Introduction at the Norwegian-African Business Summit (NABA)

Mr Brende’s introduction was based on the following text.

 

Excellencies, ladies and gentlemen,

It is a great pleasure for me to be here.

The NABA summit is an important event. And I would like to thank Managing Director Eivind Fjeldstad and NABA for taking the initiative for this conference, which takes a look at Africa from a new perspective.

African affairs are no longer just of interest to development ministers. Today African affairs are highly relevant for foreign ministers, finance ministers and many others, which shows that the perspective has changed. There are still a lot of challenges that we need to address. Today we will discuss the fact that a stronger business and investment focus rather than a purely development focus is a prerequisite for future growth.

Rather than “Africa is the new Asia”, I prefer to say that the 21st century is Africa’s century. Africa has great potential. Africa should develop this potential. We should not be euphoric, we should be realistic. But there are great opportunities that Africa should capitalise on.

If Africa succeeds in enhancing private sector and foreign direct investments, it will also succeed in eradicating poverty. There is a clear correlation between private investments, a strong private sector and good governance, and later, inclusive, sustainable growth that creates jobs for the young population of Africa.

There are many different perspectives, but I think one of the best illustrations of Africa’s potential is one shared by President Obama. His father came from Kenya to the US in late 50s/early 60s. At the time, Kenya was at the same development level as South Korea. Today, South Korea has a per capita GDP that is 20 times higher than Kenya’s.

There are many explanations for this, but one is lost opportunities. Aid matters, but aid needs to support good governance, a strong private sector, entrepreneurship, anti- corruption efforts, democracy and strong institutions in a country that can then support growth.

This is also the new Norwegian Government’s perspective on development.

I am sure this summit will contribute to the establishment and strengthening of Norwegian–African business ties. And that it will help to further the discussions on how we can work together to enhance business opportunities and reduce barriers to further development.

In Ethiopia I have witnessed the beginning of a manufacturing industry, not an industry based on natural resources.

I travelled to Zimbabwe 20 years ago, and also three years ago. What used to be the breadbasket of Africa has turned into a country where food has to be imported. Malawi, on the other hand, is an example of a country that has been importing food for decades, but is now exporting maize. This is the result of good policy, good governance and the support of donors who are making sure that the right incentives are in place.

Now a few words about the political context of Africa how I see it. There are an increasing number of democratic elections. Multiparty elections are taking firm root across sub-Saharan Africa. Democratic institutions are being strengthened. There is a reduction in the number of conflicts. The number of wars and conflicts has fallen considerably over the last decade. But we also know that where there are conflicts, there is no development. A clear pre-condition for development is the absence of armed conflict.

We are committed to providing humanitarian support in conflict situations, for example in Somalia. But working with conciliation and mediation in situations of conflict is the best and most cost-effective way of creating the right framework for future development.

We know the demographic patterns: Africa is the second largest, second most highly populated continent on earth. It has an estimated population of 1 billion people. But the population is extremely young. 40 % of the African population is under 14 years old. More than 60 % is under 25. So inclusive growth also means growth that includes the creation of jobs. This is crucial, a precondition for stability.

We saw this in the “Arab Spring”, which turned into an Arab autumn and even winter. It started among young people with some education, but with no real opportunities. This is also one of the major challenges in Africa, where there is a growing middle class. At the same time it represents a great opportunity. If a country doesn’t have a critical mass off well-educated people – a fairly strong middle class – it will not see development.

Norway has good experience of managing its substantial income from natural resources, and has made sure that this are kept aside and invested for future generations. We know that that long-term thinking is vital for future success. The parts of Africa where we see development are those where the middle class has reached a critical mass, and there is a willingness to think in the long term.

In much of the discussion on official development assistance (ODA), focus is on rural areas and the poor. This is extremely important, but at the same time we have to focus on how to ensure that they are not still poor in 20 years’ time. We need to change the perspective. We should not be the ones fixing the pipes, the infrastructure; we should be helping to fix the institutions that fix the pipes themselves. These are still major challenges in Africa.

The past decade has been an incredible journey, and we have seen a major turn-around. According to the IMF, seven of the ten fastest growing economies are in Africa, and one third of African countries have a growth rate of 6 % or more. Africa’s direct foreign investment is ten times higher than the average “Asian tiger”, and foreign direct investment is the largest source of capital flow in the region.

And we are probably also seeing the fastest growing consumer class in the world; almost half of the African population have obtained middle income status.

Since 2000, there have been more than 360 million new mobile phone subscribers in Africa, and in Kenya, most banking transactions are now carried out over mobile phones.

The online education revolution that we have seen is just the tip of the iceberg. The educational system will change dramatically over the next ten years. The next generation will have access to the best universities and teachers in the world. We have to change the way we organise educational initiatives and development assistance and make sure that the young population of Africa has access to these great opportunities.

***

Our engagement with Africa is political, economic, environmental and cultural; it is multi-faceted. Our relationship with a growing number of African countries is changing rapidly – into a partnership with a common interest in promoting trade, and economic interests on both sides.

We have also seen a revolution in the way the African Union is operating under the leadership of Madame Zuma. Africa’s identity is growing. Africa will be better coordinated. Africa will be punching according to its weight in international forums in the future. This is excellent news.

Natural resources are being extracted in a more sustainable way, and increased economic activity leads to greater tax revenues. A broad tax base is a precondition for growth in any country.

Official development assistance (ODA) should not be a substitute for an adequate tax system. ODA should be provided on the condition that the country is moving in the right direction. We should not provide government-to-government aid to countries that do not respect human rights, promote democracy or fight corruption. We need to move from government-to-government aid to supporting the forces in a country that want change, that want reforms that move the country forwards.

If we see willingness in a country to address the broad complexity of challenges it faces, and a willingness to move in the right direction, we are there to provide support.

If a country is moving consistently in the wrong direction, we need candid and frank discussions on those issues.

Too much money disappears through corruption. According to the World Bank, 25 % of Africa’s GDP disappears through corruption. This is unacceptable.

What we need is a future-oriented policy that also looks at African industry and the continent’s competitiveness.

In my former job, I was in charge of the World Economic Forum’s competitiveness work. We took deep dives into various African countries’ competitiveness, in cooperation with the Danish development organisation Danida. This is one of the most rewarding undertakings I have been part of.

Competitiveness is affected by a range of factors: infrastructure, education, health systems that work. Gender is a big issue in Africa, and it is important to include women in partnerships for change. Good governance and anti-corruption are also vital areas. So is the development of police and armed forces that work in the interests of the people.

There is a clear correlation between competiveness and a country’s ability to build a welfare system.

The Nordic countries are at the top of the competitiveness league. We are very open economies, but also quite egalitarian societies, where people have a lot of opportunities. This should be the vision for Africa too.

In the area of trade and commerce, there are big opportunities to change the perspective. Today, intra-African trade, which the African Union now sees as its main priority, is not where it should be. Intra-African trade accounts for only 12 % of the continent’s total trade. In Europe the equivalent figure is 65 %, and it is 40% between the ASEAN countries, which are launching their own single market in 2015.

Kofi Annan once said at a conference in his home country, Ghana, that due to high transportation costs, it is cheaper to import rice from Thailand to the capital Accra than from the nearby countryside.

The barriers, borders and infrastructure that were built in the time of the colonies are not being changed or developed.

Infrastructure is crucial. There can be no development without energy, and there can be no real development without adequate infrastructure. How can you otherwise capitalise on the huge agricultural opportunities in Africa, if it is not possible to bring in fertilizers or machinery.

Africa has major opportunities for a “green revolution”. 60 % of the world’s non-cultivated, arable land is now in Africa. With a world population that will increase from 7 billion to 9 billion in 20–30 years means that we have to increase food production. Africa can undergo a green revolution with the right tools.

But this will depend on a partnership with the private sector.

This Government has stated that it will maintain a high level of ODA. But more important than the exact figures are the real results.

If you really want big money to be invested in big projects that make big changes, you have to involve the private sector.

For 15 years – after Monterrey, after Johannesburg, after Rio+10 – we have been saying that we need private–public partnerships. Things are changing slowly. Let us enhance that change together.

If you want big money for big projects to solve big problems, you also need additional funding from the private sector. The private sector is an important part of the solution.

If we are going increase access to energy, unlock investments in agriculture, and bring about change in the education system in Africa, we need the best business models from the private sector to be applied to the governmental sector. This is where we need an African revolution. This approach has not been taken before, and it is crucial if we are to move forward.

Africa will define this century. We will have to try out new ways of thinking, new strategies. We will then be able to change the patterns globally.

My hope for the future is that extreme poverty will be eradicated in Africa. That is not unrealistic. In 10–15 years’ time we will have reduced the number of the people living in extreme poverty globally by half. Previously, no one would have thought that this was possible.

I believe we can eradicate extreme poverty by 2030, and make sure that all children in Africa have the same basic opportunities as children in Norway. It is possible if we implement the right policies, if we are proactive, and if we work in line with the perspectives of this conference. That includes seeking to ensure that Norwegian companies continue to invest in Africa and grasp the opportunities to be found there.

Thank you.

 

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