Beyond Africa Rising: The Future of Global Economy’s ‘Last Frontier’ (1) 03 Aug 2014 Font Size: a / A Kingsley Chiedu Moghalu Is Africa Rising? In the past decade Africa has emerged in the world’s consciousness in the context of an evolution in the continent’s image. Africa is not yet seen as the place to be, to go to, or to be envied in terms of economic and societal progress. Indeed, still too many people around the world hold a decidedly different view. Gradually but surely, however, Africa is increasingly viewed less as a “hopeless” continent and more as one with promise for economic development, less as a haven of poverty, war and natural disaster and more as a continent that offers economic opportunity. In short, Africa is seen more as a “normal”, even if less prosperous place than many other parts of the world, than as the decidedly “abnormal” place off the map of the mental imagination that it once was. This recent emergence and the positive evolution of the continent’s image has led to the growth of an “Africa-Rising” industry of analysts, commentators, scholars and business executives in which the continent is seen as the next big thing in the world’s economy. The continent in this view can lay claim to a looming African century close on the heels of the economic rise of Asia in the 20th and 21st centuries. Three main factors have shaped this trend. First, many of the wars for which Africa was famous have ended. The wars in Sierra Leone and Liberia, the Great Lakes region of Africa including Rwanda and the Democratic Republic of Congo, and the long armed conflicts in the Horn of Africa in Ethiopia, Eritrea and Sudan were and are only a few of the destructive orgies of annihilation of human capital, political stability and economic possibilities that shaped perceptions of Africa as a war zone writ large in the 1980s, the 1990s and the 2000s. As most of these conflicts have ended, more recent ones have raged in Mali and the Central African Republic, keeping the world’s peacekeeping armies in business. But the continent is far more at peace now than it once was, clearing the path for a shift in attention to democratization and economic development. Second, macroeconomic stability has been broadly established across the continent in the past decade. Inflation is down, at an average of 10 per cent in sub-Saharan Africa compared to the nearly 25 per cent in the 1980s and the 1990s. This trend can be traced to the evolution of better monetary policy by increasingly independent central banks, as well as improved fiscal management. At the same time, GDP growth has continued apace. Average GDP growth in sub-Saharan Africa in the decade leading to 2013 was 5 per cent, with a third of Africa’s countries reaching growth rates of 6 per cent and others, such as Nigeria, growing at average rates of 7 per cent. According to the African Development Bank, Africa’s economies are growing faster than those of any other continent. Nearly half of Africa’s countries are now classified as middle income countries, the numbers of Africans living below the poverty line fell to 39 per cent in 2012 as compared to 51 per cent in 2005, and around 350 million of Africa’s one billion people are now earning between $2 and $20 a day. The third factor is the global financial crisis and the subsequent recession in the Eurozone and other Western economies at a time in which African economies were growing rapidly. This has led to opportunistic focus on Africa by several multinationals and global investment funds as the “final frontier” for wealth creation, with returns on investment that can only be the stuff of dreams in the world’s industrialized countries. But the reality is more nuanced. Contrary to the breathless prognostications of enthusiasts, while Africa has become an economic opportunity in the world economy, the continent is yet to fully emerge, let alone rise, as an economic presence and a co-creator of global prosperity. Let us look at another set of statistics. Africa’s share of world trade is a minute 3 per cent, with less than 4 per cent of global Foreign Direct Investment (FDI) flows going to the continent. With a combined GDP of S1.6 trillion, the combined GDP of the continent’s 54 countries is just about that of Brazil. The GDP of the entire sub-Saharan Africa, including South Africa, is just about equal to that of Belgium or that of metropolitan Chicago. All the electricity produced in sub-Saharan Africa, half of which is, in fact produced by South Africa, is equivalent to that of Spain which has 20 times fewer people than Africa. Argument for a New Paradigm What all this suggests is that real questions regarding the “rise” of Africa include that of what parameters are used for measuring the continent’s progress and who does the measuring. Is Africa aspiring to holistic development that encompasses human development as a reflection of the real quality of life of Africans or is it focusing on economic growth statistics that do not necessarily translate into more jobs for its citizens and better education and healthcare? Have African economies become industrialized manufacturing economies, and will job creation outpace population growth and put Malthus to shame? What is the role of science, technology and innovation in African economies? Is Africa assessing its own progress against benchmarks it has set for itself, or is its “rise” the received wisdom from global institutions and the ambassadors of global capital seeking new frontiers of profit? In Emerging Africa I make the case that Africa needs an endogenous growth model that is inside-out in its perspective, rather than the presently dominant one that is outside-in and globalization-centric. Africa needs to manufacture goods for its own markets as a first foundation, spreading out regionally from that base and emerging as economic power in its own right through competitive advantage or at least self-sufficiency. What is being celebrated as Africa’s rise is the fact that the continent has increasingly become a market or a playground for globalization. Africans appear to have become excited merely to be participating in the wider globalization process, and the external economic players for whom the continent has become the new frontier are excited at the novelty of playing in new territory and the benefits it has brought or potentially will. This is quite a different thing from structural economic transformation, which is what has happened in many Asian economies and which is what Africa really needs to achieve for itself and its peoples. Without a doubt, GDP growth is necessary for such a transformation, but is not an alternative for it because the two are not the same thing. Africa’s recent economic growth statistics have been derived largely, but admittedly not completely, from a structural dependence on primary commodity products. This growth is thus not transformative, and it is only transformed economies that can truly rise, in the manner in which we speak, for instance, of the rise of China. The continent needs to decide whether it will continue to engage with the world as (a) a destination market for consumer goods and ideas, (b) a self-sufficient player based on endogenous growth, or (c) as a dominant actor. I argue that the first option is not an option for real progress, the third one is not realistic in the near to medium term given how far behind Africa really is in terms of the structure of its economies, while the second is realistic and achievable within the next 30 years. The required approach to creating the real economic rise of Africa must be based on at least three things. The first is what I call fundamental understandings, a philosophical approach to wealth creation and economic prosperity that prioritizes the role of individual and collective minds in economic and social progress. In this context, what is required is nothing short of the reinvention of the contemporary African mind. That mind must better understand foundational realities and its inherent power to alter these realities in favour of the continent. The second approach is the need for strategy and the active management of risk. The third is the role of governance, the rule of law, and institution-building. Fundamental understandings The point of departure for Africa is the need for African states, their governments and their citizens to understand how the world is structured in reality, and why this is so. They will then need to develop mechanisms that can enable them arrive at a different interpretation from their own perspective, and stamp that interpretation as an alternative reality in their environment. That is to say, African governments must create worldviews, and in that context develop a proper understanding of globalization as a dominant economic context, the implications of this concept and context for Africa in the world economy, and the possibility of creating an “African century”. Nothing is written in the stars in terms of Africa’s destiny. The continent can create the destiny it wants, just as other parts of the world have done. This requires a reappraisal of a number of fundamental assumptions that have prevented Africa’s economic development and transformation such as a misunderstanding of where responsibility lies for the continent’s transformation. From this point of departure, the fundamental understandings of issues such as globalization, foreign aid, capitalism and international economic governance as a framework for economic development, and so forth, can be applied to economic activities such as industrialization, finance, agriculture, foreign investment, science and technology, and world trade. I argue in Emerging Africa that the fundamental reason for Africa’s condition of underdevelopment is the absence of a futuristic worldview. This is the most fundamental aspect of the African development dilemma. A worldview is basically how we see the world, understand and interpret it, and how we engage with the world around us and beyond us. It is that inner world of the mind of an individual or group, which he or she or they project in their outward actions, and which influences the world around them by creating certain realities. The Belgian philosopher Leo Apostel and his research collaborators identified seven core components of a worldview. These are: (a) a model of the world – an understanding of how the world is structured and how it functions; (b) an explanation of where we have come from and why the world is the way it is; (c) rational futurology, which addresses the question of where we are going, the possible destinations, and the options and alternatives to promote or avoid; (d) values, including systems of ethics that guide what we should or should not do; (e) action – how to get to our goals by developing and implementing plans; (f) knowledge – how to construct knowledge systems, addressing the questions of what’s true or false; and (g) building blocks that construct a worldview from what already exists in theories, concepts or models across various disciplines or ideologies. –Being a paper delivered by Moghalu, deputy governor (Financial System Stability), Central Bank of Nigeria at the London School of Economics recently.
Posted on: Sun, 03 Aug 2014 18:10:39 +0000
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