Why does Africa keep missing the bus?
Among the questions that are raised in relation to Africa is whether the continent can be said to be on the economic mend. This question is necessitated by the observation that Asian countries have had their turn at economic growth, and African countries should be logically in line to be the next beneficiaries of the economic boom. Why do African countries continue to “miss the bus”?
If African economies are sufficiently integrated into the global economy, then it is important to consider why Africa seems not to benefit from this integration. There are two possible explanations to this.
Firstly, African countries are either falling short of devising policy framework through which to pursue economic growth and development on the continent. Therefore, Africa’s ability to fully enjoy the benefits of being integrated into the global economy is inhibited by internal challenges of governance, including poor levels of state capacity.
The second explanation is that the global financial regime, including global economic recession, has a disproportionate negative impact on Africa’s ability to share in the global economic growth.
This explanation is outlined in the Mapungubwe Institute’s book, The Great Recession and its Implications for Human Values: Lessons for Africa.
The authors point to an inequitable global finance regime as one of the impediments for Africa’s share into global economic growth. Internal capacity problems within African states only exacerbate the problem and define the varied responses by individual African states towards global economic growth.
The book highlights how African countries are negatively affected by global financial crises, while at the same time never getting to enjoy returns from their opening up to and participation in the global finance regime. At issue is the reliance on the markets when it comes to allocation of resources and whether this model is sufficient to address the global economic imbalances.
Former president Thabo Mbeki, who authored a chapter in the book, is questioning the coherence of the system in which financial crisis is orchestrated by the private sector in dominant countries; yet, it “contaminates” economies all over the world and in Africa.
It is argued in the book that the domination of the global financial regime on nations, and its neoliberal framework, essentially undermines the idea of a developmental state. This is more serious where the role of the state in pursuing development is more stark, as is the case in Africa. Not all nations require similar levels of state capacity; African states need more capacity in line with challenges that are experienced in this setting.
The argument that African countries bear a parochial culture, which essentially lacks residues for economic “lift-off”, no longer holds in understanding the impediments to growth on the continent. The capitalist system – at least its fundament ideal that the markets would optimally distribute opportunities among players – has also fallen off. While the capitalist system periodically endures a crisis of confidence, there seems not to be willingness from participants to fully evaluate the utility of the system as a tool to address global inequality and address some of the ills of our societies. Within societies across the continent, there exist perverse incentives for accumulation by the few. The capitalist system does not in any way attempt to repel unjustifiable accumulation by the few at the expense of the majority. This raises the moral question as to whether inequality can be eliminated under capitalism.
African countries and their Latin American counterparts have for a long time maintained that they are not seen as equal partners in the global financial regime. That the system is unfair, both in terms of allocating gains and costs among participants, is a point that is beginning to resonate in Western societies as well, in the aftermath of China’s rise to global economic stardom. Dubbed one of the main beneficiaries of globalisation, China’s rise in terms of productivity and industrial expansion has seen countries that have always been proponents of a global financial regulatory regime beginning to shift towards protectionism and a move towards regulation of global finance with the aim of protecting their local industries.
Given the impact of global economic recessions on Africa, African countries need to have a say when it comes to shaping the global financial regulatory framework. The shift towards protectionism, which culminated in the British exit from the EU, for example, could result in a situation where African countries are hard done by, and may miss the bus again as global economic integration is being replaced by protectionism. Africa has already opened its economies to the global financial framework, with the promise that this will create opportunities for growth and further integration of African states into the world economy. The results for this effort are less than satisfactory.
It is important to forge ahead with the conversation as to how African countries can thrive economically, through regional integration and a meaningful global integration into the global economic community, if such exists. This book offers an opportunity to further interrogate the question as to what the conditions for Africa’s continued participation in the global finance regime should be. Mathekga is head of political economy at the
Mapungubwe Institute The book launches on November 10 at Unisa’s main campus and Mbeki will give an
overview of his chapter