Helping Africa Grow

Some articles about Africa have been refreshingly positive lately. After a lifetime of reading stories of misery and false dawn, it feels like the next few years could finally see Africa break free of its past.

What we are seeing in North Africa can be seen as a part of this trend, as a possible outcome of the revolutions could well be a flowering of nations held back by repressive regimes. With a semblance of democracy, better education (especially of girls) and a freer business climate should not be far behind. Of course, the road could be a rocky one. The current Western propaganda in Libya cannot obscure the short-term likelihood of death, depravity and other unfair outcomes, partly at our bidding.

But economic news across the continent has generally become good, with prospects for even better developments. Ten years ago there were three democracies in Africa, now there are 23. Infant mortality has plummeted, despite the impact of Aids. Think tanks predict Chinese rates of growth over the next twenty years, buoyed by the usual golden combination of demography, education, resources and investment.

For many countries in Africa, a turning point was the debt elimination programme from around the millennium. After that, resources could be diverted away from servicing debt into more constructive uses. We should not forget the key role played by both Tony Blair and Gordon Brown in championing that initiative. Their legacies have since become somewhat tarnished by later errors, but that was a truly heroic achievement, probably with more global impact than most politicians can claim over their careers.

With the continuing need for investment in Africa, I believe the time has come to challenge the prevailing opinion of Oil Companies in Africa, that of evil empires stripping natural resources and plundering the profits.

As a long-time Shell employee, I always observed the negative press from Nigeria with mixed feelings. More than anything, I was glad I never had to work there, despite the financial rewards, since the place had a reputation as a marriage breaker, somewhere where ones humanity would be tested, and a posting with very delicate decisions to make.

Although I never saw it myself, no doubt over the years there have been times when Shell employees, and others, have compromised fair business values and displayed colonial prejudice. Yet I can only imagine the pressures these people have been working under, and sense that most have been honest humans trying to plot a course through ambiguity. I have seen as fact the efforts Shell has made over many years to develop Nigerian staff, often a very frustrating effort for a variety of reasons, and certainly working in the opposite direction to plundering and stripping.

But the wider point is about the future. A key thing Africa requires to develop its people is business investment. Yet in the West we are taking a nuanced view about the current wave of Chinese investment there, while holding our nose when it comes to our own primary investors, oil companies and miners.

It is fair to be cautious about such investors. The disgraceful Transocean debacle showed that some companies will take advantage of lax institutional setups. But the result can be a set of restrictions and a public relations climate which stifle investors.

This in turn leaves some potential resources underutilised, and a monopolist feel to those investors who remain. What I mean by that is a climate of regulation rather than competition, with scope for local politicians to exploit rules and also for companies to become part of the establishment, with political risks but reduced competitive ones.

What would be better for Africa would be a well defined, stable regulatory regime, but then encouragement of new entrants and healthy competition. Over time, competition improves standards, not just in areas such as prices and costs but also in their legacy, development of staff, and so on. That is how capitalism works. That is why a profit motive helps, in order to offer potential reward for investors.

We usually understand this in the west, even if politics sometimes gets in the way. By the way, you can argue the same recipe for banking, since that sector globally suffers the same problems. Do you see much competition on savers interest rates just now? Now it is time to apply good capitalist principles in Africa. In many ways that is exactly what the Chinese are doing, and good luck to them. It is a shame if outdated notions and the legacy of past mistakes inhibit others from playing the same game.