Africa's development: Time to abandon theory and confront reality
A rejoinder to Olu Fasan's claims
Adewale Stephen
2014-09-13, Issue <
http://www.pambazuka.org/en/issue/693> 693
Globalization cannot help develop Africa, as peddlers of the 'Africa rising'
myth claim. In reality, globalization is yet another form of colonization -
not by nations but by multinationals with the active support and
encouragement of their governments. Happily, there are alternative paths to
Africa's true development
Economics is a slippery subject indeed. Even the great Albert Einstein who
is widely presumed as the most intelligent man to have graced the earth, the
same Einstein who is the originator of one quaint equation, , which had been
driving the successive generations of physicists and mathematicians crazy
ever since it was proposed in 1905, once had to give up Economics. According
to him, he had difficulties in "reconciling the paradoxes which are so
thickly embedded in economics." They simply drove the professor of
professors up the walls. Because, in economics, often times, theory is not a
true reflection of reality.
In two consecutive editions of the Guardian newspaper of Monday 25 and
Tuesday 26 August, 2014, Dr. Olu Fasan, a London-based political economist,
took time to scholarly criticize Dr. Kinsley Moghalu, Nigeria's Deputy
Governor of Central Bank's recently delivered lecture on Africa's
development. While Dr. Moghalu delivered his lecture entitled "Beyond Africa
Rising" at the London School of Economics, Dr. Fasan took to the Guardian
for a rejoinder under the caption: "Africa's development: Fallacy of
self-sufficiency".
While Dr. Moghalu was on a mission to challenge the current orthodoxy about
Africa's development, Dr Fasan brilliantly defended globalization, which
according to him, is a reality which "Africa must embrace (irrespective of)
the challenges and the opportunities it presents." Considering the status of
both dramatis personae, the positions taken by these two highly placed
individuals are profound ideas that can have fundamental effects, and define
or re-define the terrain of policy dialogue. Whereas one is the deputy
governor at CBN, the other is an erudite political economist and a Visiting
Fellow at the London School of Economics. It is for these reasons that we
need to critically examine the worldview that Dr. Fasan hypothesized to
correct any inaccuracy, just as he had done to Dr. Moghalu's dissertation.
The fulcrum of Dr. Fasan's disagreement with Dr. Moghalu is that
globalization is not as dangerous as portrayed by the latter. Globalization
to him has huge opportunities because it has liberated economies and has
also succeeded in launching Nigeria's economy to become Africa's largest
through its recent rebasing. To him, therefore, "nothing will perpetuate the
inequality and marginalization that Africa currently suffers.more than an
inward-looking, self-reliant economic policy." He also submitted that
self-sufficiency failed many countries that had practiced it in the time
past that they had to abandon it.
Dr. Fasan did not hide his support for the middle class who, according to
him "is often the victims of a policy of self-sufficiency". He rejected the
policy of self-sufficiency because it will "force the middle class to
exercise frugality or control their tastes and cupidity through restrictions
on imports."
If we may ask, what are the percentages of middle class citizens out of the
entire population of Africa? How many people can really afford the price of
the luxury things that flow into the continent on a daily basis? Let's just
consider the primary items that appear to be the cheapest of these items.
How many citizens can afford the usage of a gas cooker, microwave and other
electric cooking appliances in sub-Saharan Africa where, according to the
statistics released in 2013 by UN on Global Issue, over 80 percent of the
population depends on traditional biomass such as fuel wood, charcoal, wood
dust and animal dung to meet their energy needs for cooking? In other
statistics released by the same UN, around 27-28 per cent of all children in
the developing countries are estimated to be underweight or stunted. Again,
sub-Saharan Africa accounts for the bulk of the deficit. Africa's economic
malaise is highly obvious but unfortunately our economics scholars pretend
not to see it. Except for few wealthy elite and the more prosperous peoples
of South Africa and the Maghreb, Africans have very few consumers. The
much-touted middle class are not just there in the first instance as even
the best educated ones such as Dr. Fasan often choose to leave the continent
for the West or the Persian Gulf in search of a better life.
To Dr. Fasan, globalization has liberated Nigeria's economy whose activities
in the "telecommunication and entertainment" sectors have suddenly made it
the largest economy in Africa. But has this so-called economic improvement
reflected in the lives of the common man in the street of Lagos, Yola or
Owerri? A similar IMF's pronouncement in Ghana three years ago claimed to
have increased its overall GDP by two-thirds and vaulted it into
middle-income status. Between then and now, Ghana's currency has lost more
than 30 percent of its value against major trading currencies; cost of
living and utility tariffs have risen to an embarrassing limit while
inflation has hit a high of 15 percent. Today, hopes of oil riches have
dried up as Ghana's success story descends into disenchantment as its
citizens struggle to afford daily bread. And, it is disheartening to note
that Ghana is now on its knees begging IMF for the award of another loan of
slavery. That is what happens when a country implements the World Bank's
dictation, such as what Dr. Fasan is recommending, hook, line and sinker.
The antics of the agents of globalization such as World Bank, IMF and their
funding countries, who have long cultivated the diplomatic habit of churning
out encouraging figures to deceive the African leaders, is not a new
phenomenon. They often mention the fictional productivity of Africa just
when the issues touch the mainstream. The risk is that a few citizens and
some African scholars are bought into this false sense of hope; thereby
assisting these agents of domination in spreading the misleading impression
that appropriate route is being taken.
Indeed, Dr. Fasan is right about the development of telecommunication across
the African continent. But he forgets to, or deliberately decides not to,
talk of many African countries where radios, televisions, and automobiles
are rare luxuries till date. No one is canvassing for a total break away
from the global world as Dr. Fasan assumed. Even an unlettered man in the
remote part of the continent knows that he needs his neighbour to survive
the rigours of this age. What everyone is saying is that such relationship
must be based on principles. After all, the 'Asian Tiger' countries did not
withdraw from global economic institutions or flout their rules before they
developed to the point where they are today.
No nation has ever developed on the basis of raw globalisation and complete
privatisation, as being canvassed by Dr. Fasan, without putting in place the
essential foundations such as domestic infrastructure. The theory of raw
globalisation as the only prerequisite for immaculate development as posited
by him, was founded on a considerable ignorance of the history of economic
development among the developed countries, the United States inclusive. In
the first 70 years of its own history, American government had played a
relatively active role in building the turnpikes, canals, harbours,
railroads and schools which made its subsequent economic expansion possible.
When what economists unhappily termed 'social overhead capital' such as the
provision of transportation, electricity, good roads, and food is the great
need, public investment becomes a necessity, since foreign investors or
private capital will not go into these areas of low return.
One of the most distinguished 20th Century American historians, Professor
Arthur M. Schlesinger Jr. in his book, 'A Thousand Days: John F. Kennedy in
the White House', described the United States' attitude of forcing down
globalisation on the Cuba's throat as "a trifle unseemly on the part of a
nation who had financed so much of its own development by inward economic
expansion, inflation, wildcat paper money and state bonds sold to foreign
investors and subsequently repudiated. If the criteria of the IMF had
governed the United States in the nineteenth century, our own economic
development would have taken a good deal longer. In preaching fiscal
orthodoxy to developing nations, America is somewhat in the position of the
prostitute who, having retired on her earnings, believes that public virtue
requires the closing down of the red-light district."
Even China, which Dr. Fasan made a glowing reference of, solidified its
domestic economy before opening up its market. Long before it emerged as an
economic powerhouse, China has always been careful to ensure that its
domestic economic development was not compromised in any way. Unlike what he
would want us to believe, internal events have always influenced China's
foreign policy. It was not a sheer oversight or economic difficulties that
forced China not to play any role in the African affairs during the Cold
War, particularly in the 1970s, but a calculated attempt to solidify its
domestic economic base before joining the fray. Despite the fact that
African votes in the United Nations General Assembly made a weighty
contribution to the accession of the People's Republic of China into the UN
Security Council in October 1971, China preferred managing its domestic
reform to returning Africa's gesture. Following the end of the Cultural
Revolution after the death of Mao Zedong in September 1975, the launch of
the economic reform programme ensued at the 11th Party Congress of the
Chinese Communist Party in December 1978. Even with this entrenchment of
reform, market opening and trade liberalisation, Chinese state-owned firms
enjoyed, and still enjoy, access to capital from the so-called policy banks
most notably China Export - Import Bank and China Development Bank.
In a nutshell, the point is that while China's unleashing of economic market
forces in the late 1970s resulted in the erosion of ideological leanings of
the Chinese leadership and society as a whole, it had solidified its
domestic economic structures before embarking on that adventure. It is this
kind of economic policy that enabled Chinese firms and citizens to look
outward and establish an international footprint over the course of decades.
Till date, the bulk of Chinese outward bound investment originates from
state-owned enterprises. According to the statistics published by China's
Ministry of Commerce in March 2014, 84 percent of China's outward Foreign
Direct Investment (including stocks and portfolio investments) has come from
SOE's.
While Fasan agreed that Africa is yet to build such viable public sectors,
he also frowned at this kind of state capitalism on the basis that it would
deny Africa a "market economy status (MES) in the World Trade Organisation".
He blamed Moghalu for recommending inward-looking economic policy; rejected
state capitalism and criticized crony capitalism. He is convinced that "if
globalisation is evil, self-sufficiency is a greater evil; and if
market-based capitalism is bad, state capitalism and crony capitalism are
even worse. And, as the saying goes, of two evils choose the lesser". The
lesser, in Fasan's scholarly view, is what he termed "entrepreneurial
capitalism" where government would have nothing to do with business but
would rather leave everything in the hands of sized medium enterprises
(SMEs).
I had to critically read through his teatise to see his examples of
countries who have successfully practiced such but to my uttermost dismay,
his only reference is a 2009 Eurostat figure, which submitted that "SME's
accounted for 53 percent of the UK's goods exports." And, because of this
figure that has never been subjected to rigorous test to prove its
effectiveness, Fasan is challenging the Africa to jettison the building of
domestic structures but open its domestic economy to foreign economic
invaders and global fiscal hitmen through what he called 'globalisation.'
Dr. Fasan concluded by reminding Africa of the reality of globalisation. To
him, "we must embrace both the challenges and the opportunities it
presents." Globalization, as he brilliantly conceived it, actually spells
disaster for the third world, particularly the nations of Africa. For a
continent that is far from being self-reliant, for a continent which has
little or nothing to sell, there is no justifiable reason for keeping our
borders open so that the industrialized world can inundate our markets with
their goods - even those we can easily do without or produce by ourselves.
Africa is surely not going to develop by solely relying on the products of
other nations. We shall become self-reliant only by making the sacrifices
which these other nations made to produce those luxuries. I disagree with
the position of scholars like Dr. Fasan who professes, against all the
available realities, that 'globalisation without regulation' is the only way
that leads to the promised land; that Africa should only "create the
enabling environment for businesses to produce", then totally hands off its
business to the western powers, and goes to sleep because its economic
renaissance will be sorted out by the countries of Europe, US, or China.
This is a blatant fallacy as no state has ever worked out the rejuvenation
of another. On the contrary, whenever a people have fallen into sleep, they
have woken up in chains. The nations which colonised us before will colonise
us again, if we give them a chance. Globalization is yet another form of
colonization - this time not by nations or governments, but by
multinationals with the active support and encouragement of their
governments. Globalization is not a social thing. It is an economic thing.
It is not about humanism. It is about wealth and power. In the face of this
monster, if we do not set to work immediately to repair years of damage to
our country and economy, if we do not unite and make the sacrifices that
need to be made, above all if we do not give up our greed and corruption, it
will not be long before we are assimilated by the rest of the world.
It is ironic that the borders of those nations which advocate globalization
are shut, not only to our own men and women, but also to our goods. If we
are going to be able to eliminate corruption and violence, we must first
solve the problem of unemployment. We cannot solve the problem of
unemployment until we begin to strengthen our state-owned enterprises and
create new jobs. What made Africa to lag behind is not because of the
failure of state-owned enterprises but the awful corrupt practices. A public
enterprise can be managed exactly like a private enterprise with the
exception that while a private commercial enterprise aims at profit
maximization, a public commercial enterprise aims at either full cost
recovery or a satisfactory profit. Because, the public enterprise is not too
heavily tilted towards profit making, it ends up providing more employment
than its counterparts in the private sector and its environment is healthier
and less competitive.
A typical example today is the Nigerian Security Printing and Minting
Company (MINT); with majority government ownership and the CBN Governor as
Board chairman it is managed under a first class private sector model and
makes satisfactory returns to government. The Bank of Industry (BOI) owned
fully by government is another successful public enterprise that is doing
Nigeria proud.
It is not true that corruption, nepotism and embezzlement only occur in
public enterprises. The 2008-2009 experience with very big Nigerian banks
and manufacturing companies in the private sector where corruption, poor
corporate governance practices and mindless acquisition of personal wealth
became the order of the day is an example of the abuses that private
enterprises indulge in. The inventory manipulation reported in Lever
Brothers Plc and a similar practice in Cadbury Nigeria Plc also some years
back are examples of such bad practices in the private sector too.
But these evil tendencies on the part of public enterprises were the same
the world over. However, whenever such poor practices were detected among
managers of public enterprises in countries like China, India, Brazil,
Malaysia or South Korea, they were punished either by death sentence, life
imprisonment, amputation, or very long jail terms that were complemented by
debilitating fines. David Yonggi Cho, founder of Yoido Full Gospel Church,
pastor of the largest Pentecostal churches in South Korea, who was sentenced
to three years in prison this year February for embezzling $12 million of
his church funds, is one of the examples in this regard.
Finally, in Africa, our inability to enforce rules against corruption and
petty theft has been our major undoing and not vice versa. I agree with Dr.
Fasan, Africa should open up - but not until we have put all the necessary
requirement of development into places.
* Adewale Stephen is Head of Programme, Africa Dialogue Mission (ADM),
Abuja, Nigeria.
Received on Sat Sep 13 2014 - 16:51:31 EDT