Africa – the next driver for wealth says US policy expert

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Dan Runde, a former director of the Global Development Alliance and currently Senior Vice President at the Centre of Strategic and International Studies (CSIS) is a major influencer in Washington DC. The strategist and expert in international development, trade and investment believes Africa could be the next major growth market.

Dan Runde is an American who truly straddles the international stage when it comes to development policy in developing countries in the third world.
He has advised several governments, including the United States, Australia, Canada, South Korea and Denmark, as well as the World Bank and United Nations on development policy.
Dan Runde played a central role in persuading the United States Congress to renew US support for the World Bank and other multi-lateral banks, has testified before the Senate Foreign Relations Subcommittee on US Aid Management, is a member of the Bretton Woods Committee and an active Republican.
A fan of Portugal, he has visited several times, the first in 2005, was a friend of Ambassador Frank Carlucci who did so much to promote the introduction of a fledgling democracy in Portugal in 1975 and cites Portugal – The World’s First Global Village by Martin Page as a great read.
“Frank Carlucci was most proud of his service as ambassador to Portugal, he talked about it all the time, how he supported the emergence of democracy and Prime Minister Mário Soares. The ambassador remained in Lisbon in the turbulent events of 1975 when he put his life on the line and took professional risks at the State Department by supporting democracy in Portugal” Runde said.

Best of times
Stressing that the developing world today is the not the same world as the generation of our grandparents, he said that despite the myriad of challenges in the world, now is the best time to be alive in terms of opportunity and prosperity. “You wouldn’t think it if you read the newspapers; you’d want to jump out the window” he said.
Runde highlighted that 39% of people in developed countries worldwide think that their country is going in the right direction, 60% think it is not, while the top worries are unemployment, crime, corruption and inequality. Interestingly the environment doesn’t feature at the top of the list!
In the developing world, particularly Africa, there has been an “incredible amount of progress” over the past 30 years across all metrics, with the amount of poor people falling from 1.9Bn people ( living on under US$ 1.90 a day) in 1990, to 770 million people, so “poverty is less of a problem than it was 30 years ago,” Runde explained.
By 2030, the African and Chinese middle classes will be twice the size of the poorest part of the pyramid. There has also been progress in global health and education, pre-mature death rates are falling, while life expectancy has increased over the period to the highest rate in the shortest time in human history, with successes combatting diseases like AIDS, polio and malaria.
In the emerging economy, over 80% of adults have mobile phones, 25% have smart phones, with greater coverage and access to mobile banking with “a lot more money sloshing around in developing countries and more taxes gathered.”
There is an enormous demand for global infrastructure with a US$ 3.7 trillion demand in the developing world because of population growth and massive urbanisation while even in the poorest countries there is an emergency of social safety nets and helping the poorest of the poor.
Since 2015 there has been more people living in cities than in rural areas all over the world, with 90% of urban growth occurring in the developing world, and 70 million a year moving from rural to urban areas, but managing that growth, Runde said, will become a “massive collective challenge” in order to avoid crime and poverty with most of the world’s poor living or gravitating towards urban areas.
In 1980 there were 41 democracies in the world, today there are around 100 countries that are free or nearly free. “That’s a good thing; the Berlin Wall meant something despite the democracy recession over the past 15 years” he said.
“If you take the long view we’re living in the freest most prosperous time in human history” added Dan Runde.

Opportunity Africa
Dan Runde says the world needs to start seeing Africa not as a problem or charity case that needs to be managed but as one of the greatest economic opportunities today with 31 free and partly free countries.
Sub-saharan Africa has 450 million mobile phone subscribers, its demography is expected to double to 2.4Bn by 2050. In fact “there will be more Africans that Chinese and Indians combined”.
Mozambique and Angola have a population of 25 million, by 2050 both countries will have an estimated population of 60 million. In 2100 that figure rises to 130 million each. Compared to Portugal, which currently has a population of 10 million, in 2050 that figure will go down to 9 million and in 2100 only 7 million. Portugal, he says, will have a “hell of a demographic challenge to face.”
“Portugal has a big opportunity and role to play in thunking about how it engages with Africa. We have a demographic freight train on the way and the Western countries are going to have to deal with that,” he said.
Dan Runde thinks that young people have four options in the world today: either work for a formal business or start one; go into education; they will either join a gang or militia, or they will migrate. “The question is how do we make from this African demographic freight train the next Asian economic boom which drove growth and prosperity?”
Runde says we can do the same for Africa but it will require a 20-30 years of focus with US and European partners. Today there are over 300 million in Africa’s middle class, by 2030 that middle class will be 460 million people.
“We have this mental mindset that Africa is all poor and all failed states and the reason we think that is because 80% of all media coverage is negative, in other words if ‘it bleeds it leads’” he said.
“We have a shared interest in making Africa rich and there is no reason we couldn’t see a doubling or tripling of Africa’s wealth on a GDP per capita basis of many African countries. There are at least 20 African countries that are making it and on the right path. Thirty are doing not so great but we can help and must think about how we can partner with these African countries” Runde explained.
China has already become the leading economic partner in Africa and Angola’s largest trading partner today is China. Mozambique’s largest trading partners are South Africa and India and with the expected the population boom in both countries, Portugal has a role to play in shaping the future of Portuguese-speaking Africa.

Dan Runde says tourism will be one of the drivers of wealth and growth in Africa and there are lesson to be drawn from the Cape Verde Islands while Mozambique has stunning beaches. “What lessons can we drawn from the happy story of Cape Verde for the other African countries?” He asked.
In 2016 US exports to Africa reached a 10-year low and now, to help redress that situation, has launched the programme ‘Prosper Africa’ aimed at doubling US trade over the next few years. “We need to be seeing a lot more Americans in Africa and encourage young people to study Portuguese and set up businesses in countries like Mozambique” he said with a target for getting up to 100,000 UC citizens to make their fortunes in Africa.

Now the main competitor of the United States, it is no longer an emerging competitor but a fully fledged economic rival.
“China sees Africa as a business opportunity and it takes a neo-colonial approach. “They are prepared to bribe, they have been accused of being racist and there have been several violent incidents which have generated ‘anti-bodies’ to the Chinese on the continent because of their behaviour, particularly in Zambia where the elections partly focused on whether the country should have better relations with China or not.
There are 46 projects being built and or funded by China in Africa for trade-offs in areas to do with minerals, agriculture and oil.
Dan Runde also highlighted that there has been a boom in Africa partly because of debt forgiveness from the West, but if China piles another layer of debt on Africa that could hold Africa back and reverse the e economic growth gains that have been made, Dan Runde concluded.

*Dan Runde was the Guest Speaker at the American Club of Lisbon (ACL) on 10 December 2019 where he spoke about the “Future of Global & African Development”.