What Africa Needs

Given Africa’s recent strong growth figures, a perceptible shift has now moved in the direction of the continent’s “rise” opposed to the previous “hopeless continent” rhetoric.

Globalization presses a core challenges to many historical assumptions. Given Africa’s recent strong growth figures, a perceptible shift has now moved in the direction of the continent’s “rise” opposed to the previous “hopeless continent” rhetoric. As today they are not powers that can be simply ignored the need for modification in global governance is increasingly pressed. Early entry into African economies provides opportunities to create markets, establish brands, shape industry structures, influence customer preferences, and establish long-term relationships. Today the rate of return on foreign investment in Africa is higher than in any other developing region. Business can help build the Africa of the future. 

Empirical evidence on growth and policy related indicators is consistent with the null hypothesis that more than twenty years of “policy reform” had limited impact on strengthening the potential for rapid and sustainable growth in the sub-Saharan region - Africa’s growth record has occurred within the context of overall global growth. In this regard, Africa’s growth has only been around 1 per cent higher than the world average: credible, but not fantastic. Another claim about Africa’s middle class, with assertions that it now amounts to over a third of Africa’s population results in fact, that currently only 4 per cent of Africans have an income in excess of $10 a day. 

Meanwhile, high economic growth in Africa must be understood in the context of the rise in importance of various “emerging powers” within the global political economy. Decades after the European powers carved up the African continent for their own imperial needs, Africa is undergoing a new wave of resource and strategic exploitation – some are calling it the new scramble for Africa. The relationship that these “new” powers have with Africa has elevated the continent in the strategic thinking of “traditional” (largely ex-colonial) partners, yet massive challenges remain. Africa remains the weaker partner - dependent relationship in the international system and historic insertion into the global capitalist economy. The bulk of the growth in African exports in the last decade or more has been heavily underpinned by mining-related commodities, deeply problematic in terms of development with Africa’s world market share in processing industries being extraordinarily low. 

Though Africa has possibly never been in a stronger bargaining position than at present, the key question remains: how can African leaders take advantage for the benefit of the ordinary citizen. Currently, this does not seem to be happening. Emerging countries’ trade structures with Africa do not exhibit any exceptionalism and are comparable to the relationships established by the capitalist core since the colonial period, following the model of the ‘small colonial open economy’. It cannot be taken for granted that actors such as the BRICS are interested in furthering Africa’s developmental priorities. The trade between the BRICS and Africa is clearly dominated by the exportation of commodities. 

“Solutions” to the energy revolution thus far simply implies a further intensification of an over-reliance on primary commodities, with the hope that through such a diversification of dependency, the effects of new developments in the oil industry may be mitigated: hardly a sustainable or visionary response. Indeed, rentier strategies rather than developmental strategies tend to be negative—as the history of Africa’s petro-states testify. In the past two decades, Africa has seen an unprecedented boom in oil and gas investment. With big companies shut out, or deterred from investing in the Middle East, Africa has by contrast offered multinationals relatively lenient terms and extensive access to its oilfields. 

Problematically, developments elsewhere may well push Africa further down the energy dependency road as, paradoxically, exports to the West (particularly the United States) decline. In the past few years, a radical change in the forecasts for growth in American oil production and oil reserves has taken place. As such the premium on controlling political power is very high, leaving virtually no incentive or space for the democratization of state-society relations. 

It hardly needs stating that the diversification of dependency is not a coherent development project for the continent, even if the notion that the BRICS somehow facilitate an escape route from the historic relationships with the North is held. The current pattern of growth in Africa is neither inclusive nor sustainable - a model of development that is based on enlarging the opportunities for non-commodity production and a rejection of the tyranny of comparative advantage is required.

This article is based on Valdai Paper #5 , prepared within the framework of the Foundation for Development and Support of the Valdai Discussion Club research program. 

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.