Remarks as prepared to deliver by Development Reimagined CEO Hannah Ryder during a forum of representatives from G7 governments in Nairobi, Kenya, March 2024.
FULL SPEECH BELOW
Thank you very much for inviting me to this forum to share my thoughts with a speech entitled “What is “the West” missing? Defining an affirmative agenda for engagement of Western partners in Africa”.
I’m very happy to be here in Nairobi, my city of birth, to talk about affirmation, and engagement. I’m even more pleased that the title of my speech centers “Africa”. I think it is very important to center Africa here in Nairobi. Being here to make this speech is also great for another reason that I will return to – because one of the key threads that runs through our work at Development Reimagined draws on the economic insights and analysis of a British economist called John Kay, who wrote a book called “Obliquity”. His book, and this theory of obliquity, posits that sometimes the best results are achieved indirectly, rather than directly.
And as I said, I’ll return to this.
But let me start by laying out where we are right now.
A key challenge with the engagement of so-called “Western” governments with Africa so far is that for three specific reasons or elments, the relationship so far has actually ended up not being engagement. Let me explain and describe those three specific elements -albeit in no specific order.
First, the relationship between many G7 countries and African countries is very extractive. Quite often there is a bare minimum of investment, or surface level investment. That’s the case in so many different sectors – from minerals to mining, agriculture, energy, people – or talent… so much is extracted. Entertainment, data, intellectual property – is all extraced. And when you have extractive relationships, or a bare minimum of investment, that relationship is not engagement.
Second, the relationship is often very saviour-based, or superior. We see this with aid narratives. African governments need to be saved, or African people need to be saved from bad governments. Even the concept of “debt diplomacy” or “debt traps” – when it was popular – had underlying it a connotation that African governments need to be saved from bad negotiations with China or others, and generally that African governments negotiate badly. That saviour-based or superior narrative is a very old, colonial narrative. And again, it leads to a relationship that is not engagement.
Third, the relationship between G7 countries and Africa can often be reactive and defensive, and especially when they are compared to the relationships of others, such as China with the African continent. A classic example is the recent infrastructure push from the G7, such as B3W or PGII. While new infrastructure is extremely important on the African continent, and so it feels like it is responsive, the infrastructure push from the G7 has not necessarily been clearly linked or related to national strengths or interests. As a result, what then happens – because it’s a defensive and reactive strategy – you get results such as, over 2023 seeing just three infrastructure projects financed by US organisations, versus nine infrastructure projects financed by Chinese organisations in the same year.
The result of these three problematic elements of the relationship between the G7, or Western powers in Africa, is a relationship that cannot be defined as an engagement strategy. It ends up centering others, and chasing and talking of “counters” to China or other countries engaging with Africa. Yet those counters, in fact, are counters that the “West” can be accused of as well. The “West” easily ends up sounding hypocritical.
For instance…
- The idea that China’s extractive… no partner is not extractive!
- Or the suggestion that China is a bad lender – in fact, no partner gives the right kind of loans right now!
- The idea that China wants African knowledge and data. Well, no partner currently protects African knowledge and data!
- The counter that China wants African markets and plans to dominate African markets? Well, many of Africa’s private sector partners see Africa as at best a market for sales, so far at least!
- China is buying up land – so does everybody, just in different guises!
- China wants to use international rules to its own advantage – so does everybody!
These counters don’t actually work, they don’t ring true as exceptional, and it is particularly because they’re built on a poor foundation, a strategy that wasn’t really engagement, and wasn’t – at its core – at all affirmative.
So here is my proposal.
Affirmative engagement is literally the opposite of the three problematic elements I have outlined.
Affirmative engagement is:
1. Not extractive or surface level, but truly invested and intertwined.
2. Not superior, or savior-based, but respectful, empowering, and expecting of equally excellent governments as counterparts; and
3. Not reactive and defensive, but instead responsive and proactive.
The overall aim of an affirmative engagement strategy is to make your partner better off by being your partner, by being close to you.
And the good news is, there is so much space for this kind of affirmative engagement strategy.
On almost every metric, the African continent accounts for two to five percent of the global total. Whether its trade, Foreign Direct Investment (FDI), renewable production… you name the metric, Africa tends to account for two to five percent, except for population, where we account for seventeen percent!
This fact, however, means that although G7 governments might not easily or conveniently fund big infrastructure projects, instead they do have so many other levers that can help to drive the African continent from accounting from two to five percent, to ten to twenty percent of every metric, while still growing the overall pie.
And what is interesting is that many other of Africa’s “non-Western” partners, from China to India to UAE, do not necessarily have these levers, at least at the moment.
Two key examples bring this proposal to life. And both of them start from complaints from African governments.
The first example starts from a complaint by African governments that the cost of debt is too high.
Now, when African governments talk about the cost of debt being too high, they’re often not talking about Chinese debt at all. They’re really talking about costs of Eurobonds, of private sector finance, including from Development Finance Institutions (DFIs), and even in some cases, the costs of IMF and World Bank finance due to hidden costs from conditionality.
Now, the fact is, these extra costs of debt are a problem for the national interest of G7 countries. The reason being that most G7 countries have DFIs that they want to utilize to unlock the private sector, and leverage the private sector into development. However, with the cost of debt being too high, that means that in fact, G7 taxpayers money being channelled through DFIs is being used to overcome perceived risk, not actual risk. That’s wasted taxpayers money. The African complaints and wasted taxpayers money are the two sides of the same coin, they derive from the same underlying problem.
However, the levers to solve the cost of debt problem are within the G7 themselves. The institutions set up and regulated in G7 countries – such as credit rating agencies or vulture funds, and partners such as the IMF and World Bank, where the US and partners have the largest shareholdings, are available as levers to G7 countries. These levers are hardly available to others such as China, UAE or even Turkey.
Yet in an oblique way, by using these levers to bring down the cost of debt, it would make Chinese finance relatively less attractive, other finance relatively less attractive, and put pressure on those countries to offer less expensive debt themselves. In other words, a G7 engagement strategy that proactively responds to African complaints, and then benefits the African continent directly, as a spillover can counter other partners.
Here’s the second example, which also starts from a complaint.
The complaint by African governments is that their exports are too low value and that they want to move up global supply chains.
Now, the vast majority of African partners are problems in this respect – from West to East, South to North! The US, Europe, China – all somehow interact with the continent at the bottom of the supply chain, even if differently.
African governments are taking a wide spectrum of actions to try to address this complaint themselves. They’re setting up industrial parks, they’re agreeing to the African Continental Free Trade Area (AfCFTA), they’re imposing bans on exports of raw materials. Some African countries are even having military coups or changing governments completely, partly to address these binding constraints on their growth.
But again, here is where the G7, or the “West” has multiple and significant levers, many of which Africa’s other development partners may not necessarily have. For example, the US’s African Growth and Opportunity Act (AGOA) and the EU’s Everything But Arms (EBA) agreement are two of the most extensive preferential trade schemes in the world. The first preferential trade scheme that offers preferences to the entire African continental free trade area could have a massive effect! Similarly, the G7 has a very strong voice in the World Trade Organisation (WTO) – a voice that can be much more influential than China or India or others, also because the G7 essentially designed the WTO in the first place! G7 countries also have significantly lower capital controls compared to other emerging powers. They are today the largest sources of FDI on the continent – another lever for change. Last but not least, another lever is the fact that the G7 have well-recognised and very attractive brands in most major supply chain sectors in the world. These can build very effective partnerships to add value in African countries. Think about the opportunity, for example, here in Nairobi, of a German electric vehicles firm deciding to manufacture in Kenya and partnering with a US smart-services brand such as Uber to preferentially lease its new vehicles to drivers… That is a partnership that would both make sense from a climate perspective and add value industrially.
This is all to say – with a bit of creativity, and obliquity, there are some incredible opportunities to respond and to be proactive.
Now, I could go through these two examples in more detail or give more examples in other areas. But my remarks have already been lengthy enough! So rather than doing that, let me just finish by explain why this affirmative engagement strategy – that is invested, respectful, and responsive – can deliver more results for the G7, or the so-called “West” on the continent than a direct countering strategy vis-à-vis what others are doing on the continent, that essentially layers over – or even maintains – extractivism, saviourism and defensiveness.
There are two key reasons why an invested, respectful, and responsive strategy is best.
First, the use of these broader levers can benefit way more African countries than can be managed by countering other of Africa’s partners as they come up, or if you get information on them. Compare splashing paint on a wall versus painting that wall in a structured, planned way. In the end, if you’re splashing the paint, you’re probably never going to really fill the wall, they’ll always be gaps. What you do with the levers I’ve described is you paint the wall in a structured way – you grow the US pie, you grow the national interest, but you also grow the pie and share for Africa. And it’s still plausible to calculate your impact and result using these broader levers.
Second, the use of these broader levers enables more partnerships, not just partnerships with priority partners. It enables diversification, it enables diffusion, and helps to avoid literally putting eggs into one basket. It’s less “whack-a-mole” in the same places, it’s less obvious. By using these kinds of broader levers, you build more friendships, which has always been crucial, not just in these times.
Bringing this all together, if you know Development Reimagined, you won’t be surprised that my recommendations for an affirmative engagement strategy ultimately say: keep your eyes on Africa, centre Africa, listen to African leaders. Listen to what African leaders are saying positively, but even more carefully listen to their complaints. And use those as a starting point. From the US, to China, to UAE, to Italy – African leaders are becoming more and more strategic, more focused and demanding from all of our partnerships. And rightly so.
But even more importantly, again given our mission at Development Reimagined, I could not leave you without a message that the focus must be on African development, and to encourage you to take seriously and see your own national interest – as G7 or Western governments – in the proposition that the African continent can and will be the world’s third largest economy by 2063. To encourage you to take seriously and see your own national interest in the proposition that Africa can and will be the world’s next global manufacturing hub, also by 2063.
If you take this vision seriously – which is the African Union’s joint 2063 vision, the African Union’s development blueprint through which all the other frameworks and initiatives are derived – if you as a partner to Africa, see your national interest in it, the rest will follow.
That’s the real, only way to deliver an affirmative, but oblique engagement strategy with Africa.
Thank you very much for your time.
March 2024
