Partha P.

Choudhury

Providing An Economic Context For The Current State of Affairs Of Developing Africa

Dr. Richard Horstman

MLINS 4393 Regional Study of Sub-Saharan Africa

December 4th, 2012

As had been discussed in our class, Africa is imbued with traits that make it a polyglot, a heterogeneous admixture of cultures, lively and it is worth noting that there absolutely is an allure to the continent that many people in the West and other locales in the world find to be exhilarating. Africa, in many regards, is coming to the realization of the pan-African model with the stick-to-itiveness of solidarity. But many ethnic and sectarian dichotomies and cleavages leave the possibility of reconciliation and cohesion as something that has yet to be materialized, incipient in its current nature as it is. From the opposing viewpoints of African and other academic circles, theres a lot of work that needs to be undertaken however many cant reach a consensus as to how to go about achieving it. Its worth pointing out that almost anyone whos got an affinity for fostering development and a sense of economic parity in Africa has a liberal mindset (of that theres not much doubt about their leftist dispositions), but going through the vast array of intellectuals and their respective backgrounds, specifically nationality, what they posit about what measures the continent of Africa needs, is flavored by these inherent backgrounds. Speaking as someone whos seen abject poverty in the worst form in that of complete indifference in a country such as India, I feel a special affinity for the continent of Africa for the reason that going through the motions of development, theres much work to be done. Although Ive not personally been there, learning introspectively about Africa in a classroom setting has been a privilege. What this paper will capture in its rhythm and scope is what I hope to be an assessment about the current stage of economic development in Africa in an age of globalization. Globalization is a trend that can no longer be retracted and has the ability to bring the world closer together, however comes with many pitfalls and contingencies that makes it a point of interest among many people of all ideologies. Speaking of the continent of Africa as a whole, no

place has had such a depreciation of development in the world nor has it had the certainty of livelihoods for its people. However now that closer attention is being paid to the equitable trade of resources in Africa, that the continent has a burgeoning middle class who are attaining a modest upward social mobility, theres much improvement in the way the world sees Africa and how it is that the continent is conveying to the rest of the world the new sense of self-efficacy it is nurturing. There was an interesting question that was put forth to me by Dr. Horstman which involved a bit of guesswork in answering. Ive decided to answer that question in my paper as I can see how the lending by the International Monetary Fund and the World Bank have yielded results that have let much to be desired in Africa. The question put forth was The World Bank and the IMF thought that they had the magic formula when it came to structural adjustment policies, which in turn had caused quite a bit of misery on the local level. What would you propose and why? Gauging from the immensity of the problem at hand, one can see that one single-serving answer wouldnt suffice, so much introspection has to be given to even begin to answer this question. The IMF and the World Bank both have had a mainstay in the continent of Africa since the advent of Bretton Woods. Instead of looking at countries on an individual basis, economists have often aggregated Africa as a whole and not looked at the particularities of each country in order to assess what needs to be done. Each country in question may have its ramifications that are exclusive, but quite often the measures undertaken undermined sovereignty in order for SAPs to be inclusive into their economies. According to Gerald Scott in one of our textbooks, there are certain sub-Saharan African countries so replete with corruption that gross

mismanagement1 of capital and natural resources that are mostly in the hands of the national government, ensured failure from the get-go in terms of having an IMF relief package that could not garner success due to endemic corruption, capital flight and the lack of privatization. An interesting thing of note that he points out is that with nationalization of industries that were mired in corruption in African countries, many state-owned enterprises could expect a bailout from the IMF vicariously through the host national government due to linkages and that ensured the cycle of corruption. This is squarely opposed to the issue of privatization where once private industries were teetering towards failing, they had no option but to fold. Scott further says that it isnt the IMF that has failed Africa, but rather that blame goes to the leadership. With the issue of patronage ever entrenched in Africa, Scott likens it to a conspiracy that needs the attention of the populace at large in terms of accountability. But aside from that negative picture, theres relief at hand. In a study by Dalberg and the Initiative For Global Development, the recent wave of democratization in Africa is guaranteeing a symbiotic relationship there that the study suggests is meritorious. The spread of democracy is gradually making economic systems more meritocratic, opening up entrepreneurial opportunities and fostering a new middle class. Meanwhile, economic integration though slow in some areas is eliminating barriers to cross-border commerce 2. Ever since Samuel P. Huntington wrote The Third Wave Of Democracy, there has been much established literature on the subject of the role democracy and transparency plays in the economic thriving of nations. One can suggest that it makes for a comparative advantage in the market and with the political glasnost of a country anywhere in the world that makes political reforms and has a change of

1 2

Scott, 75. Dalberg and the Initiative For Global Development, Pioneers on the frontier: Sub-Saharan Africas Multinational Corporations, 3.

leadership, this lends itself to a more inclusive economy that encourages participation. And in an age of globalization, the interconnectedness of world governance implies that notion of inclusion. In an article by the Foreign Policy magazine called Africas Human Capital written by Daniel Altman, purchasing power3 in Africa has tripled within a timespan of a decade. Within the government allocation of investing in its people, the upward social mobility trend in Africa has increased to a large extent. Whether it should be in education and schooling for children, health and mortality, all of these upward trends signify more awareness and caution when it comes to the measures forwarded by the governments. With better health and education comes higher productivity, thus leading to attaining middle-class status in the form of wages and purchasing power. This split between the Africa of a couple of decades ago and the current Africa ensures long-term planning investment by multinationals in a nation and fosters goodwill. Altman cites the country of Vietnam where Hondas corporation opened industry there in the 1990s. Foreign direct investment brought higher incomes to people who otherwise couldnt hope to garner wages, made for a market of Vietnamese built cars and mopeds and eventually allowed for the Vietnamese populace to purchase the very cars and mopeds that they were assembling. Already countries such as Angola, which is resource-rich in hydrocarbons, are experiencing ascendant growth and a vast array of income potential. Already many in the economic sector are praising Africa as a frontier market which has promise in terms of being lucrative. Withstanding security issues such as ethnic and political strife and conflict, once Africa has its security clearance in order, the mandate to dictate affairs on its own accord becomes the rule, not the exception.

Altman. http://www.foreignpolicy.com/articles/2012/11/26/africa_s_human_capital

According to the Millennium Development Goals propositioned by the United Nations in order to halve the world poverty rate by half by 2020, sub-Saharan Africa is the region that is showing the greatest evidence of a degree of amelioration. But with some externalities such as quotas for food production and employment not being fully materialized in order to have a competitive advantage, sub-Saharan Africa still is languishing behind. And with many economists, analysts and speculators hinting at a possible food shortage and a worldwide food price increase, necessary measures have to be taken to alleviate this trend. What is necessary in Africa can be a mix of leadership and initiative. Ultimately whats necessary to happen there needs to be an indigenous venture towards self-sufficiency which can be bolstered by cooperation in the global arena. As many in the world can see, that with Zimbabwe suffering under the likes of a Robert Mugabe and quite possibly the worst inflation in a modern country, making sacrifice and austerity can be especially grievous if you have no one to rely on and youre inept. What many Africans are unnerved by is the mentality many have in the West that these are people who are incapable of taking care of themselves, which cannot be the case. In order for the drive for self-sufficiency to be successful, there needs to be an African face to the solution. Many Africans who were part of the African Diaspora need to reciprocate investment there and investors have to note that investing in Africa must be equitable rather than an all-out grab for resources while leaving much of the continent impoverished. For the perfect and willful action to be successful, there needs to be an accord that Africans are ready and capable to take charge of their own collective destinies and the promise of economic aid has gotten to the point where it is now cumbersome. As such, the very notion that a country needs long-term assistance from the World Bank or the IMF conjures up failure in inception, making aid something akin to perpetual charity. And that is something that is changing the face of sub-

Saharan Africa in that they realize looking out for the commonweal and disregarding prior mentalities of failure and malaise means looking outward to the rest of the world and reclaiming a lions share of the destiny that they can achieve.

Works Cited Scott, Gerald. Who Has Failed Africa? IMF Measures Or The African Leadership?. Journal of Asian and African Studies. August 1998. Print. Dalberg and the Initiative For Global Development, Pioneers on the frontier: SubSaharan Africas Multinational Corporations. 2011. Print. Altman, Daniel. Africas Human Capital. www.foreignpolicy.com. November 26th, 2012. Website.