A Call for New African Growth

First delivered as a speech to African leaders, in Kampala, Uganda on July 24th, 2010.

Friends, it is a great honour to have been invited here today and to speak with you at the invitation of Prime Minister Meles, whose work alongside you all has inspired much of what I want to talk about today.

And here in Kampala it is fitting to begin by remembering all the innocent lives which have been lost to terrorism.

And so friends let me say to you, and to the people of Uganda, that I grieve with you in this night of agony.

In Britain, the United States, Spain, Kenya, Bali, across the Middle East - we each and all know the suffering and the sorrow that terrorism brings, and must stand strong with one another in the darkness.

And so together let us say to the families of the victims - they will never be forgotten. And let us say to the people of Uganda - you will never walk alone.

And it is this sense - that our fates are shared, our destinies entangled - that I want to discuss with you today. My argument is three fold.

Firstly - there is no way forward in protectionism and narrow nationalism: instead we need to match the onward march of a fully global economy with the creation of a truly global society founded on shared values, agreed objectives and new and better global institutions.

Secondly - Africa must be not simply the beneficiary of that global society, but actually one of its key authors and indeed its soul.

And thirdly - since the turn of the Millennium we have witnessed a decade of development, but have thought too narrowly of development as aid. In the coming decade we need to go well beyond an old paradigm of development based on relationships of donor and recipient, and adopt instead a new conception of development as a partnership for investment and growth. The future is no longer giving and receiving, but instead investing together in a future which is shared.

It will take a lot from all sides to achieve the new partnership I am talking about. But I am confident that in this room we have the leadership which can accomplish all this and more.

Because just look what you have already achieved.

Your levels of growth inspire the world - with lower income countries forecast to grow at 5% this year, compared to 2% growth in high income countries.

And you have transformed the lives of your people these last ten years. Now 8.5 million extra African children go to school compared to just ten years ago, and in just one decade you have put 3 million extra Africans on ARV treatment for HIV.

And you have persuaded the richest countries - and I am proud that Britain helped - to cancel 100 billion dollars of debt and to commit to doubling their spending on international development.

In the ten years since the start of this new century you have created a unique peer review mechanism in NEPAD, one which is now being attempted by the G20 in the peer review of the Framework for Strong Sustainable and Balanced Growth.

No injustice should endure forever and it is to your credit as leaders that you as a group have achieved more for social justice by working together in these last two decades than has been achieved in the previous 100 years.

But as Nelson Mandela has said - the struggle for justice never ceases, and once one mountain top has been scaled, you always see a new summit to climb towards.

And my argument today is that while Africa's achievements - your achievements - are enormous, the world asks yet more from you now.

Africans have always inspired progressives with the heroism of your struggle - against the wrongs of imperialism, against apartheid, against poverty. But it is time not merely to inspire us, but to lead us.

Africa must lead, because today, because of the interdependence of our economies, and because what happens in the richest city of richest country can directly affect the poorest citizen in the poorest country, we can no longer think of policies as only for the North or only for the South, or only for developed countries or only for developing countries: shared global problems require shared global solutions.

And this is one world in need of global leadership - one world in which I am clear too that Africa does not only stand to gain from a global society, but must be its inspiration and a leader. Let me explain what I mean by a global society. I think you all know that President Obama spent some time as a community organiser before becoming a politician. I'm somebody who spent some time as a politician before becoming a community organiser...

I believe in people-powered movements, now more than ever, because I think that achieving the biggest changes that all of our countries need will require the mobilisation not simply of elected politicians but of citizens on an unprecedented scale.

All of our lives are connected: we can all impact for good or ill on the lives of people we have never met. And yet we don't currently share a common society or effective global institutions that allow us to treat strangers as neighbours or give life to our feelings of fellowship, solidarity, compassion and care.

But it doesn't have to be that way. I believe that it is possible for people, acting together, to build a global society, and design the institutions that would best serve its values. The social and democratic deficits which are at the heart of globalisation and which leave Africa so underrepresented are not inevitable - they can be overcome by we the people of this world.

I believe a global society with global institutions founded on shared values is possible - and that the need for it is nowhere more apparent than here in Africa. The continent to be hit first and worst by climate change. The continent whose integration into the global market is least advanced and whose vulnerability to commodity price shocks and financial instability is most pronounced. And, of course, the continent which carries such an intolerable burden in terms of disease, illiteracy, conflict, hunger and the unnecessary loss of life.

Africa has so much to gain from a global society, but also so much to offer. And so I wanted to come to this magnificent continent, full of more untapped potential and unrealised talent than any other, to talk about the future, and the global society that we can build together.

You know better than anybody that the great challenges Africa faces - climate change, poverty, terrorism, stunted growth, financial instability - are issues that no one country and no one continent can face on their own. They are challenges we will only meet and master working together across borders.

And the acceleration of globalisation and our interdependence is bringing with it something bigger than simply a shift in power around the world - more than a shift from West to East, North to South. It is bringing something more fundamental still. Twenty years ago nobody would have predicted that China and India would be the big drivers of growth and political superpowers they have become. And there is no reason to believe the countries of Africa cannot make similar leaps in the decades to come.

So I am here to speak not just of the ascent of Africa and Asia, but to say today just as people have spoken of an American century and an Asian century, I believe we can now speak of an African century.

People are no longer prepared to accept that some countries will always be rich and powerful, while others will always suffer poverty and powerlessness. I recall when I visited Mozambique I saw an election slogan that has always stuck with me and could be applied to all of Africa. It said "It is not our destiny to be poor".

And today we can say with certitude, not only as a moral cry from the heart but as a hard-headed market reality, that every country in the world shares an economic destiny. And that destiny cannot tolerate these seemingly unbridgeable gaps between rich and poor. Today no border is strong enough to insulate any of us from our shared reality; that we face insufficient world demand side by side with continuing risks of a new wave of financial instability, all taking place in a world where millions of people are still literally too poor to live. So what we need is more than a recalibration of power between the first and third worlds. The financial crisis has shown that the old Washington Consensus is dead, and with it must die policies of separate development, and a third world treated differently from the rest. This is more than the rise of the third world - it is the end of it.

Because the financial crisis which has cost you so much, started by the irresponsibility of Western bankers, revealed that there was also an underlying problem of long standing of global financial instability and global imbalances that cannot be dealt with other than by us working together. Global demand was fuelled by Western, mainly US consumers, who were supplied by Asian exports. Asia and some other emerging markets grew huge surpluses that became like a giant lending scheme for US consumers who grew large deficits. Finance became cheaper and cheaper and so began the "chase for yield" and "socially useless" financial instruments of fiendish complexity that increased yields and hid risks.

As we unravel this we know the situation going forward is unsustainable. The US consumer can no longer be the "buyer of last resort". And that is why the G20 has begun the Framework for Strong Sustainable Balanced Growth. But the fear is either we will have low growth affecting the whole world as we move from this unsustainable cycle of demand and finance or we will have better growth but a continuation of this cycle.

Some people will say these balances are inevitable, that the world is out of kilter and there's simply nothing you can do.

But I believe there is an alternative. An alternative to what is now called the new normalcy in the global economy of low growth, high unemployment and instability on the one hand, high levels of absolute poverty and the waste of human lives in Africa on the other.

There is an alternative to a decade of low global growth which would fail to meet both the development needs of Africa and the growth needs of Europe and America.

To me the answer is obvious: as we struggle to find new sources of growth we must turn here, to Africa, to this continent of huge potential and talent.

There is an alternative - it is an alternative where Africa grows, thrives, and contributes not only to her own development, but to world recovery.

That is the alternative - but it is a possibility rather than a probability. If we want that future, we will have to struggle for it, because it will happen through choice not chance. And if we want it, you as African leaders will have to lead the charge.

And so that brings me to the third and to my mind most important part of my argument today. It is not enough to believe that we need a global society. Not enough to believe that Africa can and must lead that global society's formation and drive its agenda.

I believe the key imperative for the world - not just for Africa - is delivering for this continent not just what we have seen these last 10 years - a decade of growth - but something much more than that. What I believe is possible is a continuous uninterrupted period of 3 decades of growth. This should not be a sprint for growth but a marathon of growth.

Economic history has shown us that 80% of poverty reduction is achieved by growth - but it has to be continuous and sustained - it takes decades of very high inclusive growth. If we can achieve this, then Africa will become a new source of dynamism in the global economy.

Because let us consider the facts.

While the Asian market continues its breathtaking expansion, China and India would have to increase their consumer spending by 50% overnight just to replace the growth lost by America in the last 2 years.

And so the world needs a new driver of consumer demand, a new market, and a new dynamo. In short; the world needs Africa. Some time ago we moved beyond the idea of charity, and said that Africa's development was not about charity but about justice. But the imperative is stronger still; it is both about justice and our shared prosperity.

Because, in the simplest terms, future growth in the world economy, and future jobs in the developing world, will depend on harnessing both the productive potential and the pent-up consumer demand of this continent and the developing world.

There is a shortage of global aggregate demand, so today every job not created in Africa is a job lost to our common global growth; every business that fails is a business lost to global growth; every entrepreneur whose idea can't be realised is a driver lost to global growth. And so there is, quite simply, no sustainable route back to long term prosperity in Bonn and Boston and Bristol, without growth in Accra and Addis and Abuja.

But at precisely the moment we need to be creating the conditions for Africa sustaining its high growth levels for decades and therefore being part of the world's economic recovery, some people are advocating world leaders take decisions which will lock in high unemployment levels in Europe and America, with growth at least 2 percent less than it could be and cutting aid and investment in Africa - support lost which will not only destroy jobs but destroy lives.

The only way out of this vicious spiral of less spending, slower growth and fewer jobs is for the G2O to agree a strategy for global growth which has as its goal increased world growth worth 3 trillion and 30 million jobs over the next three years, and has at its the idea that Africa is not the problem but a key part of the solution.

And so I am very pleased that my successor to the Presidency of the G20 President Lee is putting development through growth at the heart of the agenda for the Seoul Summit.

Africa can drive the global recovery, but not without Africans driving the global agenda. And that is why I propose enhanced African representation at the IMF, increased African representation in the World Bank and a constituency system for the G20 where Africa can be permanently and fully represented along with other non-G20 countries of the world.

So I say no more begging to attend, no more there as the afterthought, no more having to plead just for consideration; everywhere growth is being debated, examined and planned there too must Africa's representatives be as of right.

And while it is not for me to tell Africa's leadership what your agenda at those negotiating tables should be, I would like to offer, with all humility, some reflections on the policies which I believe would best promote Africa's development, and therefore the world's recovery. Let me begin by saying what I do not believe.

I do not believe that the lesson of the financial crisis and the subsequent world recession is that globalisation is doomed to fail and should be abandoned in favour of economic nationalism or command economies. Even though Africa paid a high price for financial problems caused elsewhere, this is not the time to decouple Africa from the world economy, or to abandon market-based competition, but the time to set out a catalytic role for government in partnership with markets to invest in infrastructure, skills and regional economic integration.

No country has ever grown without trade and without a successful private sector. But that does not mean that we should simply let the market rip and leave Africa reliant either on aid, or on the episodic and unstable growth which volatile commodity prices have bequeathed us.

Instead, I believe the new African growth will come from five sources;

• a faster pace of economic integration in Africa's internal market, and between your market and those of other continents, facilitated by investment in infrastructure • a broader based export-led growth, founded on new products and services • investment in the private sector from African and foreign sources in firms that create jobs and wealth • the up-skilling of the workforce, including through the acceleration of education provision, IT infrastructure and uptake and finally through • more effective governance to ensure that effective states can discharge their task of creating growth and reducing poverty

Each of these five priorities will be difficult to achieve. But we should remember the value of the prize. Because if we can agree a new model of post-crisis growth then Africa - already a 1.6 trillion economy - will continue to grow even faster than the rest of the world. This is not my assessment, but that of the world's leading companies and analysts. For example a report just published by the McKinsey Global Institute claims that Africa's consumer spending could reach 1.4 trillion dollars by 2020 - a 60% increase on 2008. In other words in ten years African consumer spending will be as big as the whole African economy is today.

It is those sorts of projections which mean people are now rightly talking not just of East Asian tigers, but of African lions.

But to make development work for the people of Africa we need a new philosophy of development - a reaffirmation that aid promised must be aid delivered, but that aid's ultimate objective must be to make aid redundant. There are those who argue against aid and say it doesn't matter if we break our promises to the poor. And there are those who say that aid is an end in itself - somehow a perfect proxy for how progressive and compassionate we are as donors. I believe neither of those things is true.

I believe aid should not be cut but continue to grow and that those countries which break their promises to the poor must be asked to explain themselves in the court of world opinion. But at the same time future aid must be an investment not in people's dependency but in their dignity. And what do I mean by that? Something very simple; that the job of aid is to kick start business-led growth and not to replace it. And so I believe we need to focus not just on poverty - but on growth. Not just on providing services for the poor, but on an investment climate for those who bring wealth. And not simply on how to support Africa's public sector, but on how to unleash its private sector. Because for me, the purpose of aid ultimately must be to no longer need it.

Of course this new emphasis is not instead of the development initiatives you are already planning - growth is designed to reinforce these - and be reinforced by them. Aid and a focus on both rights and poverty reduction still matter. For example, for an economy to thrive it needs all of its citizens to contribute and that's why gender justice is so key to development, as well as a moral imperative on its own. So I salute the African Union's focus on maternal mortality at this summit.

Likewise, education for all helps build a skilled workforce which sustains growth and a growing economy enables you to abolish fees and increase access. A healthy population means a more productive workforce; a more productive workforce increases tax receipts for funding a national health service.

So while some may try to paint an emphasis on growth against an emphasis on aid, I believe they are mutually reinforcing. Growth relies on good health and education services - but those services rely on growth in turn.

So we as donors need to broaden our focus to include all those investments which enable African entrepreneurs to succeed and the market to do its job.

The benefits of regional integration and an internal market for Africa are massive. Just think that 60% of ASEAN and NAFTA exports are sold to markets in those blocs, even more in Europe. But only 10% of Africa's goods and services are sold in Africa. And while the trade barriers the North erects at the expense of the South are grotesque and cannot be allowed to stand, so too must we face up to the formal and informal barriers which Africa erects against itself.

So I believe donors or as I would call us partners need to be more open to the need for infrastructure investment which would enable Africa to build the roads, ports, electricity grids and digital infrastructure on which future trade expansions will rely. That means an estimated 93 billion dollars of new investment which we together should seek to mobilise with new public-private partnerships to frontload investment..

Of course the creation of wealth and an increase in trade will not, in and of themselves, equal development. Prosperity does not simply trickle down but must be actively distributed to ensure that the many and not just the few see the benefit. But there is no sustainable poverty reduction strategy which does not depend, in the end, on dynamic private and public sectors creating decent work. And so that must be our primary goal.

My second recommendation is diversification of the economy. We know that the best insurance against shocks in one sector is to have healthy growth across a number of sectors. And while Africa as a whole has already travelled some way along this road - with two thirds of GDP growth from 2000 to 2008 coming from sectors such as retail, transportation, telecommunications, and manufacturing, 80% of Africa's exports are still based in oil, minerals and agricultural goods.

So the issue today is how to create sustained growth free of the commodities cycle which is vulnerable to such wild fluctuations and which has done so much harm to Africa.

I believe that will only be possible if we accept my third point; that Africa's best hope for diversification is not just in improving agricultural productivity which is a priority, but also creating jobs in the high-value sectors with a massive acceleration in the use of IT. A third of people in Africa now have mobiles, but less than 1% has access to broadband. I am already working with some of you to bring together experts in this field for a major campaign and programme of work, because I truly believe that the rapid expansion of internet access in Africa could transform how Africa trades, learns and holds political power accountable.

And my fourth point is that African growth can only be sustained in tandem with a huge upswing in good governance. Companies simply will not invest without guarantees of minimum standards on corruption, stability of regulation, property rights and the rule of law. I know that this is at the heart of NEPAD's work, and I want to congratulate you on all the progress which has been made so far.

And I truly believe that if that progress continues, and the ideas I have discussed today are adopted, that we stand at the beginning of a decade of investment, and the dawn of a global society.

We are at the beginning of the second decade of a still-young century. How the 21st century unfolds is in large part in the hands of the people on this room, and the leaders who meet in the coming days.

My message to you is simple, and it is a message not simply from Britain, but from people all over the world. It is time to rise. Rise, because just as Africa needs the world, the world needs Africa.