Essay on “The State of African Economy” competitive exam essay.

The State of African Economy


Despite their articulated concern over Africa’s poor growth record, the developed countries have persisted in main taming policies that perpetuate, rather than alleviate Africa’s dependency relationship, suggesting an ambivalence to what global role the developed countries truly envision for Africa. For example, developed countries continue to impose the insidious practice of “tariff escalation”, by which the tariff rates rise with the degree of processing to which an imported commodity has been subjected, thus effectively precluding Africa from developing an industrial sector around its substantial mining and agricultural interests. The Uruguay Round of GATT negotiations, largely ignored Africa’s needs and approved many provisions likely to prove detrimental to Africa’s interests. Faced with such an uncompromising climate, it is not surprising that Africa is seeking to shore up its own regional strengths in the hope that the playing field of international trade can be prevented from tilting even further to its disadvantage.

Alarmed by the continent’s growing impoverishment, Mr. Kulwant Singh, a veteran journalist, points out that Africa’s economic development intellectuals have begun to call for a reduction in the excessive dependence on exports, and the initiation of a programme of collective self-reliance. By self-reliance they meant that Africa should begin to directly produce the things it needed, rather than producing goods for export and then purchasing its needs with the proceeds of the sales.

Recognising that most African countries are too small to offer markets that could attract major investment, they called on African governments to focus on the creation of regional markets, adding “collective” to the self-reliance concept, and, gradually winning the endorsement of every African head of state and government at a special summit meeting in 1980.

Africa’s enthusiasm for collective self-reliance and for the regional integration concept was not widely shared within the donor community. The World Bank, particularly, was highly sceptical of the wisdom of placing serious reliance on regional integration, and was adamantly opposed to Africa departing in any way from the export-led development strategy that had become the prevalent development ideology within World Bank circles.

A full explanation for the bank’s coolness toward. African regional integration has never been articulated. But its overt hostility to any breaching of the export-led development strategy presumably derives from its blind adherence to classical Ricardian “co advantage” theory, and to its belief that strategies com-which emphasis import substitution had invariably resulted in overly protected and highly inefficient industrial ventures by their borrowing members (principally in Latin America).

Within Africa circles, some credence is given to a ‘conspiracy’ explanation, which argues that the World Bank and its bosses, the developed countries, find it in their interests to keep the African countries as mainly exporters of raw materials and importers of manufactured items, rather than to assist them in becoming tenacious industrial competitors, as the newly industrialised countries of East Asia have become.

The fact that economic competition from low-wage developing countries is an increasingly controversial issue in the domestic policies of the major industrialised nations, undoubtedly lends credibility to this perspective.

A part of the World Bank’s resistance of this new strategic thinking coming out of Africa, can also be attributed to the strains that arose when the bank insisted on structural adjustment programmes as the solution to Africa’s economic disarray, and as a condition for obtaining loans. Neither the World Bank nor the African countries seem to have understood that a strategy of collective self-reliance need not be seen as a natural enemy of properly framed structural adjustment programmes. Indeed, if properly conceived, they should reinforce one another.

In Africa, the drive for regional integration is perceived as a survival mechanism, although its overall objectives are not dissimilar to NAFTA’s. The hope is that regional economic integration will stimulate intra-African trade and provide, within Africa, a market potential of sufficient breadth to attract investment capital to the region. African countries give infra-African trade priority be-cause these countries believe they can ultimately establish a more stable market for the sale of African-made products, than the over-seas export market provides.

As Africa lags so far behind the rest of the world in technological skills, it cannot aspire to be a competitive producer in the short term. A protected internal market offers the only opportunity for Africa to move up the technology learning curve.

In the years since independence, Africa has spawned plethora of regional organisations, of which half a dozen or so are striving to weld countries together into strong regional entities. Most of them seek to increase infra-African trade via the collective reduction of myriad trade barriers, although one entity, the Southern Africa Development Coordination Conference (SADCC), placed its initial emphasis on encouraging functional, single-country projects of a multinational nature, such as the construction of national roads and railways, designed to facilitate commerce among neighbouring states.

Regional economic integration did not begin with Africa, of course, and there is a substantial history of such undertakings of Latin America and elsewhere. Development theory holds that ) regional integration follows five steps–the creation of preferential trade area, a free trade zone, a customs union, a common market, and an economic community.

Full economic integration arrives only after all these stages have been successfully completed, and is characterised by the unification of economic and social policies of the members under a supranational authority. A common currency and a central bank are implicit therein. In Africa, the merging of the several regional economic communities to be developed across the continent over the next 30 years, will create the proposed African Economic Community.

Regrettably, the rhetoric of African unity is often contradicted by the reality of African existence, which has been characterised by an astonishing amount of warfare in the post-independence years, mostly of an internecine nature. Many of these wars have been instigated and fuelled by the big powers as part of their Cold War Strategies (as in Zaire, Angola, Mozambique, Ethiopia and Somalia), but there has also been a dismaying number of internally generated wars (as in Sudan, Liberia and Rwanda).

Despite these persistent struggles, Africa’s leaders make great pronouncements in support of regional economic integration. Un-fortunately, their actions fall considerably short of their own tariff” reduction commitments, their cavalier attitude regarding the removal of bureaucratic impediments to trade and foreign investment, even when from African sources, and their reneging on agreed-upon immigration policies for citizens of member states, all belie their verbal commitments.

This contradiction is further emphasised by the widespread failure of many member states to pay their dues, and meet their other financial obligations to their respective regional associations. While these delinquencies may be understandable in the light of the austere budgetary situation in which most of Africa finds itself, the other failures are less excusable and may indicate that, at least at the highest levels of government, regional economic integration is not viewed as a priority issue.

On the other hand, summit meetings of Ecowas, the PTA, the SADC and some of the smaller regional groupings, generally attract of a surprisingly good turnout of heads of state. Nevertheless, it must be admitted that the real push for African regional economic integration comes from the intellectual community, which probably seems more clearly than the politicians that, without a regional integration strategy, Africa can never hope to pull itself up from the global economic cellar.

Morally, it is indefensible to condemn millions of people to a near hopeless existence, when the means exist to assist them. Economically, as expanding and developing African, even one inwardly focused, would offer a tremendous market for all sorts of US goods and services that Africa will be unable to produce at home for many years.

Environmentally, Africa’s rich endowment of natural resources, which are of use to all the world, is fast eroding away due to the poverty of its people, a result that harms everyone. And politically, the vast and growing disparity between the wealth of the developed countries and the poverty of the poor ones, is a time bomb waiting to explode. It is in everyone’s interest that it be defused, but regrettably, after three ‘decades of development’, the gap continues to widen. An African woman made the trenchant observation : “The rich must learn to sharp their wealth; otherwise the poor will be obliged to share their poverty”. This was not meant as a threat, but it eloquently dramatises why it is strongly in the western interest to assist Africa to move toward a sustained and sustainable growth path.

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