instead of African countries asking for foreign aid to help in economic development, they could achieve the desired economic performance by reducing corruption through appropriate institutional reforms” says Kwabena Gyimah-Brempong from Department of economics in University of South Florida. “A one unit increase in corruption index decreases the growth rate of GDP by between 0.75 and 0.9 percentage points and of per capita income by between 0.39 and 0.41 percentage points”.

Percentage of users who report paying a bribe to at least one of nine service providers in the past year;

Clearly, the issue of corruption has frustrated millions of poor Africans. Yet few countries, if ever, have shown readiness to uproot the practices altogether. Although most African countries have explicitly instituted anticorruption organizations, the war on corruption in Africa has been drilled by selective allegations, some of them as political weapons. Corruption watch dog institutions in many African countries are fragile and weak to make the few elites deeply saturated in the practice accountable for their appalling behaviors. Each year reports from the transparency international mirror African countries as ‘perceived’ most corrupt by their citizens.

Truth is corruption in Africa is not a matter of perception; in some countries such as Nigeria pilfering public money is an ordinary practice. The African Union has estimated that during the 1990s corruption in African economies had a price tag of nearly $148 billion per year, or about 25% the continent’s total output. “Other reports show that in one year corrupt African politicians and civil servants diverted amounts in excess of $30 billion in development aid to foreign bank accounts”, says John Mukum Mbaku professor of economics at Weber State University in Utah.

  Good governance and democracy

In Africa both are in short supply. The Joint UNECA and AU Economic report on Africa says: sustaining the growth momentum and taking Africa’s development potential much further depends on strong “political leadership with the capacity to mobilize the population”. For many states in the continent, this is a mere rhetoric.  Admittedly, both are improving in most cases, but oddly enough, countries described as autocratic (take Eritrea for example) have managed to register double digit economic growth.

However, there is no question that ineffective governance has remained the top challenge of development in the continent. Only one country – Mauritius – made it to the list of fully democratic in 2012 index of Democracy by The Economist Intelligence Unit. That is one country out of a total of 31 countries in Sub-Saharan Africa.  23 of them are rated authoritarian. There are a few improvements left and right, but 23 out of 31 is too big a number.  The Mo Ibrahim foundation struggles to nominate an African leader to win the 5 million dollar prize for peaceful transition of power. Elections are routine in Africa with an average of 15 up to 20 elections held each year. But,  “not all ballots pass the test of being “free and fair” and many have been charades held by regimes clinging on to power”, according to the Economist Intelligence Unit. Although coups have become more infrequent, (save for the recent ones in Mali and Guinea-Bissau) public dissatisfaction as expressed in demonstrations and mass revolutions in many parts of the continent is escalating.

  Can the Forum help?  

May be. “Democracy is the key; it is what people want; that is obvious. And with democracy comes better business,” says Nikoali Germann, Managing director of Addex Bioengineering , a company which is trying to develop 10,000 hectares of sugarcane in Sierra Leone, and hoping to  generate 350, 000 liters of  Ethanol per day. Investors in Africa are still apprehensive that coup democracy is the most demanded in the continent.

Building the culture and institutions of democracy, renewing commitment of political leadership in democratization and development and promoting pragmatic policies working for Africa’s development surely need more than an annual gathering of the movers and shakers of the business world and powerful policy makers.

This is of course is not to undermine the power of coming face to face to discuss issues that matter most for the continent, which the Forum is set to achieve.

“The ability of Africa to sustain high rates of economic growth in [future] will depend, to a great extent, on how well its countries are able to transform their governance systems, especially as it pertains to fighting corruption,” says John Mukum Mbaku. The Forum has one big opportunity to set that record straight and tell African leaders as its academics dare say it out loud.

The writer can be reached at  

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