OBG talks to Mahathir Mohammad, former Prime Minister of Malaysia

Interview: Mahathir Mohammad

How can economic collaboration between Southeast Asia and Africa be further enhanced?

MAHATHIR MOHAMMAD: There is always the potential for further economic collaboration between South-east Asia and Africa. Despite their different degrees of economic growth, both regions have had to deal with managing natural resources and a rising foreign interest in their economies. China and other Asian countries are looking to partner with Africa and have become major players in West Africa and other regions of the continent.

In terms of laws, policies and practices, much needs to be done to make the continent more attractive. Africa has a large amount of natural resources that garner increasing interest from international companies. However, each country’s ability to attract investors will depend on legal guarantees and the establishment of a progressive framework for business.

What parallels can be drawn between Ghana and Malaysia’s recent economic development?

MAHATHIR: Malaysia and Ghana share a common link based on their agricultural partnership. Malaysia has taken trees indigenous to West African countries and has built its agricultural strength based on them. Indeed, Malaysia has benefitted greatly from West African oil palm trees, cocoa and coconuts. Therefore, the existing conditions for a strong agricultural base are already in the region. These indigenous plants, however, have yet to greatly affect the living standards in some of West Africa’s economies. While Ghana’s agricultural sector is small, the country has the potential to increase its agricultural exports. The next step will depend on the growth of agro-processing capabilities.

How can advanced-stage processing of raw materials and local manufacturing be developed?

MAHATHIR: Ghana and other countries that are attracting investment into Africa will initially have to depend on foreign expertise and investments. Manufactured products based on oil palm trees, rubber and other indigenous raw materials are a good base to start from. In order for a nation to take advantage of its natural endowments, value-added services for manufacturing must be done in-country and by a local, trained workforce. Malaysia also went the same route. Acquiring expertise, capital and management skills are essential.

What do you believe are the most effective ways of enhancing employment creation in Africa?

MAHATHIR: Malaysia created jobs initially through land settlement schemes. When land became less available, we switched to labour-intensive industries, which created more jobs. As a country, we went up the value and production chain. African countries need to find the right formula to be able to transform their natural resources into high-earning finished products. For this to be achieved, capital and technology must be acquired.

Many examples have shown that industrial peace is essential for development, though the government must oversee the sector to ensure workers are not exploited. This is a difficult balance to achieve, as recently highlighted by the ongoing crisis in the eurozone.

Centralised marketing will be needed to help market the products of domestic industries. The government will have to help the central market, including the provision of good marketing. Cheap banking facilities, such as microcredit, will help. While there has been a rise in the number of microcredit facilities in African countries, credit can be hard to come by. The private banking sector in some West African nations has had difficulty achieving this, as bank rates are too high to allow private businesses to flourish.

Training in manufacturing, and tax-exemption for equipment and raw material imports would further support this process. But this is dependant on strategy. Once a country establishes which industries it wants to focus on, additional exemptions can be targeted.