A changed Africa still needs our help to grow
By Nicholas Stern
Five years ago, the Commission for Africa argued that supporting the continent’s quest for growth and development was not only a moral imperative but also enlightened self-interest. As the finance ministers of the Group of 20 leading nations meet this week, we need to recognise that the futures of the rich world and Africa are ever more closely intertwined.
The Commission was relaunched this month to look at what has changed since it made its recommendations in 2005. On many, such as those on aid and debt, there has been progress. There is a lot less to celebrate on others, global trade reform being an obvious example.
Most of the report’s analysis and recommendations remain valid but a great deal has changed. Much of Af rica has experienced strong economic growth and rising demand for its re sources. Foreign investment and trade have quadrupled since 2003. Growth rates have been damaged by the global crisis but are bouncing back, demonstrating the impact of improvements in economic governance.
What we did not integrate sufficiently into our work were the implications of the scale of growth in China, its demand for Africa’s goods and just how fundamentally that would change the continent’s relationship with the rest of the world. China’s industries are already moving up the value chain and Africa can become a major source of low-cost manufacturing as this change in the international division of labour gathers pace. It will increasingly look east for its markets – China is already its fastest-growing trade partner and has become one of its main donors – providing an estimated $17bn in 2007.
Further, our focus was largely on “traditional” resources such as oil, diamonds and timber. We did not anticipate how strong demand would be for less well known resources, such as coltan and uranium.
Looking back, we should have placed much stronger emphasis on climate change and the environment. Africa has played a negligible role in the accumulation of greenhouse gases in the atmosphere, and its per capita emissions are still far below those of rich countries and most emerging economies. However, climate change is a massive threat to its future growth, development and stability. Some deserts will continue to grow, placing pressure on resources and forcing populations to move elsewhere. African cities – already expanding too rapidly for them to cope – will grow even faster. All this change threatens to undermine pro gress towards peace and security, as it has done already in Darfur. That matters to Africa first and foremost, but conflict and failed states affect us all.
The Africa Progress Panel, a Geneva-based forum that monitors implementation of development commitments, estimates the continent will need up to $20bn more per year in the next few years to adapt to climate change, on top of previous estimates to meet the UN millennium development goals by 2015. We urgently need to come up with ideas on how to finance that need – which is what the high-level advisory group on climate finance (of which I am a member), set up by UN secretary-general Ban Ki-moon, is working to do.
At the same time, the continent has the potential to generate clean, renewable energy, which will be vital in our collective battle against climate change. It has leapfrogged older technologies in its take-up of mobile phone technology. If it can leapfrog in the use of clean technology – harnessing its resources for hydro and solar power – it can, in coming decades, play a leading role in cutting global emissions. By exporting electricity, it could also achieve greater added value from its resources to support economic development.
Investing in Africa is in our common interest now as much as it was five years ago. Economic crises in the rich world, the rise of emerging economies such as India and China, and a focus on climate change may have directed attention from the continent’s great potential and its crucial role in the world. Africa’s importance to the rest of us is, however, as strong as ever, and its potential for growth and development is increasingly clear and tangible. Now is the time to renew our commitment.
Lord Stern is I.G. Patel professor of economics and government at the London School of Economics and chair of the Grantham Research Institute on Climate Change and the Environment. He was director of policy and research for the Commission for Africa
This article was first published in the Financial Times on 31 May 2010.