WAR-TORN SUDAN HAS BEEN the site of a years-long civil conflict.
In the 1970s, vast oil reserves were discovered in the southern part of the country. Meanwhile, pipelines and refineries were appearing in the northern region, perhaps as an attempt to prevent secession.1 The two regions of the country could not agree on how to “share” oil revenues, causing in-fighting and an eventual split in 2011 into two separate nations. To this day, South Sudan remains one of Africa’s least developed countries.2
But even here, we see rays of hope.
In mid-2017, my company—Centurion Law Group—successfully facilitated one of the biggest and most difficult deals in African oil and gas to date in South Sudan. We worked with Nigeria’s Oranto Petroleum and the South Sudanese government to open the door for Oranto to explore for oil in South Sudan’s Block B3. The resulting exploration and production sharing agreement (EPSA) enabled Oranto’s comprehensive exploration and long-term development to begin immediately.
Shortly after that landmark deal, Centurion Law Group entered into a strategic alliance with a South Sudanese law firm, Awatkeer Law Chambers, in Juba.3 Awatkeer’s local network and Centurion’s pan-African reach means we can train South Sudanese attorneys on using our legal technology platforms to better serve businesses, the government, and non-governmental organizations (NGOs) in South Sudan, particularly in matters involving energy law.
This agreement was a significant development because Oranto’s EPSA is the first to be signed in South Sudan since 2012. This EPSA is a testament to the government’s strengthened commitment to nationwide economic revival through investments in utilities and infrastructure, particularly in the oil and gas sector. More importantly, it signals a renewed hope: If we can succeed here, we can succeed everywhere on the continent.
I have helped both private companies and African governments alike take proven steps in the oil and gas industry to improve African economies and help everyday Africans live better lives by harnessing the influence of our natural resources. So, I know that we Africans can overcome significant obstacles to help ourselves. I’m optimistic that our successes can be contagious.
At the time of this writing, some 400 delegates had recently returned home from South Sudan Oil & Power 2018.4 Attendees gathered to discuss (and, rightly, celebrate) the growth of exploration activities, the resumption of oil production in the region, and the ongoing enhancements to regional infrastructure and security in operational areas. This second annual conference of oil and gas professionals represents the contagious nature of success: Open dialogue among government delegations, diplomats from abroad, and private sector representatives is fostering conversations that will lead to a stronger Africa.
But I also know that accomplishing this goal takes work—a lot of work—and requires the initiative and cooperation of Africans—all Africans. I call on you to step up. We must all shoulder the responsibility of working to improve Africa. It’s not an onus, but an honor.
There’s an adage that goes something like this: Give a man a fish and you feed him for a day. Teach a man to fish, and he’ll feed himself for a lifetime.
Charity has its place. It’s hard to watch someone flounder, especially when we can help lift them back up. Monetary aid is a quick fix that can stave off hunger, help someone keep their home, or pay for urgent medical care. But this generosity, however well-intentioned, can be misdirected. And once the gift has been used up, there is nothing left.
For too long, well-meaning foreign entities have stepped in to provide aid to Africa—but, in doing so, they have inadvertently stepped on our toes. In some instances, they did more harm than good. Many charitable and nonprofit endeavors are designed by donor nations and foreign institutions that don’t sufficiently understand what the recipient country or community really needs or how it operates.
This is also often the case with for-profit companies. It’s quite common for multinational companies to offer an extra benefit or two to sweeten their deal with host countries. But these “benefits” typically reflect the same lack of understanding—particularly in African countries.
I recently heard the story of a foreign oil company trying to curry favor with a tribe. The company’s executives approached the tribe’s chief to ask what his people needed. The chief proposed a hospital; the execs agreed. It sounded like a win-win: The tribe would get necessary improvements in healthcare, and the oil company would foster goodwill by addressing the most pressing needs of the tribe.
The problem was, a hospital was not actually the community’s most pressing need. The chief had merely suggested the first thing that came to mind. While it was true that people in the tribe were getting sick, it wasn’t due to a lack of access to medical care. It was because they were drinking contaminated water. The tribe didn’t need a hospital; they needed a proper water supply.
But, of course, the oil executives didn’t know that. And they didn’t spend any time doing additional research or consulting with the local government. They just moved forward and built the hospital. Once complete, the building sadly lay vacant: There were no doctors to staff it or beds to accommodate patients. It was locked up and fenced in, no good to anyone.
I like to give these execs the benefit of the doubt; I like to believe that the company actually tried to do the right thing and find out what the locals needed—but they neglected an essential step in their due diligence. They talked with one person and didn’t validate his request or determine the logistics.
Good intentions only get you so far. In reality, good intentions must be backed up by hard work, due diligence, and solid execution to have an impact.
You can’t simply throw money into a community and expect positive outcomes. But, in some cases, this is what is happening. We’ve heard stories of companies going out and tossing out bags of money from a boat. Neighbors fought each other over the cash until it was seized by gangs, leaving the community with nothing but ill will.
And while first-world governments and international charity organizations would argue with me, I consider many of their efforts in exactly the same light: They may be well-intentioned, but they are essentially throwing out sacks full of money.
William Easterly, an economics professor at New York University, co-director of NYU’s Development Research Institute, and nonresident fellow of the Center for Global Development, has called African aid “One of the scandals of our generation.” Easterly argued at a debate back in 2007, “Money meant for the most desperate people in the world is simply not reaching them: $600 billion in aid to Africa over the past 45 years, and over that time period there’s basically been zero rise in living standards.”5
Zambian global economist Dambisa Moyo has research that supports this point. “Aid has been and continues to be an unmitigated political, economic and humanitarian disaster for most parts of the developing world,” she wrote in her book, Dead Aid.6 Africa has been the recipient of more than $1 trillion in aid over the past 50 years—but all this charity seems to have just exacerbated poverty. During the peak of Western aid from 1970 to 1998, Moyo reported, poverty in Africa actually rose—from 11 percent to 66 percent.
The problem with charity is that it can become a crutch. The longer people receive contributions, the more they rely on them—and the less motivated they might be to put forth extra effort toward self-reliance. And, as Moyo bluntly pointed out, “Aid has never created a job.”
Such is the case in Africa. If you’ve read my book, Big Barrels, you might remember a discussion about this. My research for that book uncovered analysis that shows aid-dependent countries are less capable now of rising out of poverty than they were 30 years ago.
Reliance on others is a hindrance. And aid, however well-intentioned, often comes with a price.
Let’s consider loans. Sure, loans are intended to be paid back rather than simply gifted out of generosity. But loans foster attachments that can be just as detrimental as the crutch of charity. When payment comes due, countries that have racked up too many loans are unable to pay off their debts.
This is definitely the situation across sub-Saharan Africa, where the Overseas Development Institute (ODI) classified almost 40 percent of those countries “in danger of slipping into a major debt crisis” as of October 2018 and named eight nations—Chad, Mozambique, Republic of Congo, São Tomé e Príncipe, South Sudan, Sudan, The Gambia, and Zimbabwe—that are already in debt distress.7
“Although borrowing is often seen as a prerequisite for growth, unsustainable debt poses significant risks to global commitments to end extreme poverty, including the Sustainable Development Goals (SDGs). Unsustainable debt burdens compel governments to spend more on debt servicing and less on education, health, and infrastructure,” ODI authors Shakira Mustapha and Annalisa Prizzon wrote. “High debt also creates uncertainty, deterring investment and innovation, and has a negative impact on economic growth. A poorly managed debt crisis would not only undermine progress towards the SDGs, but it could also reverse the development progress made over the past decade.”
While we are grateful for the decades of financial support, we need to learn to stand on our own—to fish for ourselves, as it were. The days of our reliance on foreign investors and outside aid must come to an end if we Africans are to make meaningful improvements in our homelands.
Let’s look at some startling geography: Africa, the second-largest continent after Asia, is five times the size of Europe. But its coastline is only a quarter as long, and 16 of its countries are landlocked. This severely hampers international trade.
In their study “Geography and Economic Development” for the National Bureau for Economic Research, John Gallup, Jeffrey Sachs, and Andrew Mellinger pointed out that “Coastal countries generally have higher incomes than do landlocked counties. Indeed, none of the 29 landlocked countries outside of Europe enjoys a high per capita income.”8
Does this mean that economic development in landlocked African nations is impossible?
Absolutely not. But it requires a dedication to cooperation. Africa is a sum of her parts; if one of her nations falls, the rest also suffer. But if we rise together, supporting each other and considering one another’s successes our own, our strength is unlimited. We’re already seeing signs of such support, from the 17 nations bordering the Gulf of Guinea joining forces to enhance the maritime safety and security of their region to 4 East African countries teaming up to increase agricultural productivity and growth through scientific advancements.
Success breeds success. But it also takes the collective labors of all stakeholders: the African governments, the African companies and investors, and the organizations striving to establish the continent’s rightful place in the world of 21st-century commerce.
Let’s talk about the government. What is its responsibility in achieving successful economic growth?
The ODI infographic, “Financing the End of Extreme Poverty,” claims, “Growth alone can halve poverty. Investing in health, education, and social protection could do the rest.”9
Yes, many African nations are small economies, where increasing growth rates and expanding revenues will be a challenge. But, as Indermit Gill and Kenan Karakülah pointed out in a piece they wrote for the Brookings Institute, “Increasing tax revenues is something that almost all of the subcontinent’s governments can do by themselves.”10
Meanwhile, Gill and Karakülah believe, as I do, that the larger African economies have the ability to expand their own economies and spur plenty of positive growth—even across borders: “There are some countries that can do this on their own. With more than half of the region’s economic output, Nigeria and South Africa control not just their own destinies but also those of their neighbors.”
I would add that large countries that prioritize cooperation among federal, provincial, and municipal governments are the ones most likely to successfully generate growth. Look at Nigeria and South Africa. Has a strong central government helped them yet?
The Nigerian government controls the vast majority of the nation’s resources—and, therefore, the power—leaving the weaker municipal governments poorly funded, inefficient, and all but powerless to handle local issues. Every level of government should have sufficient resources to complete the projects under its jurisdiction. But that’s not happening—the levels aren’t cooperating, and everyone is suffering the consequences. This has actually held back development, especially in creating value and building infrastructure.
Meanwhile, South Africa’s 1996 Constitution identifies its three bodies of government (national, provincial, and local) as “spheres” rather than levels to connote interdependence instead of dependence. While great in theory, this effort toward deconcentration has been hampered by the lack of an adequate policy framework. An unclear delegation of responsibilities often means that the sphere expected to execute an activity doesn’t have the capacity to deliver.
As South Africa shows us, the key elements needed here are strong, clear, enforceable regulations. We need to improve our regulatory policies to create effective and noncomplex master plans. At the same time, let the private sector work. While a strong central government is good for stability, a more decentralized policy will enable local communities to work effectively, employing local expertise whenever possible.
“Countries with better policy frameworks exhibit higher efficiency of investment,” the World Bank explained.11 “A country’s institutions may create incentives for investment and technology adoption and the opportunity for workers to accumulate human capital, thereby facilitating higher growth over the longer term. Weak institutions, by contrast, may encourage rent-seeking activities and corruption, leading to less productive activities; discourage firm investment and human capital accumulation; and lead to worse growth outcomes.”
With this in mind, the most impressive example of strides toward a positive business environment might be Rwanda. This is, after all, a country with basically no natural resources—but, nonetheless, they built something amazing.
In spring 1994, the world watched the manmade genocide of almost one million ethnic Tutsis and moderate Hutus perpetrated by ethnic Hutus. In most western cities, people wondered: How did this happen? How could we let this happen? Even after the killing spree ended, the country was in utter despair and on the verge of collapse.12 And yet, the last two decades have brought an amazing economic turnaround because the government worked to position itself as an attractive destination for business ventures. They focused on elements to draw investors, from improved infrastructure and transportation services to intra-regional trade and security to enhanced healthcare services. Most importantly, they introduced an efficient bureaucracy. This is really something that most African countries could proudly emulate. With the right leadership, every country can be a success story.
I see two major regulatory changes African governments can implement immediately to promote investment.
The first is the sanctity of contracts. Investors want to know, unequivocally, that their agreements will be respected and that they will see the end result of their financial obligation. The second is the ease of doing business. African leaders must take an active role in both of these elements by taking a hard look at their tax framework. We cannot create suitable business environments or create investment opportunities if we aren’t ensuring that people will yield the right dividends after their hard work. We need to show the benefits of the investments while we prepare ourselves to meet the market dynamics because integration without preparation will only lead to frustration.
The free market works well, not because the private sector is made of saints—many business people I have met are just as self-serving as politicians—but because of competition. Without this crucial element inherent in the free market, there is no guarantee that the resources the private sector employs will, in fact, be used efficiently.
We Africans must build better organizations and run better businesses. The private sector must partner with the government to create jobs and grow domestic opportunities. African businesses have to understand that it is about delivery and getting the job done: All the glamour does not count if there’s no return on investment.
I don’t mean that business people should be greedy cut-throats, only out to make a big profit. But a country’s success hinges a lot on its businesses succeeding. Business owners should consider a two-fold obligation: They need to make a profit to keep their shop afloat and support the prosperity of their community.
One solid way to make a profit is by investing in a company rather than making a direct engagement.
When I first started my company, I had the benefit of partnering with an American law firm, Greenberg Traurig, under the leadership of its Africa Chair, Jude Kearney. They didn’t just offer me cash on deals. They offered to invest in our people and help me build my workforce alongside that of our clients. I thought that was an interesting model, one that I hadn’t considered. It really shaped my company and gave us a lot more to work on than a simple handout would have. In the process, I enhanced my Western education even more and instilled good business ethics and skills into my staff, while also emphasizing African values.
Businesses can succeed in Africa by empowering communities. Building solid organizations with solid human resources and establishing strong networks in Africa and within Africa will allow the partners to create opportunities that tap into unlimited resources.
I’ve already lamented foreign handouts. But that’s certainly not to say that foreign business affiliations are unwise. On the contrary: Foreign partners are essential to Africa’s growth. They can teach us the transferrable skills we need to push ahead. For me, personally, my American education and my American partnership gave me the chance to believe in myself.
But capital only works in an enabling environment.
The best partners for African companies are the investors who want to transfer technology and empower Africans to use—and improve—it. Simply put, we are not going to develop Africa without technology.
We need investors who show that they want to fully participate with us by coming in and building long-term sustainable businesses that last and make a profit, create jobs, and further development.
On the contrary, investors who still see Africa as a place to throw sacks full of money (literally and figuratively) are going to have a hard time.
Everyday Africans today frown at the “aid model” because they know that aid has led to corruption, mismanagement, theft, and—worst of all—animosity among Africans.
Nations across the continent have woken up. We’ve realized the truth behind the concept of strength in numbers. Cooperation and collaboration among neighbors and across borders are promoting African self-reliance.
We are uniting for positive change.
This is happening to groups like the Investment Climate Facility for Africa (ICF) and other independent organizations that foster initiatives that make it easier to do business. ICF, in particular, makes it possible for companies to “Register, pay their taxes, solve commercial disputes, clear goods through customs, and so much more, in a quick, simple and transparent manner. This simplification and efficiency is helping to speed up economic growth, ultimately changing the lives of millions of Africans.”
As ICF Co-Chair and former President of the Republic of Tanzania H.E. Benjamin Mkapa explained, “ICF was set up to prove that investment climate reforms can be done quickly, using little resources while creating great impact for the private sector, governments, and countries in general. We have done this. We have shown that it is possible. Now it is up to African countries to follow the example set by ICF and to pursue greater investment climate reforms that will spur Africa’s development and unleash the entrepreneurial spirit of its people.”13
Likewise, the African Development Bank (AfDB) Group bolsters African economies by helping its 54 regional member countries and 26 non-regional (non-African) member countries achieve sustainable economic development and social progress. By helping African countries—individually and collectively—invest public and private capital and financing projects run either by the government or the private sector, this multilateral development bank is attacking its main target of poverty across the continent. This means that the AfDB doesn’t just provide monetary assistance. To support development efforts, regional member countries receive policy advice and technical assistance as needed.
With its connection to and understanding of the continent, the bank is in a unique position to help its members most effectively. The AfDB website (www.afdb.org) explains, “The admission of non-regional members in 1982 gave the AfDB additional means that enabled it to contribute to the economic and social development of its regional member countries through low-interest loans. With a larger membership, the institution was endowed with greater expertise, the credibility of its partners, and access to markets in its non-regional member countries. The AfDB enjoys triple-A ratings from all the main international rating agencies. However, the AfDB maintains an African character derived from its geography and ownership structure. It exclusively covers Africa. It is also headquartered in Africa, and its president is always African.”
That, I think, is key: Africans must unite in Africa, with Africans, for Africa.
That’s not to say that we need to rule out international involvement entirely. The AfDB exemplifies the value in a larger constituency with a broader reach and greater access to funds. Such is also the case with the “Great Green Wall.” Without external support of multiple nonprofit organizations and international agencies like the World Bank and the United Nations, some 20 African countries may never have teamed up to battle hunger and strengthen their economies. But they did so on African terms.
The Great Green Wall for the Sahara and the Sahel Initiative (GGWSSI) was a pan-African program launched by the African Union (AU) in 2007 to reverse land degradation and desertification in the Sahel—the semi-arid belt that spans 5,400 kilometers (3,360 miles) from the Atlantic Ocean in the west to the Red Sea in the east—and Sahara regions. The initiative started as a massive tree-planting project that was to result in a wall of trees—15 kilometers (9 miles) wide and 7,775 kilometers (4,831 miles) long—stretching from Senegal in the west to Djibouti in the east. While the wall was deemed impractical, the land protection campaign has evolved into something new.
“Slowly, the idea of a Great Green Wall has changed into a program centered around indigenous land use techniques, not planting a forest on the edge of a desert,” Mohamed Bakarr, the lead environmental specialist for Global Environment Facility, told Smithsonian Magazine.14 “We moved the vision of the Great Green Wall from one that was impractical to one that was practical. It is not necessarily a physical wall, but rather a mosaic of land use practices that ultimately will meet the expectations of a wall. It has been transformed into a metaphorical thing.”
Across the continent, all Africans must advocate for better business practices and good governance. This should not be left to Western companies or foreign institutions. We welcome help, but we have to lead this. We can no longer be passive bystanders when it comes to fighting for policies that will encourage investment, create jobs, and bring prosperity to Africa’s countries and its people.
So, let’s learn to fish—and teach each other what we learn.