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What Africa Needs to Succeed

by Isobel Coleman
September 20, 2013

Students at a public school in Gudele, South Sudan, April 2013 (Courtesy Reuters/Andreea Campeanu). Students at a public school in Gudele, South Sudan, April 2013 (Courtesy Reuters/Andreea Campeanu).

In the early 2000s, Africa’s future seemed grim. The Economist’s May 13, 2000 cover declared “Africa: The Hopeless Continent.” But over a decade later, when The Economist again devoted a feature story to the continent, the message had changed entirely to “Africa Rising.” A new book by Jonathan Berman, Success in Africa: CEO Insights from a Continent on the Rise, aims to explain how this transformation happened and what the world can expect from a now-hopeful continent.

Berman argues that three simultaneous revolutions – in governance, education, and communications – have catapulted the region forward. Indeed, for eight of the past ten years, Africa grew faster than East Asia, with a solid 4.2 percent growth in GDP in 2012 and 5.3 percent projected for 2014. The proportion of poor Africans fell from fifty-eight percent in 1999 to 47.5 percent in 2008. The number of AIDS-related deaths fell thirty-two percent between 2005 and 2011, and the region now boasts the world’s fastest-growing middle class.

Berman rightly lauds the sound economic management and investment strategies that have propelled the economies of countries such as Ghana, Kenya, Tanzania, Botswana, and Gabon. In addition, the book profiles hard-charging African CEOs such as James Mwangi, the CEO of Kenya’s Equity Bank, which boasts nearly 8 million accounts and a market capitalization of over $1 billion; and Funke Opeke, a Nigerian businesswoman and CEO of Main One Cable who is helping wire and bring transformational high-speed, affordable Internet access to the continent. These business leaders, with their world-class skills and long-term visions, are forging new markets, driving growth, and raising both economic and political expectations along the way.

Although some African nations have made promising progress, the reality is that economic and social reforms have occurred unevenly across the continent. Some countries, including the Democratic Republic of the Congo, Nigeria, and Angola, are still held back by rampant corruption, severe inequality, and undiversified economies. The continent faces several other challenges as well. Perhaps its most pressing issue is education. Africa’s workforce, currently made up of nearly 400 million people, is expected to grow by 122 million people this decade, becoming the largest in the world by 2035. This represents a huge economic opportunity, but one that Africa will be able to take advantage of only if it is able to upgrade its education system. Today, children in sub-Saharan African countries spend an average of just 4.7 years in school – attaining only rudimentary math and reading skills. And thirty-five percent of African youth have no access to secondary school or technical training.

A related source of long-term concern is that Africa’s current mix of economic activity, which is mostly related to resource extraction, will not generate a sufficient number of jobs to soak up Africa’s youth bulge. The International Labor Organization reports that between 2000 and 2007, the working age population grew in Africa by 96 million people but there were only 63 million new jobs created. As we’ve seen in the Middle East, having a majority of unskilled and unemployed youth in a population is a huge risk factor for conflict. This is particularly important given the rise of extremism in the Sahel and West Africa. In Nigeria, for example, where there is rampant unemployment, government corruption, and too little formal education, youth are ripe for radicalization by Islamic jihadist organizations such as Boko Haram.

Berman doesn’t ignore these real challenges, and readily acknowledges that although the positive trends he emphasizes are still underway, their outcomes are “by no means certain.” Nevertheless, Success in Africa helps change the lens through which Africa is viewed. Readers will come away with a greater appreciation for the dynamism, innovation, and economic potential of the continent.

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  • Posted by Peter Bailey

    Africa is a problem and one of the bigger problems is that honesty, integrity, morallity all need to be built into their culture to try to get rid of the idea that being a politician is the way to make money. Politicians are there to look after and guide the people but there are a lot of outside sources which use bribery and corruption to exploit various country assets and resources.
    They have also picked up political systems from the West and the East.
    There is a better system which promotes the creation of jobs and is the only system to alleviate poverty.

    THE CENTER LINE SYSTEM OF GOVERNMENT
    COMBINING THE BEST OF CAPITALISM WITH THE BEST OF SOCIALISM

    A system of government which will eradicate unemployment and poverty and will provide an environment suited to free open market trading conditions.
    The people in the community will enjoy:

    Free health for the family
    Free education for children
    A good standard of living with low housing costs.
    No fear of recession.
    A low rate of inflation.
    A liveable pension at the end of the day.
    No personal taxes.

    All for sound economic reasons and not for social reasons and therefore sustainable.

    For the business community:

    A strong market base.
    No fear of recession.
    The ability to produce products and services at the lowest ever cost enabling business to compete in the local and overseas markets.
    A good labour force because of the above and the ability to hire and fire with little need for trade unions.
    Very strong incentives to invest with no taxation.

    Does this sound like Utopia?
    Can we ask for anything more?

    WHY THIS SYSTEM WILL WORK

    The system has a basic single Value Added Tax system. VAT as it is generally known is a tax that is eventually paid by the consumer when he purchases goods and services. The tax is paid by business enterprises on their sales. It is passed on from manufacturer to wholesaler/distributor to retailer and it is eventually born by the consumer.

    What has not been recognized under existing systems is that in addition to VAT all items carry additional hidden taxes such as income tax on employment, social service costs and company taxes including local rates and other taxes. In other words the consumer is already paying all of the taxes in the prices they pay.

    The consumer is the community which forms the population of the country and the tax is levied at various levels starting with low rates on basic living requirements to high rates on luxury items. All items would carry some tax.

    It follows that people earning low incomes pay low tax and people earning high incomes will pay more tax. At present many countries have a VAT system with a tax rate of around 15% and under this system, bearing in mind that hidden taxes can account for another 10 – 15% it is expected that the general rate of tax would be in the region of 25 – 30% . See Taxation to see why this should be and why it is necessary.

    The Government would then need to maintain a cost structure that would fit this revenue income. This would require the government to balance its budget and the number of members of parliament to be restricted to what is affordable.

    It would be in the government interest to maintain a high level of employment with a high standard of living to maximize government income. Its success or otherwise could be judged by its results. No other system provides this obvious incentive to government to keep the community in employment.

    In discarding the income tax system government provides the incentive to business and employees to perform, and at the same time maintain a competitive cost structure. Entrepreneurs will be encouraged and businesses will expand with the realization that they will not be penalized by taxation and will have an assured market place. (See TAXES)

    Both government and business will appreciate the benefit of paying a reasonable wage for work in order to maintain a market place in that country and the people will come to the realization that they need to support local industry to maintain employment levels.

    THE SYSTEM PROVIDES THE INCENTIVES TO ALL TO MAINTAIN HIGH EMPLOYMENT LEVELS WITH A GOOD STANDARD OF LIVING.

    For more detail and why this system works to achieve the necessary results, please contact:
    Peter Bailey
    P.O. BOX BW 256
    Borrowdale
    Harare
    Zimbabwe

    pwbailey@mweb.co.zw

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