Good governance is a win-win
Peter Harrington is an AGI alumnus having worked for the organisation in Liberia between 2010 and 2012. He is now a Fullbright Scholar at the Kennedy School of Government, Harvard.
Earlier this month Tony Blair gave a speech on ‘Seizing Africa’s Opportunity’ in Houston, Texas. Speaking to the business and philanthropic community in the world’s oil capital and the US’s fourth biggest city, his message was simple. Today, Africa’s breakthrough depends not on aid but on better governance, and investors and the private sector have a big role to play.
The venue for the event was the Baker Institute at Rice University, a think tank set up by Secretary James Baker, former Chief of Staff to President Reagan and Secretary of State under President Bush Snr. Since its creation, the Institute has built a world-beating reputation as an academic center on energy and particularly extractive resources governance, thanks in no small part to its formidable founder and its similarly formidable director, former US Ambassador Edward Djerijian.
The ‘Africa rising’ theme is a familiar one today, but Tony Blair’s message in Houston went further. He framed the extent of the progress on the continent. Massive strides have been made in tackling disease, and he paid tribute to President G.W. Bush’s PEPFAR initiative to combat AIDS which has helped better treatment reach 4 million people. Eighty-eight million people now have access to bed nets to tackle malaria, and 40 million more children are going to school. Increased aid – like the agreement struck with President Bush’s help at Gleneagles in 2005 – helped achieve this.
But Africa faces a different kind of challenge today. Rather than how to use aid to address crises across the continent; the challenge for Africa is how to use its resources, businesses and potential to lift millions out of poverty. The last decade underlines this shift. Income per person in Africa has increased by 30% having shrunk for the previous 20 years. Foreign direct investment into Africa more than tripled between 2002 and 2012. Perhaps most importantly of all, given this event’s setting, Africa has 10% of the world’s known oil reserves and 40% of its gold. Since very little exploration has actually taken place in Africa compared to the rich world, that proportion may only be a fraction of the natural resource wealth lying beneath the continent’s topsoil.
Tony Blair argued that unlocking this potential depends on three fundamentals to growth that Africa has lacked: electricity, without which no country can be productive; infrastructure, without which no economy can move; and quality private sector investment, without which there is no growth and economy at all. And successfully putting these fundamentals in place depends on one thing: governance.
AGI exists because in many countries that governance – the capacity of a government to act to enable things like access to electricity and roads – falls short of what it needs to be to meet the needs and expectations of Africa’s growing, young populations. In many of the African countries AGI works in, around half the population is under 25 years old, so the need for growth and development is urgent and will only increase. The sustained support that AGI’s advisors provide helps governments keep up with that need.
Of course, these fundamentals are only a beginning. In response to a question from the audience about unleashing the huge untapped energy of Africa’s youth, Tony Blair responded that education must be among a country’s next priorities and with sustainable growth, the successes in increasing access to education can expand to improve the quality of education. And prompted by Ambassador Djerijian on the question of selecting whom to work with, Tony Blair emphasized the importance of bold leadership and the demonstrated desire to reform.
But given Houston’s position as a global business hub, the biggest emphasis was on the role and critical contribution that the private sector can and must make to help Africa seize its opportunity. Africa’s emerging economies need investment that generates jobs and stimulates knock-on opportunities for local businesses. And Africa’s governments also need the world-leading expertise clustered in Houston to extract the deep, inaccessible but valuable natural resources like oil. In the past bad governance and, on occasion, bad practice by the extractives sector has led to these resources being a barrier rather than a bridge to development with wealth being retained by small elites rather than benefitting the country as a whole. But this does not need to be the case; resource wealth can play a huge role in Africa’s development and become a ladder to prosperity. The key to this, according to Tony Blair, is better governance.
This was an underlying theme of Tuesday’s discussion: better governance can be a win-win for the countries concerned, and for their private sector partners. When a government creates a predictable environment for investment, tax and contracting, investors breathe easier. And when regulations are clear and consistent, business has a partner it can work with for the long term. As more and more companies wake up to the simple insight that what is good for governments is often good for business too, they are looking for ways to do more to help governments improve. How those vehicles take shape has enormous significance for international development, and the potential for enormous impact on millions of lives in Africa and beyond.