On the road to Debre Berhan (a city about 120 kms north east of Addis Ababa), a few colleagues and I passed lines of Chinese dump trucks that sat on the grass that separated the two roads going in opposite directions. As we drove down the road, the lines of trucks were only interrupted by the cross streets that allowed us to make a U-turn to the other side. The 4 x 4 lines (16 dump trucks per plot of grass) blinded us from what was happening on the other road. This type of scenery is neither unusual nor surprising on a drive through many African countries. What struck me as different this time is the dump trucks were the blocking my view of seeing the other side of the road (or “the other side of development” in theory).
Addis Ababa, Ethiopia
In Addis, many Ethiopians talk about the former Prime Minister Meles Zenawi’s keen knack for mixing different aspects of China and the U.S. into modern-day Ethiopia. In other countries, locals often discuss what strategy of development to follow—China or the U.S.? This is not how we should pose the question for many African countries where leaders encounter local populations that are not exactly similar to the oft-mentioned two major world powers. Rather, we may ask why China and the U.S. and not another country.
Why not Brazil? Brazil will be hosting the World Cup in 2014 and subsequently the Olympics in 2016. Its transformation from new kid on the block to the world’s sixth-largest economy has been impressive and surprising to many observers. Brazil has pursued an aggressive infrastructure plan as well as a successful poverty reduction plan. News out of Nigeria is that the government is considering Brazil’s Bolsa Familia Conditional Cash Transfer (CCT) and other related social protection and poverty reduction programs. Brazil cut in half the number of poor people within five years of the Millennium Development Goal’s declaration for the country. Nigeria may also be taking Brazil as an example as there are many similarities between the two countries’ population size and population distribution across their respective countries.
Why not South Korea? The country has a similar population size to many African nations and has overcome a similar tough history of war, colonization, and incessant border wars that hamper a number of African countries. Yet, South Korea’s economy has flourished with the development of its manufacturing industry and its export of notable and high quality products. A number of African nations may be better poised to prosper under this model than South Korea. Labor is cheap in many parts of Easy Africa and is coupled with an educated populace and cheap energy. Ethiopia will look to export energy by 2015. Language barriers of Swahili, Amharic, and or whatever local language you imagine is just a weak argument when you consider the growth of English in China or better yet, the growth of Mandarin amongst the world’s non-Chinese population. Manufacturing as percentage of GDP has remained virtually the same across the African continent since the 1970s. Whether it is light manufacturing or heavy manufacturing, maybe there is a sequel to South Korea’s emergence burgeoning before our eyes.
Why not Chile? This is more the odd man in the conversation because it is often a silent giant as an economy. But Chile’s emergence from the dictatorial years of Pinochet into a country of stability and a model of energy infrastructure building cannot be ignored. Hydro is sexy in Chile and may become the new sexy for a number of African nations. Despite contentions around the poverty data out of the government’s office, Chile has made great strides since the Pinochet years in growing incomes and job opportunities.
For all the country specific questions when talking development across the African continent, we may help ourselves to consider the multitude of country specific models that can be adapted for different nations. The right model may simply be one from the six biggest economy adjusted for local content. Surely, it cannot simply be streamlining the model from one of the two biggest economies and hoping for the best—or better yet, taking the former colonial structure and thinking it will be better simply because it is locals running the (political) machine now.
Kurt Davis Jr. is an experienced private equity investor and early business/start-up consultant with experience in Sub-Saharan Africa and North Africa, Asia, Europe and United States. He is an avid traveler who has been to 60+ countries throughout the world in search of new investment opportunities, new people, and better understanding of the world. His international professional career includes positions with Schulze Global Investments, Kukula Capital, African Development Bank, Swicorp S.A., Bear Stearns, Citigroup Smith Barney, and Skadden, Arps, Meagher, Slate & Flom. His experience covers the agri-processing/food processing, construction, fast-consumer moving goods (FMCG), energy & infrastructure, manufacturing, natural resources and real estate sectors. Mr. Davis holds a Master in Business Administration (M.B.A.) degree from the University of Chicago Booth School of Business, Juris Doctor (J.D.) degree from the University of Virginia School of Law, and Bachelor of Arts (B.A.) degree from University of Virginia, having also taken classes and/or studied in Ghana, Nicaragua, France, and Brazil. He is a registered lawyer with the New York State Bar and the Massachusetts State Bar. He has also passed CFA Level I and II and speaks English, French, Portuguese and Spanish. He is currently living in Ethiopia and can be reached at kurt.davis.jr@gmail.com.
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