Kathy Gibson reports from the World Economic Forum on Africa in Durban – Between them, South Africa and Nigeria account for 60% of sub-Saharan Africa’s GDP. As the continent’s most industrialised countries, they need to grow a lot quicker if Africa as a whole is going to succeed.
“Africa needs to get its act together,” says Kuseni Douglas Dlamini, chairman of Massmart Holdings in South Africa. “The starting point is for Nigeria and South Africa to turn around. If they don’t, the chances for Africa are poor.”
Dlamini believes that a reliance on the global economy, and particularly on commodity markets, was at least partly responsible for the poor growth of the two countries over the last couple of years.
“We also need to ask if we have been responsive enough in terms of inclusive growth,” he says. “We need to think beyond short-term strategies to medium- and long-term strategies that can underpin the economies of Nigeria and South Africa.
“I argue that we have not done the right things at the right time to lay the foundations for sustained growth and development.
“We need to learn lessons from the opportunities we have missed.”
Haruki Hayashi, executive vice-president and regional CEO Europe and Africa of Mitsubishi in the UK, believes the two countries have the potential to lead the continent and become role models of other African countries.
“They can also become healthy competitors on the continent.”
Part of growing their economies, Hayashi says Nigeria and South Africa should look to extending intra-African trade, supported by local and regional production capcity.
“What we need is for government to commit to policies, governance, long-term prospects, less corruption, regional integration and education.
“These two nations can lead the continent.”
Danladi Verheijen, co-founder and CEO of Virod Capital Management in Nigeria, thinks there are signs of an upturn in the Nigerian economy.
“GDP is going to be positive this year, from negative last year,” he says. “Agriculture is growing, the foreign exchange markets are liberalising.
“The government’s growth and recovery plan has been well received. And I believe politically there is more cohesion than in the past, and there is a strong economic team working on moving the country forward.”
Geoffrey Qhena, CEO of the Industrial Development Corporation, also believes the economic downturns in Nigeria and South Africa was largely as result of dependence on the global economy. “When those economies slowed we were also affected.”
He adds that South Africa has always had great policies, but the implementation of these policies has been flawed.
“We have the plans, but implementation has failed. We need predictability, to stick to the plan. When times are tough, we need to make the tough decisions.”
Other mistakes have been poor intra-African trade, as well as a lack of infrastructure investment.
“Plans fail because we don’t have co-ordinated implementation mechanisms,” Dlamini says. “We need to ensure that all players are mobilised to engage.”
Going forward, he urges business and political leaders in South Africa to look beyond the investment downgrade and focus on an investment-grade recovery plan.
“We have a lot of examples of countries that have been through this. We need to benchmark ourselves and look at international best practice experiences.”
Part of this recovery will come from policy certainty, he adds. “But there is stability in the country. Yes, there will be political noise for the next 18 months, but we do have strong institutions.
“We should be able to pull ourselves back to investment grade.”
On a practical level, Dlamini urges business and government leaders to read the reports put out by the ratings agencies. “They do spell out why they made their downgrade decisions.
“So we need to develop responsive actions to address those issues.
“We also need to show visible leadership at a national level, to demonstrate that we are committed to doing the right things on a sustainable basis.”
Local investors also have a big role to play in promoting in-country activity.
“There are mistakes that have been committed, and we need to be very serious about with it takes to correct those mistakes.”
The trust deficit that has grown between business and government cannot be discounted, Dlamini adds. “But I get the sense that people are willing to re-engage and reconnect/
“I think leaders want to do the right things to get us back to investment grade.”