Understanding the money value of time

For Africas growth path it is important to recognize that lessons learnt in a particular place and time in history are not automatically transferrable to another part of the world. However, the growth of Africa mirrors to some degree that of Asia over the past 40 years.

The development of the four main Asian Tigers – Hong Kong, Taiwan, Singapore and South Korea – started when the Cold War was in full swing. It was important for the West to support examples of strong free enterprise economies in Asia as a buffer against the influence of communist China and the USSR.

Thousands of low-cost manufacturing jobs, in sectors like clothing and consumer electronics, were exported to these countries by Western firms with the blessing of their governments. This gave them the impetus to start earning foreign currency and developing skills that were appropriate to higher value industries. It also enabled them to develop levels of employment and economic growth that encouraged political stability.

During the same period, Africa acted as the chessboard of the Cold War, with tribal and other divisions nurtured by both the Soviets and Americans in order to wage their ideological battles. Guns, tanks and mines were exported, as opposed to jobs. Since that period ended, the flow of weapons has stemmed and most of the wars on the continent have stopped. Political and economic stability have set in in many parts of the continent for Africas growth path.

Africas growth path tracks that of the Asian Tigers

As with the West and Asia in the 1960s, we in Africa now have our own economic benefactor, China. The world’s second largest economy after the United States is hungry for the resources found in Africa, including its oil. China has more or less left the Middle East to the United States and gets most of its oil from Africa. This means jobs, and not only jobs for Chinese workers being exported to Africa. It is estimated that for every one Chinese worker on a project in Africa, three locals are also employed.

But, more importantly, it means the beginning of a continuum of economic activity. In order to get resources out of the ground in their often-remote locations and shipped abroad, infrastructure is required, and much of it has been neglected or damaged in Africas growth path. So more money is spent and jobs are created in renewing the roads, railways and ports. This enables Africas growth path to do business with each other more effectively and it means there is more money to be spent on consumer goods, which is why companies like Shoprite, MTN and SABMiller are doing so well across the continent. Services like banking, auditing, legal and IT are following close behind. And in the next ten years it is likely that Asian firms facing rising wage rates at home will start exporting manufacturing jobs to African countries.

As a result of all this, Africas growth path is now the second fastest growing region after Asia, with the IMF forecasting that 7 out of the 10 fastest growing countries in the world over the next ten years will be in Africa. Along the growth path there are sure to be mistakes made, but we can certainly smooth the ride by learning some lessons from those who have been through it all before not long ago. There will also undoubtedly be winners who take advantage of our time and place in history and losers who get left behind, with the likes of Myanmar and Bangladesh finding their equivalents in Africa.

The time and place may be very different from the period of the Cold War, but the opportunity facing the countries of Africas growth path is as great now as it was for Asia then. It’s up to us to make the most of it.

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