Building bridges between Africa and Australia

International Forum on Africa

University of Sydney

Speech. Check against delivery, E&OE

13 May 2011

Australia is enhancing its engagement with Africa because we have confidence in the continent’s future.

Four months ago, I visited Ethiopia where I addressed the African Union and opened our new Embassy in Addis Ababa.

Our new Embassy in Ethiopia, the home of the African Union, is a symbol of Australia’s deeper engagement with Africa — politically, economically and strategically.

The 21st century looms as a century where Africa can fully realises its potential.

Australia is alert to that potential. It is a big story and it spells opportunity for both Australia and Africa.

As we all know, the 20th century was a difficult one for sub-Saharan Africa.

Independence from colonial rule in the 1950s and 60s brought with it hope and enthusiasm. And, as a continent of great human and natural resources, it had every reason to be optimistic.

But, too often, Africa’s colonial masters were replaced by leaders who failed their people, squandering rather than harnessing the talent of their people and the natural resource wealth of their countries.

Africa’s colonial masters also left behind colonial borders that separated ethnic groups and communities, which only further fuelled tensions.

Africa became a continent of deadly conflict. By 1995, 15 wars were taking place on the continent.

Economic growth stagnated. Over the last quarter of the last century GDP per capita across Africa actually fell 11 per cent, or by US$200.

In 1970 Africa was home to one in ten of the world’s poor. By 2000 this figure had jumped to close to one in every two. As recently as 2000, the Economist published a covering story entitled “hopeless Africa.”

But fast forward to the end of the first decade of the 21st century and a significantly different picture begins to emerge. The once “hopeless” countries of Africa were described last year by McKinsey as “lions on the move”. In March this year, the World Bank commented that “Africa could be on the brink of an economic take-off, much like China was 30 years ago and India 20 years ago.”

So what has caused this turn around?

First, the conclusion of many longstanding conflicts on the continent has led to a more peaceful and stable political environment. Many nations have established constitutional democracies and democratic institutions. And the African Union has developed into a robust grouping that will act when hard-won gains in political stability are jeopardised.

Cote d’Ivoire, and the response across the continent, demonstrates a clear recognition that trashing democracy will cruel the entire brand of the continent.

Political reforms have gone hand-in-hand with economic and financial reforms, which combined, have paved the way for impressive economic growth.

In the decade to 2008, before the global economic crisis, GDP for sub-Saharan Africa averaged 5 per cent per year, accelerating to more than 6 per cent in 2006‑08. And encouragingly, this growth was widespread, with around 22 non-oil-exporting countries recording 4 per cent growth or higher from 1998 to 2008.

Three of the world’s 10 fastest-growing economies of the past five years were in fact from sub-Saharan Africa. The IMF predicts four of the world’s top 10 in the next five years will also be from Africa.

The continent’s combined consumer spending in 2008 was $860 billion. McKinsey predicts that this will grow to $1.4 trillion in 2020. And it estimates that Africa has as many middle-class households as India.

A key driver of its economic success has been its natural resource wealth. Africa has 30 per cent of the planet’s mineral reserves, including 40 per cent of the world’s gold reserves. It exported 19 per cent of the world’s crude oil in 2008.

But its resource boom only tells part of the story. Importantly, its economy is becoming increasingly diversified with growth in other sectors such as finance, health, infrastructure and construction. In fact, McKinsey found that only a third of Africa’s growth in 2008 was due to its natural resources.

A more stable political and economic environment has lead to a boom in investment. Foreign direct investment in the continent has jumped from $10 billion in 2000 to $59 billion in 2009, which is significantly larger than the flow to China if measured relative to GDP.

Returns on investment in Africa are, in fact, among some of the highest in the world.

Quite simply, Africa’s economic and political reforms, its wealth in agriculture and minerals, and its economic potential have turned the continent around in the space of a decade.

Ghana is one example of a true African success story.

Ghana’s commitment to democracy and good governance has led to stellar economic growth. Its GDP growth in 2011 is forecast to be at over 12 per cent and its inflation, currently at nine per cent, is at its lowest level for two decades.

This in turn has lead to a huge reduction in poverty. The country’s poverty rates have fallen from almost 52 per cent in 1992 to 28.5 per cent in 2006. It was the first country in sub-Sahara Africa to achieve the Millennium Development Goal target of halving the number of people in extreme poverty.

Of course, African countries continue to face serious long-term governance and development challenges.

First, nine of 17 countries ranked at the bottom of Transparency International’s Corruption Perception Index are from Africa, with Somalia at the bottom of the list.

Second, the humanitarian crisis in the Democratic Republic of Congo; and serious food insecurity in the Sahel are serious challenges for the continent.

Third, there is still a question mark over whether Sudan, North and South, can build a stable and prosperous future.

We look forward to welcoming the Republic of South Sudan to the community of nations in July, following an overwhelming vote for independence.

The new state of South Sudan will face immense challenges and will need long-term support from the international community.

Australia is playing its part and is committed to playing its part even more strongly in the future.

Fourth, more broadly across the continent, the wave of change that has swept over North Africa is ushering in a new dawn for the region and with it much uncertainty.

Egypt is on the path of fulfilling the aspirations of democratic change. And Australia is assisting in this transition. We are working closely with Egyptian authorities in supporting agricultural productivity, job creation and mine action.

Australia also stands ready to assist Libya in future plans for political transition and post-conflict reconstruction. So too in Tunisia.

Fifth, Africa still remains the world’s poorest continent.

It faces extraordinary challenges relating to infant mortality, food security and harnessing its human capital.

Notwithstanding the challenges, the big picture is significantly brighter than before.

The last decade has shown that Africa has so much potential and its people are determined to realise that potential.

Australia stands ready to support Africa in that process. And given our similar natural endowments, we are well placed to do that. We are both located in regions of growth and we are both continents that are rich in natural resources.

Australia’s resource sector has long recognised Africa’s potential.

Ghana’s open business environment has encouraged 20 Australian mining companies to work there on 30 projects. They include companies such as Adamus Resources, Ausdrill, Coffey Mining, Noble Mineral Resources and Perseus Mining, which all have operations under way or in advanced stages of development. 

More than 220 Australian mining and resource companies now have assets in Africa. They account for more than 600 individual projects, spread across 42 countries and are worth some $20 billion of investment. Figures released on spending for new projects suggest that there is billions more in the pipeline.  

BHP Billiton in Liberia and elsewhere, Rio Tinto in Guinea, Sundance Resources in Cameroon, Sphere Resources in Mauritania, Aquarius Platinum in South Africa, and Terramin in Algeria are just some of the companies with major projects under development across the continent.

In fact, Australian mineral and resource companies have more projects in Africa than any other region in the world. And these numbers are growing on a monthly basis. Around 48 companies and 143 projects were added to the list in 2010 alone.

Australian miners have only relatively recently begun working in Mali, for example. And now there are six mining companies in Mali, including Resolute Mining, which has a major gold mine there.

Supporting this commercial investment is core to Australia’s interests in Africa.

First, the Australian government is working hard to make it easier for Australia and Africa to do business.

Second, we are boosting our political engagement with the continent.

A significant step in this was the Memorandum of Understanding on bilateral cooperation I signed in September last year with the chair of the African Union Commission, Jean Ping.

We are increasing high-level visits on both sides. And the attendance today of both Ghana’s Minister for Education, Ms Betty Mould-Iddrisu; and Mr Amadou Cisse, Mali’s Minister of Mines, is testament to this.

Australia now has diplomatic relations with all 53 African countries, after establishing ties with Guinea-Bissau in March. This is compared to only 41 back in 2007.

We’ve been hard at work. We have boosted our presence on the ground in Addis Ababa, Abuja, Accra, Harare, Nairobi and Cairo in North Africa. Austrade has also opened new offices in Accra and Nairobi, employing local business development managers who are primarily focussed on mining.

Since 2007, the Department of Foreign Affairs and Trade and Austrade have organised a major promotion of Australia at Indaba in South Africa, which is the biggest global conference on mining in Africa.

The Australian Government also participates in the Africa DownUnder mining conference held in Perth every year. And we hold regular consultations with the recently established Australia-Africa Mining Industry Group.

Austrade is also building Australia’s profile in the other great industries of the land, agriculture and forestry, which together with mining, account for more than half of our export earnings.

More broadly, Australia is committed to developing a deeper pan-regional identity in the Indian Ocean.

Australia is a nation of two oceans, not just one. We are a nation of the Pacific and the Indian oceans. We are a nation that looks both east and looks west. The countries of the Indian Ocean are our neighbours and they are our markets.

In co-operation with African and Asian members of the Indian Ocean region, we want to try to develop over time a common set of interests, values and norms that will guide our future engagement across the region.

And in partnership with our friends in India, who this year hold the Chairmanship of the Indian Ocean Rim Association for Regional Cooperation, of which Australia is Vice Chair, we are continuing to enhance our cooperation across the Indian Ocean.

Also, choosing Perth as the host city of the Commonwealth Heads of Government Meeting later this year, which brings together 55 heads of government from across the world — a large proportion of whom are from across the Indian Ocean Region and Africa ‑ is a very public recognition of the fact that Australia is very much looking west. Perth is Australia’s gateway to Africa and the Indian Ocean.

CHOGM 2011 will be one of the biggest international political events in Australia ever.

19 of Africa’s 53 countries are Commonwealth members, including South Africa, Nigeria, Kenya, Ghana, Tanzania and Botswana.

But CHOGM won’t just have political benefits. It will also have commercial benefits.

The Commonwealth Business Forum that will be held just prior to CHOGM will be attended by around 1000 delegates.

It will bring together leading figures from government and business, many from Africa, to talk about how to increase trade and investment among Commonwealth countries.

Given the meeting’s location in Perth, natural resources will be a major focus.

Australia believes that our increased engagement with Africa in these sectors should also contribute to our broader aid agenda of tackling poverty there.

As a strong mining country, and a big investor in Africa’s mining sector, Australia wants to assist African governments manage their mineral resources.

Better governance frameworks will also benefit Australian mining companies working in Africa.

In the last decade, African governments received an estimated US$200 billion from oil revenue alone. But, where governance is weak, a wealth in natural resources has the potential to exacerbate corruption, conflict and lead to human rights abuses.

On my visit to Africa in January, I outlined four areas where Australia will assist African governments.

They are:

  1. Working with African governments to improve their ability to manage and regulate the use of their natural wealth;
  2. Promoting environmental management and social responsibility in mining;
  3. Helping African governments build technical capacity in geo-science, surveying, and occupational health and safety;
  4. And finally, promoting public-private partnerships that work with, and share expertise from, the mining industry as well as government, academia and civil society.

These objectives will build on other mining-related assistance in the past few years.

AusAID, for example, is partnering with Australian Industry group AMIRA international in West Africa, including in Mali and Ghana, to build teaching and research capacity in geosciences.

We have provided 31 mining short-course awards to African governments since 2008 to support sustainable management in their mining sectors. Another 60 mining fellowships are being awarded in 2011, including to Mali and Ghana.

We have also provided $3 million to the International Monetary Fund’s network of African Regional Technical Assistance Centres that are building capacity for macroeconomic and financial management.

Our assistance in helping Africa manage its natural resources extends to supporting the development of dry-land agriculture and food security, where we are drawing on the expertise of ACIAR and the CSIRO.

Australia is partnering with the West African Council for Agricultural Research and Development in Mali and Ghana where we are supporting crop and livestock productivity research programs.

We are also offering training opportunities to over 100 African officials in 2011 to increase expertise in agriculture.

Working with African partners, Australia is delivering development assistance programs that are making a difference to the lives of Africa’s poorest.

Australian education is also making a real difference in Africa.

The Australian Government is giving Africa’s young people the opportunity to meet their educational goals, which in turn, will assist in lifting Africa’s human capital — in partnership with governments of the continent.

This year the number of Australia Africa Awards will increase to 400 and will be available to 40 countries. By 2013 we will offer 1,000 awards per year to African students.

For Australia, this new generation of Australian Awards — under which around 5000 students from across the world will study in Australia in any one year — represents our new Colombo Plan.

Students will have the opportunity to learn in areas of vital importance to their continent, such as agriculture and food security, public health and medicine, and energy and resource management.

We already have an impressive network of alumni which attests to the difference Australian education has made to Africa’s development.

Australian alumni include the chief of trade and international negotiations section at the UN Economic Commission in Africa, the Deputy National Director of Agriculture in Mozambique, the Principal Geologist in the Tanzanian Ministry of Energy and Minerals, as well as the Chief Economist of the Ministry of Finance in Zambia.

The Australia Africa Awards will also have benefits for the Australian economy.

It’s estimated that the 1375 African students who come here as long-term scholarship recipients in the next three years will contribute $130 million to the Australian economy — with $63 million of this going to our tertiary institutions.

Our Australia Awards for Africa support the work that Australian universities are also doing to deepen relations with Africa.

The University of Sydney, for example, is working with universities in Ethiopia, Kenya, Rwanda, South Africa and Uganda, supporting programs in key areas such as public health and governance.

And, of course, Sydney University is host to this important forum.

The Australian government is committed to ramping up its engagement with the continent of Africa.

We are making it easier for Africa and Australia to do business.

And through this increased commercial engagement, we are working to ensure that all Africans benefit from the continent’s growing economic strength.

We are also delivering an effective development assistance program that is making a difference to the lives of Africa poorest.

And we are working to increase Africa’s human capital by assisting in education.

We do this as a part of our strategy of looking west, for Australia is as much a country of the Indian Ocean as it is the Pacific.

And we do this because we have great confidence in Africa’s future.

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