Top businessman’s view on the real reasons for Africa’s economic growth

Perceptions of Africa have undergone a dramatic turnaround in recent years. Because of strong economic growth over the past decade, a continent previously seen as a place of war and poverty is now lauded as one of the world’s hottest investment destinations.

Hakeem Belo-Osagie

Hakeem Belo-Osagie

However, poverty remains rampant and the majority of Africans are seeing few benefits from economic growth. Some commentators are starting to question whether the hype and buzz about Africa is glossing over what is really happening on the ground. Is the continent’s economic progress more complex than the generalised ‘Africa rising’ narrative touted in the media and at investment conferences?

Well-known Nigerian businessman Hakeem Belo-Osagie believes Africa’s current growth and improved image are partly because of two factors – less involvement by African governments in business and fresh foreign investor interest due to the economic troubles in the west.

“I think we are very fortunate that these two things happened at the same time,” Belo-Osagie, chairman of mobile network operator Etisalat Nigeria, told a recent Africa business conference at the University of Cambridge.

Following independence in the period from the 1950s through to the 1970s, many African countries adopted a state-led approach to economic development where the government took “the commanding heights of the economy,” explained Belo-Osagie. State-owned corporations became the engine of growth.

This situation discouraged private sector activity and made it difficult for foreign investors to enter some countries on the continent.

For many people, the public sector or academia were the only viable career options. When Belo-Osagie was at university his goal was to become a university professor and an advisor to the government.

Around the turn of the century, many governments however started to exit their involvement in the economy, paving the way for “private individuals, both local and international, to go in and do things that they could not have done before”.

Together with these new opportunities for the private sector, came the 2008 economic crash in the west that prompted foreign companies to reconsider the potential for business in the fast growing economies of Africa.

“When you have no growth, it forces you to look at markets that you have written off. And now you say, ‘hey, what about Africa?’”

Africa’s demographics of over a billion people with a median age of around 20 years is often said to be one of the main trends that will drive economic growth in the coming years. Belo-Osagie however downplayed the role of demographics in Africa’s recent progress, saying the continent has had favourable demographics for the past 20 years. He said he finds it fascinating that two decades ago the large number of people in a country like Nigeria was described as an over-population problem, whereas today it is seen as an attractive market.

Risks to Africa’s rise

Belo-Osagie noted there has never been a time in recent history that international business has been as enthusiastic about Africa.

However, an “over-enthusiasm without careful analysis” does hold risks for the continent. He said foreign companies making uninformed investment decisions could lead to an “exodus” of investors from Africa if something goes badly wrong in one country.

For Africa’s current growth spurt to continue, Belo-Osagie said governments need to focus on education and put in place incentives to develop infrastructure.

One of the big dangers for Africa is a situation where leading business people influence government policies and decisions for the benefit of themselves and their companies. He said many businesses in Africa currently rely on government-created monopolies.

Governments need to think about public interest and avoid “the transformation of the state to a playground for a group of oligarchs”.