Sanusi calls on Africa to overcome protectionism
‘Continent should be growing at 12%’
Why Nigeria is Africa’s biggest importer of generators
by Edward Longhurst-Pierce
Mon 12 Nov 2012
A strong call for Africa to turn its back on protectionism and open up markets in the cause of growth and prosperity has been issued by Lamido Sanusi Lamido, Governor of the Central Bank of Nigeria.
Speaking at the opening Gala Dinner at last week’s Africa meeting in Port Louis organised by OMFIF and the Bank of Mauritius, Sanusi said Africa had 15% of the world’s population yet only 2.7% of the world’s GDP, and was still growing at well below its economic potential, which he said in some cases was as high as 12% a year.
Despite optimism among many international investors about Africa’s future as a frontier economy, Sanusi drew attention to a range of quality-of-life indicators that showed how far Africa was lagging behind the rest of the world, especially Asia and the Middle East.
‘When you hear the growth numbers at the IMF or World Bank, it’s nice, you smile – but we need to focus on these questions, the real issues. What are the problems? We need to look at corruption. The problems that exist because of a small elite minority that profits from this. Nigeria represents the greatest of Africa’s potential. It could be the next China. But it also represents all the [negative] issues that I have to deal with. It’s the seventh largest oil producer in the world, yet it imports oil products. Because people are profiting from it.’
Sanusi pointed to the problem of Africa’s reliance on commodity prices. ‘What policies does Africa have to put into place to profit from the higher price of commodities? None. Any growth that benefits from higher commodity prices is vulnerable growth.’
He underlined how China needed to make rapid advances in productivity. ‘African labour costs are now cheaper than China’s. China has lost its cost advantage for labour. The difference is that China is a lot more productive.’
And he added that governance was still a very significant challenge. ‘Investors need assurance that an investment over the course of 20 to 25 years will not be undone because the government changes over that time. Anything that relies on cronyism and patronage will not attract investment. You cannot maintain contracts over a long period if this is all based on rent-seeking. Reform by definition requires an attack on certain established interests. Nigeria is the biggest importer of generators in Africa and perhaps in the world. There is a whole group of people who don’t want to see electricity generated in Nigeria. So reform always faces challenges.’
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