Sunday, September 30, 2012



BY JASON KIPKIRWOK, 29 SEPTEMBER 2012 The Star Nairobi "The arc of the moral universe is long, but it bends towards justice," Dr Martin Luther King Junior once said, paraphrasing Theodore Parker, a 19th century church minister. Today, with respect to Africa, we can paraphrase Dr King and say the arc of negative perception has been long, but it is rapidly bending towards positive territory. For decades, the dominant image of Africa has been one of the sick man of the world, badly weighed down by a seemingly intractable burden of ignorance, disease, poverty, war and parasitic leadership. Africa itself was caught up in a psychological lock-in: abysmal human conditions undermined its self-confidence, producing a mass psychology of hopelessness which in turn worsened human conditions. This self-reinforcing negative-feed-back loop was further maintained by repressive leadership at home and a sneering nothing-good-can-come-out-of-Africa attitude abroad. The paradox of one of the most resource-rich continents being also home to the most impoverished people in the world. And yet this image of Africa as incurably hopeless is increasingly being replaced by a more sanguine outlook. And it is happening relatively rapidly. In the May 13 2000 edition of the respected Economist magazine, the cover title was: Africa, the Hopeless Continent. Failure and despair was the running theme in a litany of woe ranging from recurrent floods and famine to brutality, despotism and corruption. Concerning these last three, The Economist explained that "...African societies, for reasons buried in their cultures, seem especially susceptible to them", and concluded authoritatively that, true "Africa's biggest problems stem from its present leaders. But they were created by African society and history." A decade later in the December 3 2011 edition, the same magazine had this cover title: The Hopeful Continent - Africa Rising. What has changed? Before we get into what prompts the likes of The Economist to change its perception, it is important to be clear about one thing: adaptive order does and can emerge out of chaos. It is the norm in nature. Chaos has a dynamism all its own -with adaptive order and creativity often the result. We know this from the study of biological systems as well as the physics of the universe: chaos, order and adaptive creativity co-exist in a constantly shifting equilibrium. The political economy of human societies is no different. If therefore, out of the boiling chaos of ignorance, disease, greed and ethnic competition that is the norm in Africa, a more complex, adaptive dynamic equilibrium emerges; it should neither be surprising nor unusual. What should be of interest is a fuller understanding of the forces that drive adaptive creativity within this chaotic system. In understanding the specifics of the forces at play, two concepts from physics and chemistry are helpful. These are criticality and catalysis. In physics, criticality is the point at which a nuclear reaction is self-sustaining. In chemistry, catalysis is a change - usually an increase - in the rate of a reaction induced by a catalyst. Adaptive, more complex, dynamic equilibrium emerges only when certain elements in the system - induced by catalysts - increase to the criticality point. Is there evidence of catalysis and criticality in Africa today? Whilst it is difficult to be categorical, certain facts are compelling and are beginning to change the narrative. That the continent is home to six of the world's10 fastest-growing economies in the last decade is now a cliché. Perhaps most significant is the fact that growth is widely spread across the continent and encompasses virtually all sectors of the economy. The Eastern Africa Community (EAC) countries have particularly been impressive and are increasingly seen as the tip of the spear in Africa's forward push. All except for Burundi and Kenya (the latter had a three-year run of above 5 % GDP growth rate from 2005 to 2007), grew by rates of above 5 % in the last 10 years. As is the case elsewhere in Africa where growth has been steady, the underlying driver in East Africa's growth surge is relative political stability, improving governance and better economic management. Even though progress has been uneven, the business and governance environment has generally been improving. According to the 2012 Doing Business report by the World Bank, all five EAC economies instituted regulatory reforms in 2011, making it easier to invest and to do business in the region. A lot remains to be done but this modest progress has already contributed to boosting confidence as seen, for example, in increased private equity (PE) investment deals. According to a 2011 PE survey by Deloitte and Africa Assets, a total of 20 PE deals were signed in East Africa representing 30 per cent of the total sub-Saharan deals. Nearly 80 per cent of those surveyed expected PE activity to increase over the coming years. The determination shown by EAC countries to integrate their markets and facilitate factor mobility is also a key dynamic driving business and investment confidence. Whilst major challenges remain, steady progress is being made in creating a single customs territory and a common market with the result that market access has improved and trade and investments grown. Intra-EAC trade grew from $2.2 billion in 2005 to $4.1 billion in 2010. Similarly, the value of trade with the rest of the world doubled from $17.5 billion to $37 billion during the same period - according to the 2012 State of East Africa report published by Society for International Development. Recent oil and gas discoveries in Uganda, Kenya, Tanzania and neighbouring Mozambique - and prospects for more natural resource discoveries - have added fresh impetus to the perception of Eastern Africa as the next hottest growth destination. If changes in the economic and political landscape have been the trigger for a positive shift in perceptions about Africa, it is the nature of demographics that underpin the longer-term outlook. Africa has the fastest-growing and most youthful population in the world. With increasingly literacy rates and an expanding skills-base, Africa's youth bulge represents a potential demographic dividend. Finally, the Diaspora, as a source of skills and resources, constitutes an important driver of catalysis and criticality. According to the World Bank, annual remittance flows to the continent are in excess of $40 billion and are growing at 10-15 per cent year on year. In Kenya alone, Diaspora remittances in 2011 totaled $891 million compared with $642 million in 2010, a 39 per cent increase. Africa is clearly on the move. True, huge challenges still exist and democratic gains remain fragile. But it appears that, finally, the long arch of history is turning in Africa's favour. Soon it may be possible for the world to agree with Pliny the Elder (23 - 79 AD) who said "There is always something new out of Africa."