Statement by Mr Malusi Gigaba, Minister of Public Enterprises, addressing the African Renaissance Conference on “The role of State-Owned Enterprises in African Infrastructure Development” in Durban
4 Aug 2011
“Africa, since its partition, has seen its mineral wealth exploited for the benefit of others, its fertile land left undercultivated, its rich cultures destroyed, and its brain-power ‘drained’ to other parts of the world. At the centre of this calamity is the role of the West in creating an international system that reduced proud Africans to the lowest caste of the twentieth century. How will post-colonial Africans overcome this condition in the twenty-first century?”
This is the assessment Ali Mazrui makes in his Preface to Adekeye Adebajo’s book, “The Curse of Berlin: Africa After the Cold War”, as he talks about Africa post the infamous 1884 - 1885 Berlin Conference of a cartel of European states which resolved to partition Africa and slice it all up into a number of European colonies.
Of this partition he says – “The partition of Africa, on the other hand, resulted in some of the most vulnerable societies in modern history.”
The journey from Africa’s colonisation to her independence took many centuries, many generations, much effort, sweat, toil and blood, and yet today standing here today we do, we will be correct to say that the journey still to be traversed is still much longer and more arduous.
The question Professor Mazrui posed addresses itself not to victims any more, but to the masters of their own destiny! This is because victims possess no capability, nor the aptitude, to overcome their situation and convert themselves from their position as victims to that of masters of their own destiny.
It is only as such masters of their own destiny that we can answers most affirmatively and with absolute clarity the question about how we, post-colonial Africans, intend to overcome our condition of vulnerability and being the lowest caste of the 20th century.
It was as though Frantz Fanon was providing us a way to respond to Professor Mazrui when he made the clarion call:
“Come, then, comrades; it would be as well to decide at once to change our ways. We must shake off the heavy darkness in which we were plunged, and leave it behind. The new day which is already at hand must find us firm, prudent and resolute.” (“The Wretched of the Earth”)
He proceeded to say,
“Humanity is waiting for something other from us than such an imitation (of Europe), which would be almost an obscene caricature... But if we want humanity to advance a step farther, if we want to bring it to a different level than that which Europe has shown it, then we must invent and we must make discoveries... For Europe, for ourselves and for humanity, comrades, we must turn over a new leaf, we must work out new concepts, and try to set afoot a new man.”
Therein lies our most important challenge – to turn over a new leaf, work out new concepts, and try to set afoot a new man!
But, what does all of this mean! Or, how must we do it?
First and foremost, we must break up and destroy all colonial ideas and practices. We must proceed from the premise that Africa is one continent; that the people of Africa are one people and therefore their unity is paramount to the pursuit of her development.
Colonialism was predicated on this geographic partition of Africa and the pursuit of “divide-and-rule”. It created not only vulnerable societies and nation-States, but also left a legacy of a divided continent even long after its political demise.
As a result of this legacy, intra-African trade only totals 10% whereas intra-European trade totals 80%. What this tale tells is that Africans are not trading with one another, largely because of the absence or lack of infrastructure networks, persistent colonial ties and over-reliance on commodity exports.
This latter point has for centuries made Africa a target for the global scramble, which is still true today. What it means is that African countries have nothing with which to trade with each other.
African economic integration and the role of infrastructure development on the continent is an important strategic priority for South Africa. It is not only an economic imperative, but also a political imperative that would constitute the ultimate negation of the colonisation project.
That process of economic and political integration on the basis of infrastructure development must be led by the Africans themselves, for their own benefit.
It is not that we think or should think that the West has no role in this obviously mammoth endeavour, but it is that we believe that those keen still on plundering our continent, who were responsible for the situation we currently find ourselves in, do not possess the generosity of spirit or even the will to help us solve our problems, or to solve those problems for us, even though they possess the material wherewithal to do so.
As a medium-sized economy, South Africa is at a structural disadvantage in building our industrial base given our remoteness from major global markets. This hinders our ability to invest in adequate economies of scale, realise technology learning curves and build robust clusters that are the backbone to a competitive industrial economy.
However, in relation to the African market, South Africa has a locational advantage, and hence by failing to foster high levels of economic cooperation and integration in Africa, we are effectively imposing limits on the growth of the South African economy.
South Africa’s future, and her future prosperity, is intricately linked with and dependent upon that of the rest of the African continent. As the African National Congress (ANC) Secretary General, Mr Gwede Mantashe, said it yesterday on Ukhozi, the problems anywhere in Africa are felt immediately on the skins of South Africans.
Accordingly, we should similarly be of the same attitude of mind that prosperity anywhere in Africa will be immediately felt on the skins of South Africans. After all, most tourists in South Africa are from Africa.
Infrastructure, such as electricity and water supply, telecommunications and the logistics network are both sources and enablers of economic activity. As key enablers of activity, infrastructure investments tend to require relatively large amounts of up-front capital that will only be re-paid over the usually long life-time of the plant.
Hence, there is a chicken and egg situation – without the infrastructure, economic activity is stifled, yet the infrastructure investment requires a context associated with capabilities that are enabled by existing economic activity.
Infrastructure is also a key enabler of trade and economic integration. Logistics infrastructure enables the efficient movement of goods; telecommunications enables commercial activity whilst an integrated energy grid enhances security of power supply for all participants.
Hence, the building of African infrastructure is a key stepping stone to regional integration.
However, the scale of the challenge is immense. It is estimated that significant amounts of finance is needed to get infrastructure in Africa on track. An Africa Infrastructure Country Diagnostic estimates annual investment needs in infrastructure in Africa at US$38 billion a year over the next ten years, with two thirds of this required from the energy sector.
South Africa can contribute significantly to African infrastructure development through enabling access to our core logistics, telecommunications and energy infrastructure as well as providing specialised technical and commercial skills.
For example, just through providing access to our electricity grid, we will enable neighbouring countries to invest in energy generation at a far larger scale than they would do in isolation, which would provide business with confidence it requires to make further investments in these countries.
However, we also need to be realistic about the resources available in South Africa to contribute to the African infrastructure challenge. We have a significant infrastructure gap in South Africa that needs to be funded and while our development finance institutions can contribute to the African challenge, we clearly need to partner with players that have greater quantities of resources at their disposal.
With the decline of public sector infrastructure in much of Sub-Saharan Africa in the eighties, Western governments and their donor agencies shifted their attention towards the privatisation agenda.
However, although donor funds for infrastructure decreased in anticipation of a massive private sector appetite for infrastructure assets, this did not materialise, except perhaps, to some extent, in telecommunications.
In response to the failure to attract private sector interest in privatisation, donor agencies tried to develop mechanisms for private sector partnerships or participation.
The dismal failure of this project, driven largely by the neo-liberal paradigm, market fundamentalism, left Africa in an even deeper conundrum and an even larger infrastructure backlog.
When all is said and done, the private sector driven approach has not been successful in attracting a critical mass of infrastructure investment in Africa.
On the other hand, the rapid existing and planned growth of the Chinese economy has both created a significant demand for commodities as well as large surpluses that need to be invested abroad, and the Chinese need new markets abroad for their products.
In this regard, Africa has been identified by Beijing as a strategic source to meet this resource and new market requirements and, consequently, Chinese engagement in Africa has increased dramatically over the last decade.
However, the Chinese engagement has been accompanied by an accelerated process of infrastructure investment, albeit with the challenges and dynamics of its own.
Yet, while we must not contribute to the China phobia we hear all around us, we must not be romantic about the nature of Chinese involvement in Africa. Our engagement with the China challenge must be driven neither anxiety nor infantile exuberance.
First and foremost, China is involved in Africa to further its own national interest. Whilst Chinese pragmatism has certainly enabled infrastructure and broader investment in a range of African countries, the lack of institutional pre-conditions to such projects has often resulted in negligible local skills, technology and business development. In many instances, the Chinese have brought in their own skills and workers to construct the infrastructure.
Clearly there is a tension between contributing to an African development process and optimising the short-term benefits for China from an infrastructure project, particularly in countries unable to negotiate national development requirements.
What is clear is that South Africa needs to develop a strategy for engaging, if not partnering, China in Africa.
International relations are based on power and interest and it would thus be fool-hardy and naïve to suggest that China has any intention of being Africa’s saviour.
However, we should be cognisant of the reality that as Chinese investment in Africa grows, just the sheer quantum of resources will dictate the establishment of more rigid engagement methodology and risk management framework to guide the Chinese African engagement.
Consequently, there is a window of opportunity that we need to grasp with some urgency, particularly utilising South Africa’s membership of Brazil, Russia, India, China and South Africa (BRICS) as leverage both for Africa and ourselves.
We need to envisage the possibility of South Africa State Owned Enterprises (SOEs) playing a leading role in building partnerships with key Chinese, Brazilian and Indian enterprises that are concerned with their long-term access to resources from Africa. These enterprises are essentially portals to access the entire BRICS international development aid system.
We can envision a public – public partnership between key South African and Chinese SOE. What is critical though is to know what we want from and what value we are going to deliver to these partnerships.
We have to feel confident that these partnerships will add to the sustainability of infrastructure development in Africa which will require the development of institutional and industrial capabilities in the countries where the infrastructure is built – this will require a long-term view.
The reality of the Chinese investments in Africa will force Western agencies to become more flexible, or face becoming irrelevant. South Africa should not limit its options, but seek to work with any agency that can contribute towards impacting on the Africa infrastructure challenge – but on terms that make sense both to South Africa and our partner countries in Africa.
However, this vision presupposes that South Africa has powerful, well resourced and highly capable State-Owned Enterprises that will be able to earn the respect of both their international and African partners. This will depend on having a political, policy and regulatory environment that enables the building of such entities.
Globally leading organisations, whether state owned or private do not emerge by chance. Hence, it will be vital for the Presidential Review Committee to engage with national policy around the role of SOE in Africa.
The question is, where do we start?
We need to start by taking some small steps and focusing on specific projects such energy and transport logistics where South African participation can make a decisive difference.
There are many opportunities for South African SOEs successfully to venture into Africa to explore business opportunities and thus contribute towards the creation of an environment in which African peoples and nation-States can trade, communicate and relate with one another.
Only then can we firmly respond to Professor Mazrui’s question about how post-colonial Africans will ultimately solve the partition problems in the twenty–first century.
Africa has a major shortage of economic and social infrastructure that is a significant obstacle to economic growth and development. The nature of infrastructure investment is long term and requires a relatively sophisticated policy, regulatory and industrial environment for it to be sustainable, apart from requiring significant operational capabilities.
Parag Khanna states it:
“On the whole, Africa is still more likely to be the site of Chinese, European, and American neo-mercantilism than to experience any sort of collective action.” (“The Second World: How Emerging Powers Are Redefining Global Competition in the Twenty-First Century”)
Of course, this would be true if we did not do anything to change our situation.
The truth is that the African Union has decided to implement flagship infrastructure development programmes, and President Zuma is the political champion of these programmes. These and other interventions should change the reality that Khanna spoke about in his book.
And so we return to Professor Mazrui’s question and Frantz Fanon’s clarion call – what are we, post-colonial Africans, going to do in the twenty-first century?
We will turn over a new leaf, work out new concepts and try to set afoot a new man – for ourselves, for Europe, for humanity!
I thank you.
Source: Department of Public Enterprises
Issued by: Department of Public Enterprises
4 Aug 2011
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