Lopes:Terrorism conflicts cost 22 African countries over 80b dollars annually
Managing Diversity Is Number One African Problem
The United Nations under-secretary general and executive director of the Economic Commission for Africa (ECA), Mr. Carlos Lopes, in this interview with KAMAL TAYO OROPO, during the African Development Week, held in Addis Ababa, Ethiopia, explains how terrorism cost the continent over 80 billion dollars annually.
The continent has been battling with serious economic challenges; how would you describe the journey so far since your appointment?
WELL, I guess the first important step was to instill the sprit of pride by changing the narrative. African has not been shortchanged because nothing was done about its fortunes, but because of the risk perception that has influenced investments and reducing the mystery about the way financial flows are being managed. The fact that the trade negotiation do not take into consideration certain interest; so they are many fronts. And then, we have anticipated that one way that we can really change this reality is by being much more forceful on the narrative. But then narrative it self cannot be invented, it has to be grounded on facts and statistics. That is why I give so much importance to statistics and during African Development Week, the ECA launched the country profiles of states in Africa, which is the ECA take on the reality of each country. It will be done once a year with and with update done every quarter. So people who want a different perspective about what is going on in each African country can turn to an alternative source of information that is credible, that is grounded and has good research and also good statistics.
Specifically on Nigeria, what’s your take on the current effort by the government to breath new economic life into the country despite challenges?
I definitely believe that Nigeria is a country of the future. Without doubt, what is happening currently with the price of oil affects public expenditure in Nigeria tremendously, and of course, public expenditure has affected the economic narratives of the country.
Public expenditure in Nigeria is almost completely dependent on oil; it’s like an addiction. But that is not all the economic activity in Nigeria. This is not the sector that will grow Nigeria’s economy. Yes, we can say oil is still important to Nigeria, but oil is not the future of Nigeria. The future lies in the diversification of the economy, which gladly, is already happening.
There is no doubt that global partnerships can provide the impetus for tackling the key socio economic challenges currently facing Africa. Global partnerships can work for Africa if they are aligned with the strategic objectives of the continent and buttressed by a unified continental voice. We have the opportunity to model what such a partnership could be.
What do you make of the calls on the government to remove subsidy, devalue the currency and increase taxes?
I do agree that removing subsidy is a good thing, because subsidy affects the poor more than the rich. It is a skewed distribution of income that benefits the rich. But while in principle I support removal of subsidy, things must, however, be done in sequence; you have to sequence it properly. Otherwise, you can have a depressive moment on your hands. The macroeconomic policies must be carefully weighed so that you don’t cause dysfunction in the system and that may stall a lot of things from happening.
Devaluation of the currency is very tricky business. But more important is the way you exercise your financial control, to making sure that you don’t let your currency to fluctuate to the point of you losing track of the reality of what the market is; otherwise, you would lose the bases of your macro-economic policies.
Talking of data and statistics, over the past couple of years, Africa has been posting impressive growth rate. But some have argued that the growth is non-inclusive and that these figures don’t tally with the reality of the people as far as poverty level is concerned. Is there a disconnect?
There is no real problem of perception in this respect, I think what people have to realise is that not much has been done to disseminate the news about the demographic profile of Africa. So, we have the idea of how the populations are growing, but we do not have the idea of how fast. It is so fast that whenever you create the number of jobs or wealth, it is consumed by the growth of the population. So if people tell you that the number of poor are still the same, they are right, but what is not complete in that picture is that the number of people also that have become richer is bigger; because you have both. You have a lot of Africans that are getting out of poverty, that are joining the middle class, you have number of developments that show the purchasing power of the continent is growing, but you also have the reality the that population is growing so fast and the number of poor is not diminishing.
In addition to diversifying their economies, what else can African country primary producers do to mitigate against external shocks and low commodity pricing?
We call it structural transformation, which is best defined as the need for us to move from low productivity to high productivity, which means the structure of our economy has to revolve. And if we take sector by sector, by slices, it is about increasing productivity agriculture and the primary sector, it is about industrialising and about formalising the services boom that we are experiencing in the continent. Services are growing a lot, but a lot of it are informal and precarious. So, if we do these three things, then we are transforming the economy and if we are transforming the economy, then that means we will create jobs and more inclusive development.
But if we don’t industrialise, what will be responsible for most of our growth is what the picture tells us today, which is internal consumption.
The growth is being propelled by internal consumption, which means more people have access to services and goods. More people are travelling, for instance, and more people are buying or building houses. More people are purchasing shopping centers. These are things Africa is seeing booming everywhere. There is increasing number of flats, the number of shopping and cars. You just go to any city in Africa and you will see that the number of cars are just increasing exponentially. But is it sustainable? It is not sustainable, because this internal consumption is generated, thanks partly to exports, which are all commodity based without transformation. Second is internal savings that do not go through the formal system, which means people do not pay taxes, the infrastructure is poor and it is a disaster and so on; in terms of sustainability of the economic activity, it is a growth never the less. It is not the growth that we want. In one word what I will like to say is we need growth with quality. This is growth without quality.
Can you put a specific figure on what terrorism and other violent social upheavals cost Africa on annual basis?
Yes. We have actually put a figure to it. Terrorism and other conflicts cost the 22 African countries that are enmeshed in it between two and four percent of their GDP every year, which is enormous, we are talking about something ranging between 80b dollars a year, which is equivalent to what we need for infrastructure in the continent every year –– just to give a comparative. So, how do we explain this phenomenon? Well, it is a very set of complex reasons why this is spreading, and it is no secret that it is not African problems, but world problems. You can have it in Brussels or you can have it in northern Nigeria. It is a global problem. But there are characteristics that are specifically African. One of them is skewed distribution between counties.
Last year we publish a report on managing diversity, which we consider to be the number one problem in the continent.