Why does Africa keep miss­ing the bus?

CityPress - - Voices - Ralph Mathekga voices@city­press.co.za

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

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