South African playwright Athol Fugard once stated that when the Rainbow Nation went through its extraordinary emergence from Apartheid, it was like having spent a lifetime in a boxing ring with an opponent and suddenly finding yourself in that ring with nobody else.
“You realize you’re now to take the gloves off, get out and reinvent yourself”.
From the days of independence from colonization to the present, we see such reinvention reflected across Africa. We have long marched to the beat of our own drum in the global marketplace, yet today, amidst the geopolitical shifts following ‘Brexit’, we enter the proverbial ring with a newfound confidence, backed by hard evidence.
The 2016 Africa Prosperity Report, recently released by the Legatum Institute of London, offers insight as to just why, from a foreign investment standpoint, Africa ‘rises’.
And their proof is most compelling; it is inherent in the resurgences found in consumer confidence in, as but examples, Nigeria and Kenya; the former, an economic powerhouse of the continent; the latter, one of the best-performing economies in the Sub-Sahara with a resurgent tourism sector.
Though the results differ with regard to upswings in Gross Domestic Product (GDP), this Report places emphasis on what stays the same – the fact that the strategy deployed by governance and adhered to by the private sector in emerging African economies is uniform – the effective promotion of, implementation of and abidance to rule-of-law.
U.S. investors and intrepid tourists eye with interest the stability in the performances of key African economies. They base decisions regarding both travel and investment on vital factors that encapsulate rule-of-law; constraints on government power, lack of corruption, open and accountable leadership, the promotion of fundamental rights, security and regulatory enforcement, to name a few.
These investors also take note of the results of rule-of-law in its execution, acknowledging its direct correlation to indicators of growth such as the alleviation of poverty, revitalization of manufacturing and mining amidst commodity crisis, an increase in tourism and decrease in civil unrest. African nations bearing such fruit, such as Liberia and Botswana, provide peace of mind and security when considering integration in to budding markets.
And lastly, these investors take a look at facts – The United Nations Development Programme (UNDP) makes clear the case that a “fair and functioning legal system that conforms to international standards of human rights and rule-of-law is at the precipice of economic growth, security and poverty eradication”. And Legatum’s Report also finds that central to prospects of delivering prosperity are four main factors: a diverse economy, respect for civil liberties, personal freedom and effective governance—essentially, rule-of-law in theory and practice.
In the era of globalization, the degree of economic liberalization to encourage investment in Africa is more omnipresent than ever, matched only by the rapid expansion of legal development. Dynamic nations across the continent, such as Kenya ($55.24 bn GDP), Ghana ($48.14 bn GDP) and Tanzania ($33.23 bn GDP), have legal systems on par with so-called ‘developed’ countries and thusly have a higher degree of cohesion.
Transaction specialists Kenny Chiu and Rita Chen of ENS Africa have stated that the continent needs to continue to create favorable investment conditions through rule-of-law; there remains “…an opportunity to actively share in the dividends of globalization by establishing legal frameworks that provide equal, reasonable and non-discriminatory law enforcement”.
It’s no surprise then that the 2015 World Justice Project Rule of Law Index lists nations that rank highly and seek to amplify rule-of-law administration in direct connection to those of the leading economic drivers of Africa.
Now no doubt and sadly, rule-of-law potentially dissuades certain foreign investors of whose intentions are below board. There are challenges such as enforceability, a concern to many investors spurned by good intention turned window-dressing from their partners in governance.
However, with an eye on rule-of-law, foreign investment opportunity could not be more abundant when in this current position. I always say that “…the best time to climb on the back of an elephant is when it is on its knees; when it rises, you should be safely on its back”.
Tourvest, a Black Economic Empowerment (BEE) consortium in which I Chair, has been able to prosper due to effective brokerage and management, coupled with the strength found in African socioeconomics, propelled by globalization-born advances in technology, which buttress the need for governmental transparency.
With a business offering that ranges from travel management companies through to foreign exchange bureaus and clients including American Express and British Airways, we are proof positive that rule-of-law abidance, in-sync with private-sector accountability, generates opportunity across the continent for the proprietor and consumer alike.
Ultimately, weak rule-of-law deprives societies of legal rights and, from such circumstances, the potential to thrive socioeconomically.
Effective rule-of-law in all of its forms, as derived from the Legatum Report, is the foundation, the incentive for international investment and the driving force behind our continent’s unlocked potential.
It is high time foreign investors and tourists alike take notice of Africa’s willingness to “get out and reinvent ourselves” accordingly.
Robert Gumede is an entrepreneur, philanthropist and Founder and Executive Chairman of South Africa’s Guma Group of Companies. The views expressed are his own.