Jean-Michel Severino, Chairman of the Supervisory Board of the I&P fund, believes that Africa will benefit from the demographic dividend, and then from the growth of its population.
How do you see Africa developing today?
Structural adjustment is over. Africa is entering a period of demographic transition. The birth rate is starting to fall. We are in search of the demographic dividend. In other words, improving the ratio of active to inactive people.
In a much more open world with low interest rates, we are going to experience a major period of growth. The African continent has seen between 4% and 5% growth since the beginning of the century, but this trend is slowing down. Since 2015, Africa has experienced a series of major economic events that have had a major impact, notably Covid-19. Then there was the Russian-Ukrainian crisis and the rise in interest rates. Not to mention the demographic transition, which is taking place more slowly than previously thought, and more unevenly. The truth is that the continent continues to save too little to meet the immense and legitimate needs of its population in terms of education, health and infrastructure.
Nevertheless, this is only a passing moment. We should see a more favourable economic climate with global interest rates falling. The decline in debt will help the continent to improve its growth. And the demographic dividend will gradually become a reality; it will mean that there will be slightly fewer inactive people than active ones. We should see a more favourable context for African growth.
However, the current context is highly volatile. How can we ensure a form of stability today so that we can finance Africa when money is becoming scarce?
We cannot avoid having national economic policies that are best adapted to the current context. Over the last fifteen years, not everything has been a disaster! The continent’s economic growth is the result of an improvement in the overall quality of economic policy compared with the 1970s and 1980s.
We are in a context where resources are increasingly scarce, and external financing of the African continent is also more complex. It is going to be less easy to finance ourselves. This implies better use of public resources and better governance by governments.
With I & P, you have supported dozens of companies and provided them with development tools. How can this experience, which Africa needs, be generalised?
Yes, we started from scratch, with nearly 200 colleagues, almost all Africans, spread over twelve sites. Some 300 companies are financed by I&P. The fund intervenes from the stage when the product is only in the mind of the entrepreneur, right through to more established SMEs, with people who have been in the business longer and with more stability.
If we’ve managed to do anything, it’s to help raise awareness of the importance of supporting African entrepreneurship. This is essential for growth. Most of the African businesses of 2050 are not yet born. They are still in the minds of entrepreneurs. There is a massive challenge in ensuring that businesses emerge more quickly from the brains of their entrepreneurs! There is a high mortality rate among start-ups and SMEs, which we need to reduce.
We need to accelerate the growth of businesses, in particular by giving them greater access to skills and finance, in order to combat the “glass ceiling” that most African entrepreneurs face when it comes to raising capital. So we need to invest quickly.
This is an agenda that is increasingly well understood. We are at a stage where we know a great deal about experiments and pilots. We are able to show that we can accelerate African entrepreneurial growth with very concrete instruments such as acceleration, incubation, venture capital, etc. However, what we need to do now is to scale up on the basis of existing solutions with proven effects. This means investing a huge amount of public and private money to accelerate the process.
Africa is made up of 54 countries. With this diversity, can we talk about Africa in a generic way? If we have to define trajectories in terms of efficiency and success, how do you draw a map of the continent?
To draw a map of Africa, I start by looking at the continent’s two major economies: South Africa and Nigeria. Each of these economies faces very specific problems. They are so important in terms of GDP that they end up overshadowing everything else.
In the rest of the continent, we have several categories of countries that are taking shape. We have relatively diversified countries that rely essentially on their internal productive resources, such as Senegal, Côte d’Ivoire, Kenya and Uganda. These are countries with excellent economic trajectories. To these we can add Ghana, which has just gone through a rough patch but is on the way out.
Then there are the mining and oil economies, which are prisoners of their economic models. They follow the trend in oil and commodity prices. They have very little capacity to diversify. Angola falls into this category. And then we have a group of countries in major political and social crisis, which are experiencing enormous difficulties in developing, such as Sudan and countries in civil war. This is a fraction that …
And sometimes through democratic means. We must salute what is happening in Senegal. The country has just given a great lesson in democracy. Things are moving! It is now up to the new leadership team to show that it is capable of responding to society’s demands. In any case, it’s a wonderful lesson in democratic governance that has been given to the whole continent and to the world in general.
How do you view the Europe-Africa relationship? It doesn’t seem to be succeeding in its bid to create a new partnership, despite the importance of trade.
Other players, such as the Chinese, have understood better. We are heading almost inexorably towards a situation, by the end of the century, where around 40% of the world’s population will be on the African continent. There will be between 3.5 and 4 billion Africans in a world with 10 billion inhabitants.
Well before the end of the century, the GDP of the African continent will be greater than that of the European Union. We are moving towards a continent which will become, by the force of its transformation of its resources, its demography and its economy of planetary importance. Neither Africans nor Europeans are yet aware of this. It’s true that it’s happening gradually! On the European side, we need to get to grips with this reality and see that over the next 70 years, Europe will gradually become the neighbour of the most important continent on the planet.
Is Europe really benefiting? We have the impression of inertia, a lack of vision and dynamism… which is preventing it from making the most of this opportunity.
There are a lot of barriers preventing Europe from becoming aware of this issue and making it a part of its policy. Like, for example, the colonial past, the weight of the imaginary, and so on. Or the issue of migration, which is a reality, but which ends up being the only ‘window’ through which Europeans look at the African continent.
We have issues that obscure reality, and this partnership. The EU should normally be the world’s leading beneficiary of Africa’s development. It is Africa’s leading customer and supplier. Increasing the size of Africa’s GDP will have major positive repercussions for Europe. Even if we were to lose some of Africa’s market share, there would still be a tremendous economic opportunity for Europe in the long term!
What has happened to bring us to this point in France?
Company-to-company relations are not quite the same as government-to-government relations. We’ve had a bad diplomatic moment between France and part of the African continent! This debate, which is turning sour, concerns only a small number of francophone countries. Today, France’s relations with Kenya, Tanzania, Nigeria and even Ghana are excellent.
Most of France’s relations with the African continent are relatively good, apart from a few countries when it comes to governments or companies. In French-speaking Africa, there are a number of difficulties, but we have to accept that African societies have become increasingly mature and want to abandon the legacies of the post-colonial period.
Relations must evolve towards another stage of maturity. This does not mean that they will be less good, but they will be different. They will give way to the recognition of greater maturity, identity and sovereignty. We’re going to have to manage this natural, normal evolution, without bitterness.
How do we rebuild these relationships?
There are steps that need to be taken on both sides. France must accept that the Sahelian countries should follow their own path of sovereignty. In this respect, Niger does not want French and American military troops on its soil. We have a military regime in place in three Sahelian countries. This is part of the sovereignty of the people of Mali, Burkina Faso and Niger. But these countries must pursue reasonable and profitable policies and diplomacy in the interests of their peoples. It is absurd, for example, to want to leave ECOWAS and WAEMU and destroy regional integration!
How can we keep up with the digital revolution and artificial intelligence? Can these tools serve Africa and its growth?
Two things are going to happen and will shape the African continent for the better over the next fifty years. The first is the construction of a gigantic domestic market that Africans are in the process of building thanks to demographic growth and the intensification of urbanisation. The second is that, thanks to the demographic transition, the ratio of active to inactive people is constantly improving.
We will see this gradually over the coming decades. Savings will increase, as will investment; working people will have fewer burdens on their shoulders, and more will be invested in health and education.
This demographic shift will be the main driver of economic growth and improved living conditions. Public policies will have to be the best possible to ensure that the greatest gains are made from this favourable development.
Are you thinking of condensing this “feedback” into a forthcoming book?
Yes, I do hope to be able to contribute to the debate on the vision of Africa’s future in the near future.
Jean-Michel Severino was born in Côte d’Ivoire. He is a former Vice-President of the World Bank and former Director General of the Agence Française de Développement, among other positions.