Analysis in brief | More than just economic factors can and do affect a business climate. A compilation and in-depth assessment of major data and indexes gauging African nations’ business performances finds commonalities in the most prosperous countries and offers direction to profitable investment.
Businesses only looking at economic data to judge where in Africa to invest are similar to blinkered horses who only see a fraction of the entire picture. IOA’s 2017 Africa Country Benchmark Report (ACBR) presents the most comprehensive view of the intermingling factors that impact one another in the real, complex world of national growth, like balls careening on a snooker table. Social factors influence business growth, while business performance affects a society’s welfare, with political implications.
Five key business “takeaways” from the 2017 ACBR derive from many factors but all provide important signals for understanding conditions that influence business success in Africa. ACBR does more than list data. Analysis of 34 international indexes and 30 key indicators — nearly 20,000 data points in total — separates transitory developments from the permanent conditions that hinder or boost a country’s business climate.
Here are five important lessons for the business community that emerge from the ACBR’s holistic approach to African data:
Analysis in brief | South Africa (SA) has long endured an unequal trade partnership with China that has significantly impacted its manufacturing sector. China on the other hand has initiated plans to elevate its manufacturing industries over the coming decades by means of implementing innovative technologies to create the smart factory. Given China’s move, SA cannot afford to miss out on this opportunity to follow suit. By adopting industry 4.0 technologies, SA stands to even the playing field with China that has long been overdue.
SA needs to change its current course of trajectory of exporting its natural resources to China in order to create jobs and see its economic growth thrive.
The ‘Made in China 2025’ initiative outlines China’ plan to elevate its manufacturing industry by implementing innovative technologies such as the Internet of Things (IoT), big data, cloud computing, 3D printing and artificial intelligence to create the smart factory.
To prepare SA to compete with the likes of advanced countries, SA businesses intend to invest approximately US$ 459 million annually over the next five years to ready themselves for the impact of the fourth industrial revolution.
South Africa’s manufacturing sector is at risk given China’s monopoly of South Africa’s natural resources
For decades, China has purchased South Africa’s natural resources for its own production industry. This has led to an increase in South African exports, resulting in the commodity boom. China imports South Africa’s primary goods, but sells manufactured products to the global market. China can rapidly produce cheaper manufactured goods, given the country’s larger and cheaper labour workforce. This is one of several factors that has contributed to South Africa’s de-industrialisation and shrinking manufacturing sector, negatively impacting upon the country’s economic growth.
Thuli Madonsela, South Africa’s former Public Protector
By Prof Jo-Ansie van Wyk (1)
During Madonsela’s tenure, she significantly transformed the Office of the Public Protector and led the strategic re-orientation and organisational renewal of her Office with the conclusion of the Office’s seventh Strategic Plan review.
Madonsela also re-organised the Office’s triaging process to improve its efficiency in the handling of caseswhich resulted inan increase in public access to the Office andthe high number of investigative reports initiated by her Office.
In order to maintain the integrity of the Office, no performance bonuses were paid to staff, which in addition to the other changes made, led to animproved overall public trust in the Office.
Founding of the Office of the Public Protector
With the advent of the Constitution of the Republic of South Africa, Act 108 of 1995 (hereafter the Constitution) in 1996 came the creation of “Chapter 9 institutions”. Chapter 9 of South Africa’s post-apartheid Constitution contains the list and mandate of state institutions established to support constitutional democracy in South Africa. These so-called Chapter 9 institutions include the Public Protector (i.e. Ombudsman); the Human Rights Commission; Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities; and more.
According to the Constitution, all Chapter 9 institutions:
Are independent and subject only to the law of the land;
Must be assisted and protected by other organs of state;
Are free from interference by any person or organ of state;
Analysis in brief | Africa’s 17 landlocked countries have built-in geographic disadvantages that contribute to poor performances in economic, social and even political growth. Some landlocked nations have overcome these disadvantages, providing templates for others to follow.
Transhipment of goods through neighbouring countries with sea access has inhibited landlocked countries’ export growth
Botswana and Rwanda have overcome landlocked disadvantages with sound business growth policies
African integration that opens borders and allows free-flowing goods and people will assist landlocked countries’ development
In the real estate industry, property values are famously determined by ‘location, location, location’. Among African countries, nations’ economic prospects and even successful governance can be determined by their geographic locations within the continent, specifically their access to the sea. Africa’s landlocked countries are among the lowest scoring nations in IOA’s 2017 Africa Country Benchmark Report (ACBR) overall and in the four quadrants of business, economics, politics and society.(1) Noting the index’s highest scores belong to island nations like Mauritius and Seychelles or countries with long coastlines like South Africa, Nigeria and the Mediterranean nations, there is a temptation to say that the more a nations’ borders are constituted by water, the more successful that nation becomes in all respects. Of course, there are exceptions. Madagascar, with its political crises and struggling economy, is one. Similarly, Botswana is a landlocked nation that is doing relatively well, while landlocked Rwanda, Uganda, and Zambia score in the upper half of African countries on the ACBR.
Analysis in brief | Africa’s most advanced economies have invested in space programmes, from satellite launches to full-fledged agencies dedicated to putting Africans into orbit.
Nigeria and South Africa have been operating space agencies, and Egypt and Ethiopia have announced their own space programmes
Algeria and Morocco have also launched satellites for military and civilian purposes with assistance from China, the European Union and Russia
Some satellite applications can now be done by drones, requiring cash-strapped African nations to invest cautiously in ever-evolving space technology
Space exploration is seen as a way for Africa to advance its communications agenda, via locally built satellites boosted by homemade rockets from African launching complexes. Space technology has become more universal, evolving from its Cold War origins where the US and Russia vied for strategic advantages and prestige with their space programmes. As part of goodwill programmes, Africans have ridden into space, courtesy of the US and Russia, and African scientists and technicians have trained overseas in space applications. Some mechanical components, used by the East and the West, have been assembled in South Africa and other African states, domesticating this technology and laying the groundwork for Africa’s own space programmes. The effort has been costly and at times cost-inefficient, as the learning curve ascends like the arc of a rocket’s trajectory.
Analysis in brief| Information and communication technology integration into South African higher education teaching makes internet access crucial for students. Government has made progress in pioneering public internet access initiatives, but more must be done to ensure their sustainability.
With higher education institutions integrating ICTs as a means for teaching and sharing of educational resources, internet access is vital for student success. Without it, they face exclusion from opportunities for learning, research and employment.
South Africa’s high data costs mean free public internet access must be made a priority.
Government needs to engage in innovative and sustainable partnerships, if universal internet access is to be achieved for all South Africans.
The face of higher education in South Africa has changed radically. Information and communication technologies (ICTs) have expanded access to information across a myriad of geographic areas. Institutions are investing heavily in ICTs, increasing reliance on online portals for access to vital study information and ‘open’ educational resources. This facilitates ‘’distance learning’’, remotely enabling students to access course material and assignments and allowing students to work during the day and virtually “attend’’ classes afterwards. Internet-based learning also fills a clear need for students in remote areas, providing a platform for student-lecturer interface in spite of geographic limitations. Internships, graduate schemes and scholarship notifications can be posted on educational sites, thus extending access to post-university opportunities across a wider audience.
Analysis in Brief | The global health workforce is in a skills shortage crisis. Distance learning, as applied to clinical disciplines, can upgrade and expand the existing workforce without causing an acute human resource deficit.
The global population is expanding, but skilled healthcare workers are not being produced at a sufficient rate to meet the needs
Technological improvements have rendered the classroom superfluous to knowledge sharing, demonstrating a need for medical schools to commit to distance learning formats
Distance learning offers financial and competence-based training advantages over the current format and can be linked with sustainable development goals (SDG)
In 2014, the World Health Organisation (WHO) released their follow up report A Universal Truth: No Health Without a Workforce to the 2000 and 2006 conference reports on the human resources in healthcare. Detailed in their report was that, as of 2010, there were 9.2 million doctors and 17 million nurses globally. The WHO estimated that, in 2014, there would be a 7.2 million deficit in skilled healthcare workers globally, which would increase to 12.9 million by 2035. How can 26.2 million doctors and nurses effectively execute their mandate of looking after 7.5 billion people?
Analysis in brief | Not just for trade, Africa’s economic communities have restored order to countries in conflict and addressed social issues from education to health, while unifying regions through common transportation and commerce policies. However, as their scores on In On Africa’s ACBR 2017 index shows, not all regional blocs are equal performers.
Determining the economic and military power of any regional bloc is the strength of key constituent nations
While primarily dedicated to the economic growth and security of member states, Africa’s REC member states commit to protocols on social advancement from education to gender equality
Eventually, all regional bodies will be incorporated into the African Economic Community, which is already established and with which RECs have treaty relations
A review of ACBR 2017 findings draws conclusions not only on individual country performances but also on how the trade blocs, or regional economic communities (RECs), of Africa’s five regions are performing, Central, East, North, Southern and West. Each region has its own characteristics, attributes, accomplishments and challenges. Similarly, RECs have unique attributes. The Southern African Customs Union (SACU) is devoted to one agenda: dividing the profits of customs duties among member states of goods imported into the region. The Southern African Development Community (SADC) consists of all SACU members and other regional countries and has a much broader political and social development agenda, similar to the East African Community (EAC) and the Economic Community of West African States (ECOWAS). North Africa is managing its economic growth and security problems without a strong regional organisation guiding their efforts. Central Africa’s under-development and political instability is not mitigated by its body of regional integration, the Central African Monetary Community (CEMAC). While SADC is progressing with economic initiatives and has a strong military component, SADC was West Africa’s regional body that most recently made practical application of its regional military force in the bloodless removal of The Gambia’s dictator, Yahya Jammeh.
Analysis in Brief | Youth unemployment affects South Africa’s economic and social development. Young people need to be innovative in finding employment opportunities. Community service is an effective means to providing relevant workplace experience and improving personal skills to better chances of gaining relevant employment.
In 2016, youth unemployment in South Africa stood at 51%, which ranks 4th globally
Gaining work experience in a competitive job market is difficult for young people who lack experience and practical skills
Community work offers a way for graduates and students to improve their chances of permanent employment, while assisting their community in a positive way
In On Africa (IOA) is currently working to expedite and encourage positive changes in South Africa’s youth sector by focusing on youth unemployment with several companies, organisations and individuals. Voices Unite is IOA’s upcoming initiative that seeks to offer South Africa’s youth a platform to voice their concerns, ideas and experiences and to utilise those insights in informing the way forward. As a preface to this initiative, a pilot study, with more than 1,400 respondents across South Africa, was implemented by IOA and Columinate, a research partner. In this pilot study, respondents were asked to indicate what issues/topics were constantly on their mind: first was crime; second, corruption; and the third important issue to them was unemployment (selected by 65% of youth respondents).
Over the last three decades, nuclear power has faced various challenges toward worldwide implementation. The Three Mile Island, Chernobyl and Fukushima disasters in the 1970s, 80s and 2010s, respectively, have setback the rollout of further plants around the world, from China to the US. At present, South Africa is the only African country to make use of nuclear power as part of its energy mix. The Koeberg Nuclear Power Station in the Western Cape province provides close to 1,900 MW of power to the central grid, accounting for 5% of total power generation in the country, and 95% of energy generation in the Western Cape.
The South African government has, however, made strides toward increasing the share that nuclear power plays in the country’s electricity generation and has set bold targets of adding an additional 9,6 GW of nuclear energy in the next 15 years. The costs of this additional power have been a big challenge, indicates IOA consultant and professor of political science at UNISA, Jo-Ansie van Wyk. “Typically, a nuclear energy expansion plan such as this requires a long-term relationship and not just a once-off delivery once the power station is operational. A third factor is the preferences of the South African population. Civil society has opposed the nuclear expansion plans and government has seen that civil society will question every decision,” she says.
Jo-Ansie van Wyk is a Professor at UNISA’s Department of Political Science and has been a member of the In On Africa (IOA) team since 2008. Her publications and research experience focus on political leadership in Africa, nuclear diplomacy and energy, environmental politics, and international security.
Analysis in brief | Youth unemployment is an international issue. Unemployed youth struggle to access the global job market due to limited experience or requisite vocational skills. Different nations address the youth unemployment crisis using different methods. By adapting and implementing public-private partnership models that have proven successful overseas, resolution of the youth unemployment conundrum on the African continent can be reached.
Public-private partnerships are helping to resolve youth unemployment and are effective in assisting youth seeking employment
Developed and developing countries are turning to public-private partnerships to combat youth unemployment
Many countries offer tax benefits to companies involved, when public-private partnerships are formed and businesses commit to providing internship opportunities for the youth
Youth unemployment is a well-documented and growing concern in South Africa and compounds increasing frustrations with the quality of education in the country. In On Africa (IOA) is currently working with several companies, organisations and individuals on plans to stimulate and facilitate positive changes in South Africa’s youth sector, including a focus on youth unemployment.