Africa will continue to grow despite global economic slowdown - experts

Economies across the world are currently in the middle of a slowdown. The slowdown can be traced back to multiple factors including, price commodities and currency fluctuations. Amidst the slowdown, African economies are on a quest to transform their economies and live up to the Africa rising narrative. The New Times’ Collins Mwai, caught up with Sugan Palanee, Ernst and Young’s Markets Leader for Africa and Country Managing Partner for Rwanda, Allan Gichuhi to explain more about the global economic slowdown and Africa’s growth potential among other aspects. Below are the excerpts: How bad has the current global economic slowdown hit Africa? It has hit Africa quite bad, commodity prices, Chinese economy slowdown, European down turn, volatility in currency and national disasters among others. However, despite the economic slowdown, Africa is projected to have the fastest growth rate across the world. A great level of investment will still come to Africa but by and large, the expectations of investors will take a granular and measured approach. As they position their investment, it is about taking a strategic decision on having a long term vision. Whereas the external factors have affected the continent quite significantly, the IMF has predicted that the growth in sub-Saharan Africa will be 3 per cent. We also have some countries that are growing way above that rate one of them being Rwanda. If you look at the trend in the last five to ten years, Rwanda has been growing at above 6 per cent. That is very encouraging. The reason for this is the diversification of the economies and less reliance on one sector. In Rwanda we have diversification in financial sector, services sector and tourism among others.The future for Africa and East Africa is good and a lot will be shaped by integration. It is 2016 and a recent report showed that over 600 million Africans are still without access to power. Being analysts in studying markets, opportunities and solutions, what should be the right approach forward? The immediate remedy should be policy evolution; policies are not consistent with working together with the private sector. Government and private sector need to come together and work with consensus. We as an organization often talk about shared values, the only way government can achieve certain objectives is by working with the private sector. There is a significant gap in the level of trust between government and private sector, which needs to be overcome. There is a lot of money available for investments from sources such as private equity, governments across the continent need to open the door for partnership. We also need to work on our skills base, in the sector. We should look at alternative ways to generate power for instance such as solar and wind. These are ways we can easily harness to reduce the energy deficit. Regional integration can help in the sense that countries with surplus can sell to those with deficit. Proper integration will connect grids. In readiness for the social economic transformation that African stakeholders mention at every gathering, where do we need to fill gaps? As we talk about the fourth industrial revolution, there has to be a link with education. We have to ensure that our education is as per our industrial needs. Our education systems require revolutionalising to move towards the needs of the future. We have a lot of children out of school and some of our curriculum is also outdated. Then there is the issue of governance. Good governance is key in the development and in ensuring policies that attract and retain the business community. Beyond verbal statements, is it a realistic objective to leapfrog to the 4th industrial revolution as if the previous ones never left us behind? There is not much we can do about the past, its not even the future that matters, it is the present. This is dealing with issues that we deal with on a day to day basis. Regional integration is the key to many of the issues we as a continent are currently dealing with. In excess of countries, we are heavily fragmented, we are vast expanse. The only way to manage a vast expanse with a very decentralized continent, is by integrating sections of it. Collaboration between African countries is key for the continent’s overall progress. Small scale entrepreneurs create more jobs than corporations. It is time to look at how are we going to improve the environment for them? It is time to look at the regulatory and financial constraints that are holding them back. Countries also need to start investing in infrastructure. Investments in infrastructure can overcome a significant amount of challenges. This is the way to the end game of having a bloc of over a billion people having access to basic amenities and technology. We ought to start with baby steps before we can talk of leapfrogging. SMEs need to be facilitated to look beyond production of their own domestic markets, we ought to look at foreign markets both within the region and beyond. As things stand, it’s not as easy for SMEs in most countries to access international markets due to challenges of infrastructure policies. Speaking of markets, what do reports and analysis from your organization indicate about intra-regional trade? As a continent, we do not have a choice other than working together. This should not be only in terms of trade among corporations, but our SMEs as well. For this to happen, our products and services also need to be competitive. There are various factors that have held back the competitiveness of African products other than quality. There is the issue of cost. That touches on aspects like infrastructure. When the mode of transport is very expensive, it is in turn reflected on the cost of products. Tariff and non-tariff barriers also need to be addressed to facilitate intraregional trade. All these coupled with a change in mindset of African buyers and sellers are key for intraregional trade. We need to have it in use to consider products and services from the continent before going to overseas markets. The erratic nature of our currencies exchange rate show that it is much cheaper to consider our alternative sources of products and services before going to overseas markets. Gichuhi speaks during the interview with The New Times. (Timothy Kisambira) According to our African attractiveness survey, intra-African trade has significantly increased due to efforts of Kenya. Previously South Africa did the most but now there is another country. This is because of the value of their products and their competitiveness in the international markets. This shows that we should stop trading with commodities and add value to our exports. We need to venture in manufacturing and processing of our outputs. This will increase the value of our products. Civil society have been quiet about alarming levels on inequality, both gender and income. Do your analysis and surveys show the same and what’s the way forward? The issue of diversity and inclusiveness are closely interlinked. In Africa, agriculture on a small scale basis is mostly done by women. These alone shows why we should address issues of gender equality as the two gender have a role in development. We also make a mistake thinking that the low income citizens are looking for free things. No they are not, they are looking for reliability and affordability. One of the ways of addressing it is by education. We ought to ensure that there is access to quality education for all citizens. Speaking of education, what should be the greatest focus, more university graduates or more technical vocational trained personnel? We have stuck with the colonial methods and forms of education. We are not preparing learners who come out of school for the business or practical world. They have become very academic. Right now, what does an emerging economy need? Vocational training. By and large on a country by country basis, vocational training is a critical success factor. If you look at the trend in a number of African countries, there is a trend of converting vocational training centres into universities which leads to producing graduates with inadequate skills for the market. It became sort of fashionable to have a degree. We should also tap into the available technologies to rollout education to schools across the continent. We can leverage on digital technologies to transform our education systems. Africa has energy deficit challenges, food insecurity, inadequate education and healthcare systems among other issues. Is the theme for the just concluded WEF relevant? I think it is. If you look at agriculture, why are we not able to feed ourselves? It is partly because the yields per hectare across the continent is lower compared to other parts of the world. Technologies will help us improve our productivity and outputs. Issues of deficit in energy, we require the latest technologies and creativity to meet the challenges. The same case applies to the financial services sector among others. Technology is at the centre of most of what we aim to accomplish. In embracing technology to solve our challenges, what sectors should we accord the top priority considering cost and impact? Agriculture is our backbone, can we start from there? Small scale and medium enterprises should also be among our priorities in the revolution. We should also work on public private partnerships and the levels of mistrust that exist currently. infrastructure development and regional integration should also be among our top priorities if we are to improve the competitiveness of our region. What are your thoughts on the recent World Economic Forum for Africa? The conversations are not dissimilar to what we have had in the past. My biggest challenge is how do we operationalise what comes out of the brain stress. One of the best ways to do this is to put some key performance indicators prior to the next WEF. This will ensure everyone delivers. editorial@newtimes.co.rw

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Africa will continue to grow despite global economic slowdown - experts