Web Chat: The World Economic Forum on Africa

Tanzania is hosting the 20th World Economic Forum on Africa, marking the first time the conference has been held in East Africa. For three days, May 5 through 7, African and global leaders will discuss key economic issues facing the continent—especially how African nations are cooperating with other countries and what Africa’s future role will be in the global economy.

On May 5, Mwangi Kimenyi previewed the forum and addressed Africa’s issues of economic growth, development and progress in a live web chat. POLITICO’s Seung Min Kim, assistant editor, moderated the discussion.

The transcript of this chat follows.

12:32 Seung Min Kim: Good afternoon, everyone. This afternoon, we’ll be chatting with Brookings expert Mwangi Kimenyi on the 20th World Economic Forum on Africa, the first time the conference is being held in East Africa. We’ll talk about the issues of economic growth, development and progress. Thank you, Mr. Kimenyi.

12:32 [Comment From Laurie: ] What is the most significant barrier inhibiting Africa’s development that the WEF should address? And how can it be overcome?

12:34 Mwangi Kimenyi: Some of the most daunting developmental challenges that Africa continues to face include low levels of human capital—primarily education and health—compounded by the HIV/AIDS pandemic and high prevalence of malaria; institutional weaknesses especially as it pertains to governance and stability, low levels of productivity in agriculture where most of the population lives, and the high costs of doing business on the continent that make firms uncompetitive.

Probably the most important issue the WEF should seek actionable strategies on is improving African competitiveness in both agriculture and industry. For Africa to achieve sustained economic development, the key is structural transformation of her economies. This requires strategies to increase investments in infrastructure and technology.

WEF can galvanize support from governments and businesses to support investments in Africa. WEF is well-positioned to mobilize financing development in a sustainable way for example through public-private partnerships.

12:34 [Comment From Efon: ] What is being done to increase foreign direct investment in the African continent by the current Obama adminstration? Because I assume that as with other previous U.S administrations, African has been pushed to the back of all policy initiatives.

12:35 Mwangi Kimenyi: Foreign direct investment is an important factor in the economic growth process. Africa receives a tiny fraction of world FDI flows. The reason for this is primarily because of perceived risk—real and imagined — of weak governance and an especially poor investment climate. There are however major reforms in Africa on all these aspects that are bearing fruit. Fighting corruption, establishing stable governments and investing in infrastructure are all key. However, we still need to do more which is why the issues that are being discussed that the WEF are crucial.

12:36 [Comment From Irving Rosenthal: ] Even friends of Africa have been concerned over the years that inefficient and corrupt African government officials have made it difficult for economic development to take place. This is such a deep and cultural problem that it is difficult for non-Africans to seriously raise it in public. Can African leaders discuss this issue among themselves?

12:37 Mwangi Kimenyi: Corruption is indeed a major constraint in Africa. I would not say it is cultural at all—it’s the result of weak institutions just as would arise in any such situation. But in fact, Africans are talking about corruption—politicians and civil society alike. We have seen major improvements but we still have a long way to go.

12:37 [Comment From Efon: ] First, why is it that topics that deal with the development of Africa are always, most often, patronized by people who have no direct stake, real life experience and first hand understanding of African development challenges and why are young African scholars being left out of the development process?

12:38 Mwangi Kimenyi: Good point. There are many individuals and institutions that claim expertise on African issues but do not really understand the issues. Some of the policy prescriptions by such individuals often propose rather unrealistic policies. Here at Brookings, the African Growth Initiative is different—African scholars who have lived in Africa, conducted research and also been involved in policy making articulate the African voice and engage the international community on African issues from informed and experienced positions. Africans must be involved in analysis of policy issues that impact on the continent.

12:39 [Comment From Shawn: ] What role do you see Africa playing in the global economy as we emerge from the economic crisis?

12:40 Mwangi Kimenyi: Africa has weathered the crisis much better than many other countries and in fact better than many would have expected. This is partly because of the limited exposure but more so because this time there has been marked improvements in the economic governance, and also because of the rebounding of the commodity prices.

Moving ahead, Africa must continue to play a more central role in the international community. First, Africa must be involved in the design of the international financial infrastructure and should be more involved in the G20 process.

Africa must also improve her share of international trade and this must not be just primary commodities such as crude oil, etc. Africa must be more engaged in trade in services and also manufactures.

But, and critically so, Africa must also focus on improving the intra-Africa trade which remains far below its potential.

12:40 [Comment From Kevin J Kelley: ] Are you disappointed by the Obama administration’s Africa policy? Do you think the U.S. has done enough in the past 16 months to promote economic development in Africa? Isn’t it focused on crises — Sudan, Nigeria, Somalia — with little attention to development strategy? There has been no initiative similar to Clinton’s AGOA or Bush’s Millennium Challenge Account, for example.

12:41 Mwangi Kimenyi: No. I am not disappointed by President Obama in as far as African policy is concerned. The President has been dealing with major domestic and international issues—and has done very well at that. The administration has as yet not articulated a coherent African policy such as the AGOA but I am hopeful that this will happen. On other issues, the administration has shown good will. But Africans also know there is not much Obama can do and they are responsible for their destiny.

12:41 [Comment From Kristen: ] How surprising is it that the conference is in Tanzania this year?

12:43 Mwangi Kimenyi: Tanzania has made major progress on various fronts–especially on governance and institution policies that are conducive to markets. so I am not surprised and i think it is appropriate given the progress.

12:43 [Comment From Alex: ] Is it likely that any tangible results will come from the Forum?

12:44 Mwangi Kimenyi: No doubt many good ideas will be discussed in this forum. But the success of the Forum should be measured not by the statements about what must be done but actual commitments to action. I would hope that WEF will propose clear actions backed by commitment by countries, businesses and civil society to implement the strategies—including financing. Most important of course is the commitment by the Africans themselves who are ultimately responsible for their destiny.

12:44 [Comment From Fred: ] Africa has surprised many with its resilience and faster than expected recovery, but what do you see as the major challenges to social and economic progress in Africa?

12:45 Mwangi Kimenyi: Africa continues to face major social and economic challenges including low levels of human capital, weak institutions of governance and low-levels of competitiveness. HIV/AIDS continue to wreck havoc, significantly costing Africa much in terms of human development. A major challenge is the fact that the continent suffers a huge infrastructure deficit. Africa is also facing the serious challenges associated with environmental degradation. Of concern also is increasing vertical and horizontal inequalities. For many countries, uniting different ethnic and religious groups remain a daunting challenge.

12:45 [Comment From Marie: ] What are the leaders at the WEF going to discuss?

12:48 Mwangi Kimenyi: The WEF is to discuss a host of issues–mainly the African developmental challenges and alternative strategies. Key issues include the human capital investments, foreign investments, leadership and governance, and technology and infrastructure investments. Some specific sectors that WEF will focus on are agriculture and investment climate.

12:48 [Comment From Carly: ] I’m really hoping that education will be a key topic at the forum, as the future of Africa really does lie in its children. What do you think about this?

12:50 Mwangi Kimenyi: I totally agree with you on this point. Education is key to the development of Africa. African governments have made very good progress in investing in primary eduction but I think that they have not done as well in terms of quality and this should be a focus. The other key area is higher education. I am very disappointed by the neglect of higher education.

12:50 [Comment From Rebecca: ] What are some of the key issues underpinning Africa’s growth strategy?

12:52 Mwangi Kimenyi: Key to Africa’s growth strategy is structural transformation of her economies. Today, most Africans are engaged in traditional agriculture which is characterized by extremely low levels of productivity. Many African economies are also heavily dependent on primary commodities and which are not sustainable and offer limited employment opportunities.

Transforming African agriculture is therefore at the core of sustainable growth strategy. The other aspect of the transformation is shift to manufacturing. Economic transformation must move in tandem with institutional transformation—improved governance, peaceful co-existence of communities and predictable rules that maximize participation in markets. Of course, sound macroeconomic management is core to any growth strategy.

12:52 [Comment From Warren: ] Do you think Africa is fairly represented in global relations, particularly in institutions like the World Bank or UN?

12:54 Mwangi Kimenyi: Aha! No I do not think so. There are many very good scholars and policy makers who could better represent the African position in this institutions. however, I must acknowledge that there has been consistent improvement over time.

12:54 [Comment From Nicole: ] A question was posed earlier about FDI. Overwhelmingly, however, FDI follows, rather than precedes, domestic investment. What can the WEF do to support African investment in Africa?

12:56 Mwangi Kimenyi: Very good point. I have always told African governments that they should never waste time talking about attracting foreign investment if they are not encouraging domestic investment. All you need is to make the investment climate good for the local investors and the foreign investors will follow. Can you imagine any other country that seeks to improve the environment for others? It just does not add up.

12:57 [Comment From Patrick: ] What can you say about former President Bush’s legacy in Africa?

12:59 Mwangi Kimenyi: President Bush (II) did a great deal for Africa. in fact, I am sometimes surprised by some who say that he neglected Africa. But in fact his administration did a lot in supporting development in Africa–fighting HIV/AIDS, malaria and the Millennium Challenge. I have a very positive view. Of course there are some other areas that did not go as well.

12:59 [Comment From Joseph: ] What can you say about relations between China and Africa? Are there any major concerns on that topic? And will this be a discussion point at the forum this week?

1:03 Mwangi Kimenyi: China has “invaded” Africa in a big way. The country is making major investments in business and natural resource exploitation. China is also supporting Africa’s development especially in building infrastructure. This is all good. However, there are also many concerns–including environmental degradation, transparency in the resource contracts, etc. Africans should therefore be strategic in dealing with China so that the gains outweigh the costs.

1:03 [Comment From James: ] It seems like Africa is perpetually unstable. Is there any hope for consistency or stability in the next few years?

1:06 Mwangi Kimenyi: I do not agree with you that Africa is always unstable. Yes, we do experience problems of instability and this is true for some countries even now. But Africa has made progress and the focus now is on building strong democracies that are accountable to the people. Crucial are institutions for harmonizing ethnic and other claims. We are making progress.

1:06 [Comment From Wei Wei: ] What role do remittance flows play in growth?

1:07 Mwangi Kimenyi: Remittances are a very important source of financing development. In some countries, remittances are more than FDI flows and tourist receipts.

1:07 [Comment From Emily: ] Will there be any kind of focus on the state of Somalia, the status of the government and efforts to curb piracy?

1:09 Mwangi Kimenyi: Somalia presents many challenges–both to Africa and to the international community. My view on this is that the world has tended to under-estimate the damage that this country can do. I believe a broader international effort–probably coordinated by the UN is the best way to go.

1:09 [Comment From Sally: ] Returning to the question of education, how is Africa doing on improving the educational prospects of young girls? And how can developed countries help?

1:12 Mwangi Kimenyi: Education for girls is very important to development. We know that investing in girls’ education associates with better health outcomes for children and is critical to achieving demographic transition and associated dividends. There are now serious efforts to make sure that gender parity in education is achieved but we are not there yet. I think support from the international community remains crucial but African governments must take the lead.

1:12 [Comment From Tom Tom: ] I hate to pose this question, but why should Americans care about what happens in Africa? In other words, how do we make an argument that it’s in our interest to do more?

1:15 Mwangi Kimenyi: Every person in the civilized world should care about other countries. It does not matter whether it is a poor or a rich country. The world is interconnected and we all must care about other countries. This is a globalized world and we are all connected.

Beyond that, Americans have many interests in Africa and it is in the best interest of America–security wise and beyond–to support Africa’s development. It’s simple–there are mutual gains from interactions.

1:15 [Comment From Brian: ] When analyzing economic and political issues, it seems odd to me to talk about “Africa” as one whole. Each country on the continent has its own financial and political situation – isn’t it difficult to generalize so much?

1:19 Mwangi Kimenyi: I agree that Africa is diverse. Northern Africa is for example quite different in many respects–including in terms of culture. However, Sub-Saharan African countries share many commonalities and it is difficult to deal with many of the problems at the country level but instead require a regional or continental approach. We Africans seek to build more united nations. So, yes, it is appropriate to talk about Africa.

1:19 [Comment From Bill in Va.: ] Does celebrity involvement from people like Bono, Oprah and Angelina Jolie really do a lot to spur needed change in African countries, or are they just preening for the camera?

1:21 Mwangi Kimenyi: It is good to have the involvement of celebrities as they highlight problems in the continent. But what we want more are business leaders and investors who can work with African partners to improve on the production.

1:21 [Comment From Nicole: ] Africa is rich in natural resources, yet these have more often than not been sources of conflict and instability, rather than economic gain. How can Africa turn its resources, particularly it mineral resources, into assets, rather than liabilities?

1:25 Mwangi Kimenyi: True. Africa has been a victim of what we refer to as the natural resource curse. In fact it is the case that some of the countries with the lowest levels of human development are also the richest in terms of natural resource endowments. But this is changing. Actually, a focus of the African Growth Initiative at Brookings is precisely this issue. There are of course many initiatives that have been instituted to deal with this problem. Our focus is on how best to use the natural resources revenues to transform African economies while also thinking about the future generations.

1:25 [Comment From Michael: ] Do you think Africa can learn any lessons or take any cues from Latin American countries? I’m also wondering what relations between countries in these two regions are like. Are there any particularly strong ties?

1:27 Mwangi Kimenyi: Latin America offers lessons–both bad and good. Although Africans tend to look more often at the East Asian experiences, there are lessons that can be learned from Latin America. In fact, some of the work that we are doing is seeking to look at the transformation experiences of such countries.

1:27 [Comment From Jim Kennedy: ] What do you see as the future role of solar energy development in providing electrical power for development, especially in the sub-Sahara and Sahel areas of Africa?

1:28 Mwangi Kimenyi: There is real potential in exploiting these alternative sources of energy and they offer potentially lucrative investment opportunities.

1:31 Seung Min Kim: That’s about all the time we have for today. Thanks everyone for your questions!