Tiny Botswana (population: 2.1 million) is Africa’s true success story. Ever since its independence more 46 years ago, it has had civilian leadership, a stable government and remarkable economic growth. Last year Botswana’s GPD per capita was $16,030, about the same as Russia’s and slightly more than Mexico’s. The woman behind the much of the success is Linah Mohohlo, Governor of the Central Bank of Botswana. Mohohlo spoke with Metro by phone from Gaborone, Botswana’s capital.
Is Africa finally on the path to prosperity?
No country can ever claim to have found the perfect path to prosperity, but it is notable that in recent years, Africa has made discernible economic inroads. We’re seeing a growing middle class and a reduction in poverty. The growing middle class, albeit still small, is important because this is the class that helps to pull others up the economic ladder, so to speak. However, Africa is part of the global economy and will suffer as a result of major hiccups elsewhere.
Which countries show the most promise?
Quite a good number of African countries have been registering impressive economic growth rates. So far Uganda, Rwanda and Ghana are good cases in point. The economic growth is underpinned by policy reforms, the gains from diversifying the economies, growing exports related to growing international demand and rising commodity prices. There’s no reason why the continent should not sustain this positive development.
Entrepreneurship or exports of natural resources: what’s the key to future African prosperity?
The world is interdependent, and while Africa should export raw materials as and when needed for a fair price, it is important to establish downstream avenues for the production of finished goods both for export and domestic consumption. This requires that African countries continue to engage in downstream industries based on the continent’s natural resources as a means of increased job creation, poverty reduction and unlocking the industrialization potential that will enable the continent to contribute to global economic growth and balanced trade relations. Africa should ensure development of vibrant entrepreneurship, which will help in competitively accessing export markets. The continent is endowed with vast land that can be exploited for agriculture in the best interest of food self-sufficient as well as export. Indeed, agriculture could become a source of prosperity, and help the continent achieve balanced economic growth and reduce poverty since a large proportion of the continent’s population is agrarian. And SMEs [small and medium-sized enterprises] are also crucial in adding impetus to growth. A nurturing of growth of the SME sector would help the continent achieve inclusive development since women and young girls tend to dominate the sector.
I would add that investing in educating women to succeed in the SME sector would derive tremendous benefits. You will know the benefits that flow from educating women. You educate a woman, you educate a family, then a village and ultimately the wider society. The educated woman would profitably run a small business, care for the family generally and contribute towards poverty reduction. Small businesses should be nurtured and steered in the right direction so that they are able to grow into large businesses that can compete in the global export market and contribute to employment. Indeed, there is a good indication that large international department stores are taking interest in some products from some SMEs owned by African women. Therefore, in order to succeed in business, women should be given the requisite rights to own land and access financial capital.
What are the obstacles to Africa becoming a thriving continent?
I’m an optimist, so I’d rather talk about the way forward than look back. Many countries in Sub-Saharan Africa have made impressive inroads in political and economic governance and the benefits are self-evident. The continent is now seeing regular elections, renewal of leadership and related positive developments. The result has been fewer and fewer dictatorships and a spreading of efficient, effective and accountable institutions, such as central banks, and the existence of the rule of law. But, in an interdependent global village, it is also important to bear in mind that Africa requires economic and trade relations that are conducive to Africa’s growth and poverty reduction.
Lots of Africans live abroad, and they’re often well-educated and entrepreneurial. Should they return to help their home countries?
Of course the African diaspora is very much needed, and they know that; the good news is that many of them are coming back home. They’re no doubt an asset to the continent given their educational attainments and experience. Many have returned to establish businesses, mainly in the private sector, while some are holding government jobs. It used to be the norm for Africans to emigrate for better opportunities, but now the continent counts as a place to look for better opportunities. Africa’s growing adoption and absorption of new technology and expanding financial services sector and related innovations seem to be doing well in attracting the diaspora and those appropriately skilled for jobs in the continent. And why not! After all the continent’s financial sector has so far survived the ravaging effects of the 2008-09 global financial crisis. Furthermore, the discovery of oil and gas deposits in some African countries has continued to attract engineers of African origin who had hitherto been working abroad and advancing the economic prosperity of foreign countries.
So African countries have done better than rich countries during the global financial crisis?
You have to remember that the financial crisis is still global in nature. But with regards to the banking sector, although a good number of banks in Africa are subsidiaries of international banks, they have weathered the storm due to the sound regulatory regimes of domicile countries. That was certainly the case during the 2008-09 financial crisis and continues to be so.
What about Africa’s growing technology sector? Is it crucial to African prosperity – or just hype?
Information technology and other innovations are spreading rapidly in Africa; the sector is also benefitting from the diaspora. It’s well known that the IT sector transforms societies and contributes to job-creation and economic growth; it improves business efficiency through speedy and efficient service delivery in sectors such as banking, education and healthcare. In Kenya, for instance, a software that was developed to monitor the post-election violence after the most recent election is reported to function successfully in Chile, Haiti and the Middle East.
When will the last African country stop receiving development aid?
There’s nothing wrong with receiving development aid, as long as it is channeled in the right direction. In any case, there is reciprocity in development aid, and there will come a time when the countries currently providing development aid will themselves need it, if that era has not already set in. So, the question isn’t when Africa will no longer be dependent on development aid. The issue is to ensure that where it is needed and obtained, it must be channeled and applied appropriately for the mutual benefit of all.