Is Malta missing out by generally ignoring the business opportunities offered by Africa? Can Malta really become what Dubai is for Asia and the Arabian peninsula? There is little doubt that Malta is attracting the attention of global investors and some of them have hinted that the island should be more proactive in positioning itself as a gateway to Africa. The potential offered by north Africa is well known to Maltese entrepreneurs but they justifiably fear the risks arising from the political instability of the region. Very few of them have ventured further south.
Our society’s perception of sub-Saharan Africa does not help. The region is associated with the sad stories coming through the mass media relating to poverty, illegal migration, corruption, piracy and diseases. Can Malta really tap significant business opportunities from such a continent?
Interestingly, while, in 2010, The Economist referred to Africa as the ‘Hopeless continent’, three years later this changed to ‘Aspiring Africa’. A number of analysts predict that the 2020s will be ‘Africa’s decade’ emulating the economic growth trajectories of China and India.
The ‘dark’ continent has a population of 1.1 billion (representing 15 per cent of the world population). Africa has the fastest demographic growth rate and its population is expected to practically double within the next four decades. One in three Africans are considered to belong to an ever-growing middle class. Increasingly more young people are leaving the villages to live in the cities.
Urbanisation and globalisation are radically changing African societies, facilitating their modernisation. Africa is far from being homogenous; it brings together 54 countries, over 3,000tribes, 2,500 languages and extremely diverse cultures.
Until the 2008 economic crisis, Africa was registering a decent average five per cent annual growth rate, even if this was not as impressive as that registered by the BRIC countries. A significant part of this growth (33 per cent) was due to the boom in commodity and food markets.
China has become a major economic player in the continent and absorbs almost 40 per cent of all minerals exported from Africa. The emerging Asian superpower donates billions of euros in assistance to African countries to pave the way for its enterprises to secure contracts for mining and infrastructural projects.
Malta is part of the EU and is busy reviving its ties with China. Perhaps Africa is the missing leg of the tripod
In 2010, China replaced the UK as the biggest source of foreign direct investment (FDI) in Africa. A big part of FDI in Africa goes to the five top recipient countries and is channelled into mining, construction, transport and telecommunications.
There are signs that Africa is finally waking up to the fast technological developments that have been shaping the rest of the world. The way of doing business, especially in banking, agriculture and healthcare, is being revolutionised by mobile telephony.
This technology is facilitating communication even with remote areas, providing critical information and helping to lower operational costs.
Africa remains unduly dependent on minerals and a narrow range of agricultural products for its exports. Its manufacturing capacity is weak and financial services are underdeveloped. Its technology absorption is limited and innovation is practically non-existent.
The level of savings is low and, unfortunately, a significant part of commodity money and overseas aid goes to line the pockets of corrupt political elites. This results in a lack of money to finance investments by both the public and private sectors.
Also, as the Tunisian experience shows, ‘jobless growth’ can become a serious threat to developing economies that achieve a degree of economic growth but still fail to create jobs.
Even if the wealth being created is not properly distributed (the number of African millionaires is on the rise) enough money should trickle down to the masses to guarantee an acceptable level of socio-political stability.
One in two Africans lives on less than €1 a day and most countries will miss out on the Millennium Development Goal to reduce poverty by half. In an ideal world, Africa’s new wealth should be invested in education, health and housing, putting in place the foundations for sustainable economic development.
Climate change is potentially another time bomb. Too many African countries remain highly vulnerable to drought, floods and other severe weather conditions, which can wipe out their agriculture and fishery industries. The World Bank estimates that natural calamities will cost African states anything between five and 10 per cent of their GDP in the next 40 years.
Africa has the potential to take off economically if it gets its act right. World population is expected to increase to nine billion by 2050 and an adequate supply of food can become a serious test for humanity. One way to overcome this challenge is by Africa making use of the immense arable land available to become a major supplier of food.
Such a development could possibly lead to a changed international division of labour with Europe and North America specialising in knowledge, Asia in manufacturing and Africa in agriculture.
How the benefits derived from such a division of labour will be shared between continents will have to be determined, given that up to now exporters of food and commodities have not got a fair deal.
The impact of such an emerging scenario on Malta is still to be understood. As a small country, we are dependent on imports for food as well as most manufactured products.
Our vocation is to serve as a broker between these continental powerhouses. Our country is part of the EU and is busy reviving its ties with China.Perhaps Africa is the missing leg of the tripod.
fms18@onvol.net