Building a robust and enduring and productive capacity in Africa

NEPAD AfricaRecruit Employment & Human Resources Exchange Seminar

“Deploying the diaspora option”

Challenges, obstacles and opportunities

Ralph Tanyi

Cranfield University

Wembley Conference Centre, London 10-11 March 2005

Introduction

Africa snapshot at the dawn of the 21st Century

Population 750 (e) GDP output (% world) 1920 4.5

1950 3.6

2004 2.0

Globalisation, share of

- stock of FDI in LDCs (%) - merchandise exports (%)

1980 10.6

3.7

2003 7.5

1.5

75% of world conflicts

Introduction

The African plight: The erosion of (human) capital

    1985-1990: An estimated that 60,000 engineers, doctors, and university staff migrated from Africa.

1990-present: Average 20,000/year leave Africa. Some 100,000 expatriates employed in Africa at a cost of about $4 billion per annum.

over $150 billion of capital flight from Africa since 1975.



The African continent suffers from haemorrhage of human and fiscal capital.

Challenges:

Building a robust and enduring and productive capacity in Africa

Human Resources Exchange/Seminar

Challenges, Constraints/obstacles and Opportunities

- MDGs

i

- healthcare

ii

- economic development

-

Management /capability

Challenges:

Healthcare UK nurse registration applicants Country S. Africa 1998/99 599 Nigeria Zimbabwe 179 52 Ghana Zambia

TOTAL

40 15 1999/00 1460 208 221 74 40 2000/01 2001/02 1086 347 382 140 88 2114 432 473 195 183 2002/03 1368 509 485 251 133 2,746 2003/04 1689 511 391 354 169 3,114

Source: WHO

UK government has budgeted USD103 million to attract and retain health workers in 2005.

Challenges:

Economic development

 

Dependence on natural resource intensive exports Marginal manufacturing exports due to a dearth of skills % of exporters by industry

Source: Måns Söderbom (2000)

Challenges:

Two dimensions of skills (i) education and experience of workforce.

(ii) operational/underlying efficiency of firms (managerial ability).

A firm’s operational efficiency is a key determinant of both investment and exports.

-Exporting is associated with significant fixed costs.

>> relatively productive firms with relatively high returns to exporting will afford the costs of international market entry.

Challenges

Management

  

Negative picture of management in Africa (reactive, resistant, authoritarian, etc) Seen through “developing-developed” world paradigm Little research effort into the nature of people and change management in Africa.

African management is cross-cultural management.

Key constructs: Humanistic vs. instrumental cultural values.

Concept of locus of human value in distinguishing between; Instrumental view people as means to an end (predominant western concept), and Humanistic view people as having value in their own right.

Western concept of ‘human resources’ typified by instrumentalism will predominate most post-colonial African organisations in the immediate future.

Opportunities

The future is African (?) Demographics: destination 2050 A

Africa’s pop. is expanding steadily; and to rise from just under 800M today to over 2 billion by 2050.

B-

Africa will have the youngest population during the 21st century.

Region Age group (%)

Over 60s Over 80s Africa Europe North America Asia Latin America 10 37 27 23 22 Projected demographic trends in 2050 Source: World Bank (2003) 1.1

10 7.7

4.2

4.1

Opportunities

Possible outcomes of the demographic divergence:

(i) large number of Africans attracted to Europe to compensate for decline.

(ii) global production to shift to Africa because of its younger population and large supply of labour.

C. large share of the global commodity production far into the future.

 e.g. South Africa:      88% of global platinum reserves, 72% of chromium, 80% of manganese, 30% of titanium, 40% of gold, 44% of vanadium, and 19% of zircon.

It also has 10% of the world’s coal, 10% of its uranium, 8% of its nickel, and 17% of its fluorspar.

Guinea: 30% of the world’s bauxite.

Botswana: 25% of the world’s diamonds.

Zimbabwe: 12% of the world’s chromium as well as large platinum deposits.

The DR Congo: large deposits of copper, cobalt, gold, and other raw materials which have not even been measured.

Opportunities

D Remittances (What about ?) - Important but not a panacea for development.

- How to effectively harness remittances towards development?

critical factors which will determine Africa’s ability to turn its demographic advantage and natural resource endowment into engines for economic growth will be:

[ political

]

governance and, Investment/industrialisation policy.

Obstacles/constraints

DOING BUSINESS -SubSaharan Africa has the most regulatory obstacles to doing business in developing countries (compared to other poor regions) - Starting a business

-plethora of procedures required.

-time spent in bureaucracy -cost of procedures

Contract enforcement

- plethora of procedures and steps (e.g. 58 procedures in Cameroon) - cost of process

- Investor protection

- Poor capture and disclosure of ownership, quality and availability of financial info.

Some good practices

India : Annual expatriates diaspora day institutionalised.

China : government promotes free movement of students, actively courts overseas professionals (60% FDI accounted for by diaspora).

Philippines : government issue USD100 million bond offering to allowing overseas professionals to purchase risk free to capture savings for infrastructure investment.

Mexico : Local and federal government match funds programs to attract capture remittances to essential infrastructure – roads, schools, hospitals.

Diaspora networks: Some 120 groups of highly skilled foreign nationals in more than 40 developed countries, of which Africans: thinkers, inventors, entrepreneurs, artists, who meet and brainstorm about their homelands over the internet.

These can provide a steady stream of ideas, experience, technology, venture capital for development.

Conclusion

- Immigration is a major domestic and foreign policy in international relations Flight of the educated African is more a symptom than the cause of Africa’s woes. Diaspora capital will be a major development instrument in Africa’s future (as a source of fiscal and skilled human capital), but many obstacles remain.

- Incentives that attract diaspora investment will have a strategic impact on increasing manufacturing exports and industrialisation.

- Many African countries remain unsold to the idea of formally engaging with the diaspora human capital. The most enterprising of the African countries that will be best able to capitalize on [their] overseas human capital. - An urgent need for a benchmark Diaspora Charter at the level of each African Union member country.

END