Chinese roadmap for rising Africa

It's time for the continent to quit only admiring China's economic miracle and start emulating it

Some say Africa is on track to repeat China's economic transformation. Some elements seen in China before its remarkable takeoff three decades ago are now visible in Africa as well.

During its rise to become a global powerhouse, China capitalized on the size and efficiency of its labor force. It attracted investment from around the world by offering international investors an unbeatable combination of manufacturing productivity and low cost.

But the country has faced its share of challenges during its ascension. When China's economic transformation began in the 1980s, it faced many hurdles coming up with policies to fight chronic poverty and high levels of unemployment - two pressing issues facing Africa today.

China was forced to find new ways to improve its production and achieve export-driven economic growth. At the same time, it found itself in a constant struggle to fend off Western criticism that its vertical style of governance would hinder innovation and market expansion.

Despite the challenges, China rose to become a globally competitive manufacturing hub thanks to its understanding of the world's appetite for cost-competitive alternatives to Western goods and services. Such an achievement was largely the result of policies aimed at boosting production in an array of sectors, in addition to regulations that mandated the establishment of joint ventures between local firms and international investors, and the provision of government assistance to new Chinese companies in targeted industries.

These policies not only allowed China to strengthen its production capacity, but also to benefit from technology transfers and overtake the United States and the European Union to become the world's leading exporter in the past decade.

China's economic transformation might be a compelling roadmap for African countries if the right policies are implemented.

First and foremost Africa should start by focusing on creating their own competitive companies that can supply the demands of both domestic and international consumers.

Although some countries have developed policies to support local startups and provide capital to small and medium-sized enterprises, productivity in Africa's private sector continues to be low. Most state-run companies are also uncompetitive, which means they are unable to cash in on market opportunities in non-commodity sectors regionally or globally.

A look at Africa's gross export earnings indicates that much remains to be done before the continent can become as successful as China.

South Africa, Nigeria and Angola, Africa's biggest exporters, each enjoy annual export revenue ranging between $70 billion and $100 billion. But the exports of almost every other African country are considerably lower than those of most of the world's developing countries.

For example, the combined export revenue of the 10 countries in the Economic Community of Central African States was smaller than the $200 billion that Belgium earned in 2013. Today's low export numbers indicate that Africa has a great upside opportunity to sell to the rest of the world. The region can develop into an export powerhouse by leveraging its relatively low employment costs and its massive labor market.

Another factor that could help turn Africa into a trade juggernaut is that more advanced economies have already tapped many consumer markets across the globe, and are aggressively looking to develop new ones, hoping to help Africa develop a lucrative consumer market.

African government and business leaders have been talking for decades about how important it is that the continent develop into a global economic force. But the trade policies that the developed world has put in place to try to help Africa achieve this objective have largely failed.

That's particularly evident when looking at international trade incentives of the US and the EU.

The US African Growth and Opportunity Act, for instance, has benefited just a handful of African countries and economic sectors. South Africa, Nigeria and Angola have accounted for more than two-thirds of Africa's exports to the US under AGOA incentives since the program was implemented in 2000.

Even though 6,000 items can be exported duty-free from Africa to the US under AGOA, only a few countries have the capabilities to produce them.

Meanwhile, recent changes in the Economic Partnership Agreement between Africa and the EU have failed to increase African exports to Europe. This is all the more troubling because the regulatory playing field between African and EU manufacturers has always favored the Europeans.

The US and EU examples indicate that Africa needs more than export incentives to help it achieve its trade potential. The continent needs capital and policies to develop its own globally competitive firms.

Moving forward, Africa's partners must continue to invest in the continent while taking steps to advance the skills of its 200 million-plus young people and its underused labor force.

At the same time, Africa's leaders from both the public and private sectors need to continue developing domestic production, using China's industrial policies as a model.

The time is past for complacency and excuses. China has provided Africa with a tried-and-tested economic-development roadmap. The continent needs to begin using it.

Francis Ikome is the founder and president of the Cameroonian American Chamber of Commerce. Marshall Comins is the press and investor relations director of the Kirishi-2 Oil Refinery, Russia's first "waste oil" refinery, set to launch in 2017. They are managing partners of the Africa Investment Agency. The views do not necessarily reflect those of China Daily.

(China Daily Africa Weekly 04/03/2015 page10)