Re­set Africa’s tra­jec­tory to drive growth

Lesotho Times - - Leader - Chiedu moghalu

THE global com­mod­ity slump and China’s eco­nomic slow­down have pum­meled sev­eral African economies, mak­ing clear that the con­ti­nent’s “rise” was a myth.

Now is the time to re-ex­am­ine the ba­sis of Africa’s re­cent “boom” and move from feel­good rhetoric to ac­tion that will drive gen­uine eco­nomic trans­for­ma­tion.

Com­mod­ity ex­porters such as An­gola, Ghana, Nige­ria, South Africa, and Zam­bia are reel­ing, with their cur­ren­cies crash­ing since the prices of com­modi­ties such as oil and cop­per be­gan fall­ing sharply.

More­over, fis­cal and mon­e­tary poli­cies are in dis­ar­ray, with the risk of so­cial un­rest ris­ing if the trend is not re­versed in the near to medium term.

The heart of the mat­ter is this: African coun­tries mis­took a com­mod­ity su­per­cy­clefed boom for a sus­tain­able eco­nomic trans­for­ma­tion.

But a boom con­notes tran­sient good for­tune — en­joy it while it lasts, or save the pro­ceeds for a rainy day. Most African gov­ern­ments opted for the for­mer.

To be sure, Africa ben­e­fited from higher GDP growth and ex­panded op­por­tu­nity over the last decade. But hun­dreds of mil­lions of Africans have yet to be lifted out of poverty in the man­ner China has ac­com­plished — a path that other Asian coun­tries, such as In­dia and Viet­nam, are fol­low­ing as well.

With­out ques­tion, many in­di­vid­ual Africans have be­come stu­pen­dously wealthy and are play­ing more as­sertive roles in the world of busi­ness.

En­trepreneur­ship is on the rise, es­pe­cially among young Africans, grad­u­ally re­plac­ing the dead end of for­eign aid. But the vast ma­jor­ity of Africans lag far be­hind.

De­spite the spread of for­mal democ­racy on the con­ti­nent, the na­ture of do­mes­tic pol­i­tics in most African coun­tries has hardly changed.

Real lead­er­ship in­volves not just mo­bi­liz­ing cit­i­zens to vote for can­di­dates, but also ef­fec­tive man­age­ment, strat­egy, and ex­e­cu­tion of pub­lic pol­icy. And yet power of­ten is sought for its own sake or to se­cure con­trol of state re­sources on be­half of eth­nic kin or co-re­li­gion­ists.

Pol­i­tics is not yet, as it ought to be, a con- test of ideas and pro­grams af­fect­ing all cit­i­zens. Cor­rup­tion thrives in such an en­vi­ron­ment.

More­over, a proper un­der­stand­ing of eco­nom­ics is nec­es­sary. The con­ti­nent and its lead­ers have so far failed to un­der­stand — or, where they have un­der­stood, to ap­ply — his­tor­i­cal lessons con­cern­ing how the wealth of na­tions is cre­ated. In­stead, we of­ten see un­crit­i­cal ac­cep­tance of the re­ceived but self-in­ter­ested con­ven­tional wis­dom of glob­al­iza­tion.

Achiev­ing pros­per­ity in the over­ar­ch­ing con­text of glob­al­iza­tion re­quires cre­at­ing a com­pet­i­tive econ­omy based on value-added pro­duc­tion and ex­port.

But it also re­quires selec­tive en­gage­ment with in­ter­na­tional treaties that fa­vor to­day’s com­pet­i­tive good pro­duc­ers but put at a dis­ad­van­tage the de­vel­op­ing coun­tries that are in­creas­ingly the mar­kets for th­ese goods.

Some of th­ese treaties take away the very pos­si­bil­ity for African coun­tries to join global value chains, im­ped­ing their de­vel­op­ment.

This is pre­cisely why Africa’s big­gest folly is to be­lieve that min­eral re­sources and other raw com­modi­ties are au­to­mat­i­cally a source of wealth.

This mis­con­cep­tion is why Africa is the world’s rich­est con­ti­nent in terms of re­source en­dow­ments, but at the same time the world’s poor­est in terms of in­come per capita.

Africa’s fu­ture com­pet­i­tive­ness and pros­per­ity lie in the op­por­tu­ni­ties af­forded by sci­ence, tech­nol­ogy, and in­no­va­tion. From Nairobi to La­gos and Jo­han­nes­burg, in­no­va­tion hubs are spring­ing up. This is not sur­pris­ing.

It is the mod­ern re­birth of Africa’s an­cient tal­ents in sci­ence, ev­i­denced in the pyra­mids of Giza, the as­tron­omy of the Do­gon tribe in an­cient Mali, and the Cae­sarean sec­tions of 19th-cen­tury Uganda.

Africa’s lead­ers in the pub­lic and pri­vate sec­tors have an op­por­tu­nity to clear the pol­icy bot­tle­necks that have pre­vented the com­mer­cial­iza­tion of African in­ven­tions, es­pe­cially in large economies such as Nige­ria, South Africa (which has a more ad­vanced in­no­va­tion pol­icy than the rest of the con­ti­nent) and Kenya. In­no­va­tion must be de­ployed to cost-ef­fec­tive, com­pet­i­tive man­u­fac­tur­ing and ser­vice in­dus­tries.

The com­mod­ity down­turn need not stop Africa’s de­vel­op­ment. But if last­ing pros­per­ity is to be achieved, to­day’s chal­lenges must be re­garded as an op­por­tu­nity to re­set the tra­jec­tory of the con­ti­nent’s economies on a truly trans­for­ma­tional path. l Chiedu Moghalu, a for­mer deputy gov­er­nor of the Cen­tral Bank of Nige­ria, is a pro­fes­sor of prac­tice in in­ter­na­tional busi­ness and pub­lic pol­icy at the Fletcher School of Law and Diplo­macy at Tufts Univer­sity, and is the au­thor of “Emerg­ing Africa: How the Global Econ­omy’s ‘Last Fron­tier’ Can Pros­per and Mat­ter.”

En­trepreneur­ship is on the rise, es­pe­cially among young Africans, grad­u­ally re­plac­ing the dead end of for­eign aid. But the vast ma­jor­ity of Africans lag far be­hind

Newspapers in English

Newspapers from Lesotho

© PressReader. All rights reserved.