By:Abdirashid Abdi Jama
Africa’s potential as a growth market for business, military and Economically remains both underestimated and misunderstood as does the potential for business to play a transformative role in solving the continent’s biggest challenge.
Chinese activities in Africa may grab the most headlines, but the reality is that the region is receiving more attention from its traditional partners as well as new entrants. From trade to security cooperation to diplomatic presence, the international community is strengthening its ties to Africa.
Between 2010 and 2017, more than 65 countries increased their overall trade with sub-Saharan Africa. For instance, India in 2016 became the region’s second-largest trading partner. Russia and several Eastern European countries, including Bulgaria and Serbia, have doubled their trade with African counterparts. In addition to China, East Asian countries such as Indonesia and Thailand have considerably increased their trade with the region.
In the past eight years, China and Japan have opened military bases in Djibouti; Turkey established a presence in Somalia; the United Arab Emirates (UAE) placed troops in Eritrea and Somaliland, and India acquired land in Seychelles to develop a naval base. Meanwhile, Russia has increased its defence support and arms sales to Angola, the Central African Republic, Nigeria, and Uganda. And international involvement in the continent’s stability is an ongoing affair. The European Union deployed a training mission to Mali in 2013 and one to the Central African Republic in 2015. A multinational combined joint task force, established in 2009, works with the European Union’s Operation Atalanta and naval ships from China and India to deter, prevent, and repress acts of piracy off the Horn of Africa.
Business and Opportunities
Africa’s fast-growing population and markets present important opportunities for business in an environment of slowing global growth. At the same time, greater innovation and investment from the business is essential to meet Africa’s unfulfilled demand for goods and services, close the gaps in its infrastructure, create jobs, and decrease poverty.
In addition, foreign governments view sub-Saharan Africa as an outlet for some of its excess capacity. One of the many reasons why China is ramping up its engagement in Africa is because Beijing has to export its manufacturing and infrastructure sectors. China is looking to move manufacturing chains to lower-wage locations. It has established Special Economic Zones (SEZs) in Ethiopia and other countries for this purpose. China, however, is not the only foreign country to favor this arrangement. a Singaporean company, is operating an SEZ in Gabon,and India signed a deal in Mauritius, which has subsequently been contested in court.
One of the most alluring prizes is Africa’s telecommunication industry. According to a recent report by the GSMA trade association, the region’s subscriber base was 444 million in 2017 and is poised to increase at a rate that is more than double the global growth rate through 2022. This tantalizing opportunity has drawn in European and Chinese companies, as well as smaller state-owned telecommunication companies from around the world; Vietnam’s Viettel, for instance, has bought stakes in companies based in Burundi, Cameroon, Mozambique, and Tanzania. Foreign investors are especially excited by Ethiopia’s pending sale of its state-owned telecommunication company. With more than 60 million mobile and fixed-lined subscribers, wireless operators are eager to gain access to this market.
This uptick in engagement represents a sea change in Africa’s foreign relations. While many of these countries including China and the Gulf States have been involved in the region for decades, the sheer number of countries and the significant influx of resources has reshaped the landscape. Rather than rely exclusively on the United States and former colonial powers, Africans are crisscrossing the globe to ink deals with foreign governments. This is an enticing opportunity for African governments to diversify partnerships and use this interest to accelerate the region’s economic growth. Examples of these partnerships include the UAE’s port operator DP World signed a deal to build a logistic hub outside of the Malian capital to handle some four million tons of cargo annually. DP world is also present in Senegal, Somalia/Somaliland, South Africa, and, until recently, Djibouti.
Africa’s new partners are assisting humanitarian responses and deploying troops and trainers to tackle security challenges, elevating them as influential players in an arena that used to be primarily the purview of the West and the UN. This development provides African states with an array of choices for partnerships and sets the stage for collaboration for a diverse set of stakeholders. Islamic countries contributed nearly 30 percent of the aid during the Somali famine in 2011-2012. Many of these countries later broadened their support to include training for security services and direct budgetary support to the Somali federal Seizing on this engagement, then Prime Minister David Cameron in February 2012 invited representatives from over 40 governments, multilateral organizations, Somaliland and Somali authorities to London to commit to addressing Somalia’s enduring challenges.
Introducing New Challenges
While the benefits are clear, sub-Saharan Africa’s integration presents some significant challenges. If this new dynamic is poorly managed, it could derail the region’s progress and entangle it in international disputes.
Look at what is happening in the Horn of Africa. The split between the UAE and Saudi Arabia on one side and Qatar and Turkey on the other has unsettled this part of Africa and threatens to unravel some of Somalia’s hard-earned progress. President Mohammed Abdullahi Mohammed Farmajo of Somalia has refused to choose sides, leading the UAE to disband its military training program for the national army. Even more damaging, the UAE has tried to pit Somalia’s federal member states against the center. Five of Somalia’s federal member states have objected to Farmajo’s handling of the Gulf rift and aligned themselves with Abu Dhabi. It is certain that this sort of dispute will happen again. As more countries invest financial, diplomatic, and military resources into sub-Saharan Africa, the potential for disagreement, disputes, and destabilizing behavior will increase.
Finally the current investment coming into Africa is a once-in-a-lifetime opportunity, but Africa needs to be smart about it in terms of policies, and building the capacity in both the public sector and the private sector.
We need to engage the investors that are coming into the continent, so that both sides benefit and It is a partnership between the investors coming into these African countries and the African countries wanting the benefit for themselves as well.
Abdirashid Abdi Jama
Economist and Diplomacy resident.