Two or three weeks ago, the Economist, more or less putting the whole question of climate change on one side, described Africa as “the hopeful continent” and suggested that “after decades of slow growth, Africa has a real chance to follow in the footsteps of Asia.” It noted that over the past decade six of the world’s fastest growing economies were Africa and in eight of the past ten years, Africa had grown faster than East Asia, including Japan. It suggested the commodities boom was partly responsible, and singled out favourable demography as well as the growth in manufacturing and service economies.
Being the Economist, it was also quick to qualify any praise: “Optimism about Africa needs to taken in fairly small doses”. Most Africans live on less than two dollars a day, food production has slumped since independence and drought and famine persist. It notes that “the climate is worsening with deforestation and desertification still on the march” though it is careful not to apply blame in these areas. It also manages to hand out a collection of brickbats: Angola and Equatorial Guinea are called “oil-sodden kleptocracies”; Rwanda and Ethiopia which it admits have begun to get economic development right have become “politically noxious”; Congo is “barely governable and hideously corrupt”; South Africa “which used to be a model for the continent is tainted with corruption”; and Zimbabwe is “a scar on the conscience of the rest of southern Africa.”
Equally, it allows that some numbers are moving in the right direction. There is a growing middle class, and as many as 100 million people may have an income of $3,000 a year by 2015. The rate of foreign investment has soared; China’s involvement has improved infrastructure and boosted manufacturing. Brazil, Turkey, Malaysia and India are all following its lead. It notes Africa’s enthusiasm for technology with more than 600 million mobile phone users (more than Europe or America) providing valuable advances in communications with mobile banking and telephonic agro-information. Health and governance has improved. It notes the bulge of better-educated young people entering the job market. This is good for any country but the Economist also notes the need to provide jobs. It also quickly adds there is a need for deep reform. Its prescriptions include making it easier to start businesses, cutting some taxes and collecting others honestly; taking land out of communal ownership to allow farmers access to credit; and “most of all, politicians need to keep their noses out of the trough and to leave power when their voters tell them to.” It also calls on western governments to open up trade rather than dish out aid and lower tariff barriers; foreign investors should sign the Extractive Industries Transparency Initiative and African governments should insist on total openness in any deals.
Coincidentally, Foreign Affairs, the publication of the US Council on Foreign Relations, has recently carried a review article of a book by Steven Radelet’s “Emerging Africa” with the sub-title “How 17 countries are leading the way”. The book was published just over a year ago. Steve Radelet was a senior fellow at the Center for Global Development for most of the 2000s, served as an economic advisor to the Government of Liberia and in the U.S. Treasury for Africa, the Middle East, and Asia, and is now chief economist for USAID. The aim of “Emerging Africa” is to explain how and why Africa has turned the corner. He identifies five main factors: “expanding democratization has opened up governments, bolstering popular accountability; improved economic policies have curbed the worst tax and regulatory policies; debt reduction has freed up resources for education and health care; new technologies (most notably the ubiquitous cell phone) have boosted Africans’ access to markets; and the rise of a new generation of energetic leaders…has brought new ideas and attitudes to the fore.” His 17 countries are Botswana, Burkina Faso, Cape Verde, Ethiopia, Ghana, Lesotho, Mali, Mauritius, Mozambique, Namibia, Rwanda, Sao Tome and Principe, Seychelles, South Africa, Tanzania, Uganda and Zambia. He adds another six: Benin, Liberia, Kenya, Malawi, Senegal and Sierra Leone which he calls “threshold countries”.
Radelet produces detailed evidence from dozens of key measures including income levels, foreign trade, political freedom, education, cell phone penetration, and demonstrates that his seventeen countries have built impressive foundations, and documents visible growth from the mid 1990s through 2008: better trade, investment and exchange rate policies encouraged investment; incentives for farmers led to better prices and bigger harvests; exports have risen. “The evidence is impressive and refreshing”. Interestingly, he does not find that oil producing countries are part of the general economic improvement as they have earned huge sums but created few jobs, failing to develop balanced economies. The seventeen emerging countries have been learning governance and policy lessons that the oil producers have ignored.
Radelet is clear. Good governance has gone hand in hand with economic growth between 1996 and 2008, and those countries with poor governance have also shown the worst economic results – and the Horn of Africa contains two of them – Somali and Eritrea. The correlation between governance and growth is very clear. The relationship between democracy and economic growth “is crystal clear: democratic governments…have been successful, while authoritarian governments have by and large been failures.” Thirteen of Radelet’s seventeen emerging success stories have made the transition to more or less fully fledged democracies since the 1990s.
Foreign Affairs says Radelet makes a “robust case” for suggesting democratic reform was the necessary precondition for recent economic advances, but wonders why some countries succeeded but others did not, and why this worked in the 1990s but not, for example, in the 1960s. One difference between the two periods worth highlighting is education, the growth of “human capital” and the boosting of labour productivity which originally laid the foundation of political change and subsequently enabled economic developments. Education makes people more politically knowledgeable and contributes to a more vibrant democracy. Radelet indeed argues that competitive democracies are more likely to adopt pro-growth economic policies. Education also produces more skilled and knowledgeable economists and policy experts and a resultant growth of technical capacity.
The result as the Foreign Policy review emphasizes is that “increasingly educated populations, democratic policies, spreading technologies and improved economic policymaking have combined to create a new Africa that bears little resemblance to the caricature of a “dark continent” that still rears its head in the media.” It notes that Sierra Leone is no longer known for “blood diamonds” but for improving access to electricity and improving rural roads; Ethiopia is no longer an inspiration for food-aid concerts, but flies millions of dollars worth of fresh flowers to Europe; and even in Congo where a civil war still lingers, army officers are being brought to trial for abuses. “It is time to turn the page and stop treating Africa like an exotic basket case,” and look to ways to sustain these developments. One suggestion is to take over some of the foreign investment that has previously gone to labour-intensive sectors of manufacturing and services in Asian countries now that wages are increasing in Asia and their populations aging. Whatever route is taken “it will require competent leaders pursuing sound economic policies.”
(MoFA)