The African continent’s next leap depends on attracting expertise rather than money, while Jetour pitched itself as a long-term partner during its Africa Forward Summit held in Sandton recently.
Africa should stop asking foreign investors for cash and start asking for their best people. That was the central message from Dr Martin Davies, Senior Advisor: Arthur D Little who drew on three decades of watching China change, saying he first went there as a teenager in the early 1990s, shortly after Deng Xiaoping’s famous southern tour through Guangdong.
He went on to complete his PhD in China before returning to South Africa and in that time he watched poverty recede across a country of more than a billion people within a single generation.
He also recalled seeing, in the early 2000s, the Shanghai municipal government buy some 20 000 light-green, boxy Volkswagens built in South Africa for use as taxis, and then watching Chinese manufacturers copy them. Local look-alikes of South African-made cars were soon cruising the streets of Shanghai, he said.
Industrialise or stall?
Davies put a blunt question to the room: is Africa the next Asia? He noted almost every economy that has grown rich did so by industrialising first, and he cited Harvard economist Dani Rodrik’s description of manufacturing as something close to an automatic escalator towards development.
“Factories create jobs, absorb and embed intellectual property and, in turn, give rise to a services sector.”
He asked whether any country can prosper without that step, pointing to China, to the roughly 700-million people of Southeast Asia and to India’s more than 1,3-billion. He said he is pessimistic about India’s industrial prospects and wondered aloud whether Africa will follow China’s path, India’s, or something in between.
His answer on what any government should prioritise was unequivocal.
“Attracting foreign direct investment,” he said, “comes first, but the reason is not the money. I am a firm believer in economic complexity theory, which holds that economies grow richer as they diversify into more sophisticated activities.”
What China learned, and when
Davies described three phases in China’s attitude to outside capital. In the early 2000s, Beijing was selling off tired, loss-making state enterprises and the buyers’ cheques were all that mattered. By around 2010, the cheque was no longer enough and Chinese firms wanted the intellectual property that came with it.
“By 2015 or 2016 the size of the investment had stopped mattering almost entirely. The question put to foreign investors was what knowledge they were bringing and whether their management teams would come along.”
From this he drew a pointed lesson for African policymakers. Countries that take a xenophobic line on foreign labour, he argued, are effectively telling investors that they want their money but not their people, and they have misread the game.
“In my own work in the Middle East I tell colleagues to turn away offers of capital and instead demand multinationals send their A teams to the local city, so that the skills can be absorbed by domestic institutions.”
He also took aim at what he called lagging South African views of China.
“The country’s economic story has moved from state-led infrastructure to mass-produced consumer goods and, over the past decade, to something more significant.
“China’s main exports are now capital goods, which makes it a factory of factories, and I believe many commentators have yet to grasp what that means for how Beijing deals with the rest of the world.
“Africa,” he added, “is already industrialising in places, with Morocco, Egypt and a few East African countries examples.”
Industry must not cost the environment
Dr. Mncane Mthunzi, Chief Executive Officer of naamsa: The Automotive Business Council argued industrial growth has to be tied to responsible development.
He pointed out Africa holds a large share of the minerals needed for the energy transition and also a significant proportion of the world’s species, which gives the continent a particular duty of care.
“The aim,” he said, “should be to avoid trading gains in the fight against climate change for losses in biodiversity.
“Energy access and the shift to a low-carbon future are the two foundations of the transition, and called for skills transfer, technology and locally developed innovation that supports environmental management. Communities must be given jobs and training along the full energy value chain.”
A carmaker makes its pitch
Ke Chuandeng, President of Jetour International described Africa as a continent of more than 50 countries and 1,4-billion people with an average age below 20, with urbanisation advancing and green industrialisation starting to take off.
“Global motoring is moving towards new-energy and intelligent vehicles and the right mix of plug-in hybrids and fully electric cars in Africa will depend on charging infrastructure and local industry.
“Africa should be seen as more than a sales market. It wants to build industrial capability of its own and Jetour hopes to contribute to that.”
He pointed to the continent’s varied terrain of savanna, highlands, desert and coast, and said Jetour’s engineering has been tested in extreme heat, altitude and humidity elsewhere.
“Abundant sunshine, meanwhile, suits the clean energy push, and Chinese strength in batteries, motors and complete-vehicle manufacturing could be matched to African demand.”
Jetour, founded about eight years ago, says it sells in more than 100 countries and regions and has reached 2,6-million users worldwide.
What it adds up to
The three contributions pointed in the same direction. Africa’s biggest opportunity lies in pulling skills and technology into its own institutions, and doing so without damaging the natural assets that make the continent so valuable. Whether carmakers and other investors will transfer expertise on the scale Dr Davies is asking for, and whether African governments will welcome the foreign talent that comes with it, is a question that remains open.
