Is Africa Coming Back?
NAMIBIA: A few years ago, Africa was simply off the global economic map. Aside from a few investments in oil in Nigeria and Angola, Africa received almost no private capital flows from the rest of the world. Trade stagnated. The continent appeared in continuous turmoil. African businessmen and political leaders rarely participated in international economic conferences.
Suddenly, change is in the air. Africa’s new generation of leaders, from Yoweri Museveni in Uganda to Festus Mogae in Botswana to Joaquim Chissano in Mozambique to Nelson Mandela and Thabo Mbeki in South Africa are keen on leading their economies back into the global economy. They are savvy, business oriented, and eager for foreign investments. President Clinton’s trip to Africa highlighted to Americans -- usually most neglectful of Africa except when in deep crisis -- the dramatic changes underway on the continent. And at this year’s World Economic Forum Summit in Southern Africa, nearly 900 leading businessmen from the U.S., Europe, Asia, and Africa, met with the new political leadership to map a way forward.
Of course intentions and results are two different matters. Africa has a long road ahead. It is on most measures, several decades, if not a century or more, behind the advanced economies in economic organization and level of income. After centuries of enslavement and colonial rule, and decades of economic mismanagement or internal conflict, can Africa stage a rapid comeback?
For many interesting reasons, the answer could well be yes. Changes in technology permit a remarkable leapfrogging in economic activity. Countries almost without any telephone lines until recently are now jumping straight to cellular and microwave transmission. At the World Economic Forum meetings, summit participants enjoyed a dinner at a game reserve in the Namibian hinterland, while by the dozens clutching their cellular phones and transacting business all over the world. Internet connections in Ghana, Uganda, Zimbabwe, and many other parts of the continent are connecting universities, businesses, and even distant villages to global information and markets. Advanced systems similar to telecomms can be found in other core infrastructure areas. We are likely to see African technological leapfrogging in government organization (e.g. the efficiency of the payments and settlements systems in Southern Africa), road networks, power grids, air travel, and other parts of the critical economic "plumbing" necessary for a modern economy and for rapid growth in Africa’s living standards.
To a large extent, this technological advance can be funded from international capital markets, rather than aid agencies or national governments. The real trick is economic liberalization and market-based regulation. Too many governments in Africa are clinging to state telecommunications monopolies as an easy source of revenue (or still less sensibly, as a perceived source of a few hundred or thousand jobs), while inadvertently strangling the introduction of new technologies. Privatization is often grudging, limited, or corrupt, with limited licenses given to insiders, again depriving the rest of the country of vitally needed services that would be privately financed. And yet the trend is moving forward, since the demands of society are clearly awakened and are pushing even the reluctant governments forward. Also, the more advanced reformers are quietly or not so quietly nudging their more resistant neighbors to become more forthcoming in economic reforms and sound management.
Africa’s reforms to date have already started to produce results, though not yet sufficient to guarantee sustained and rapid economic growth. The recent opening of the economies of Africa to global trade, combined with more realistic exchange rates, have probably raised Africa’s growth rates by around 2 percentage points per year compared with the rates of the 1980s. The bad news is that even with the higher growth rates, per capita income is just rising at one or two percent per year on average in much of the region (rather than falling, as in the 1980s), compared with the much higher rates that could be achieved.
At the recent G-8 summit, the advanced economies called for a new partnership with Africa. No doubt, much of the burden for economic improvement rests with Africa itself, working together with the private international markets. And yet, the wealthy countries have a crucial role to play in helping to remove some of the special obstacles that still burden Africa’s re-entry into the world economy. First, the advanced countries should be much more ambitious in debt reduction for the poor countries in Africa trying to find their way back to economic growth. The current debt reduction program is woefully inadequate. Second, the advanced countries should open their markets to textiles and apparel (and other labor-intensive manufactures) from Africa, sectors in which Africa has a clear comparative advantage. Third, the advanced countries should work with Africa to mobilize the international scientific community to address the critical problems of malaria, HIV/Aids in Africa, and other tropical infectious diseases that pose horrendous and distinctive challenges for the continent.
With such measures at home and internationally, Africa will leave behind its aid dependency, and will re-engage the world as a true and increasingly prosperous economic partner.