Our food might be produced in Kenya—either chickens or rice, as well as some greens—but the income received from it generally flows in one direction: out. Consequently, the money brought to rural areas through the sale of commodities such as cash crops is then siphoned back to the towns where the consumer goods are transported from, and eventually repatriated to the countries that produce them. Even most of the industries that are located in Kenya—tourism, and the growing of flowers, coffee, and tea—are largely owned by foreign companies.
Because commodities depend on availability as much as demand, they are subject to sometimes volatile price variations. In recent years, the world price of oil and certain minerals has gone up, which has meant that some of Africa's economies have been prospering. According to the United Nations Economic Report on Africa for 2008, Africa's GDP has increased from just under 4 percent annually in 2001 to just over 6 percent in 2008. Inflation is down over the same period, from just over 10 percent to 5 percent.26
While this news is welcome for those countries that have large deposits of desirable commodities, their economies are still overly dependent on too few industries for them to ride the inevitable ups and downs of the market. At the same time, not enough African countries have diversified their economic base, nor made progress toward self-sufficiency in essential sectors such as food production. For instance, between 2002 and 2005, Zambia's total exports more than doubled, from just under a billion dollars to nearly $2.1 billion; however, this increase was mainly because of a rise in the price of copper, which amounted to 50 percent of total exports in 2005.27 Ever since its independence from Britain, Nigeria's economy has been almost wholly reliant on oil, accounting for over 95 percent of total exports since the mid-1980s.28 The International Monetary Fund anticipates further divergence in growth rates between oil-exporting and oil-importing nations in sub-Saharan Africa.29
The overreliance on a natural resource to the detriment of creating other industries and diversifying a country's economy is called by development specialists the “resource curse.”30 It is especially problematic when the country does not have the technological know-how to use those resources, and is instead dependent on others to exploit and share the end products. One of the challenges for Africa's newly growing, oil-exporting nations will be to overcome the continent's dispiriting pattern of the citizens of resource-rich states remaining mired in poverty, even as a small elite and the international speculators and multinational corporations reap huge benefits. To that end, former World Bank economist Paul Collier has proposed an internationally agreed-upon charter for natural resource revenues that would ensure transparency in awarding contracts and payments to exploit resources; assure some stability in prices (avoiding cycles of boom and bust); make visible public expenditures; and better manage public spending when resource revenues aren't consistent from year to year. Civil society, particularly within countries dealing with the “resource curse,” would be central to getting such a charter adopted.31
The economic dominance of one natural resource, however, need not always be a curse. Norway, for instance, has half of Europe's oil and gas reserves and in 2004 became the third-largest exporter of oil in the world.32 In the nineteenth and early twentieth centuries, Norway was so poor that 15 percent of its population emigrated, in search of more opportunities and better lives. However, by 2007, it had the third-highest GDP per capita in the world, average life expectancy at birth was eighty years, and it ranked second in the United Nations' Human Development Index.33 Norway maintains high rates of taxation, and costs of living are also high, which together mean that disparities in wealth are relatively small and within the society an egalitarian ethos predominates.
Since 1990, Norway has been saving some of the money it receives from its oil exports in a sovereign wealth fund. As of June 2007, this fund was worth $300 billion, or $62,000 for every Norwegian citizen. The oil industry is largely controlled by the Norwegian government, a fact that suggests that a state-run enterprise need be neither inefficient nor a locus of corruption. The Norwegian economy's low inflation rate and the government's emphasis on research and development in non-oil sectors demonstrate its recognition that today's vast oil income should not be squandered. It also shows that Norway is preparing for when its oil runs out and so avoiding the “trap” that many African states that are heavily dependent on natural resources have fallen into.34
The rulers of the United Arab Emirates—seven small city-states that have integrated economically and politically, thus raising their international profiles—are using their oil and natural gas reserves to diversify their economies through service industries and leisure resorts. When I visited in 2007, I was impressed by how much the UAE has invested in higher education, particularly to develop a generation of men and women able to capitalize on future innovations in science and information technology. UAE ministers made it clear to me that they were preparing for a time without oil. The governance structures of Norway and the UAE could not be more different, yet leaders in both countries recognize that the long-term stability and sustainability of their economies depend on sound management of their resources.
Nigeria, on the other hand, offers a classic example of how poor leadership can facilitate the exploitation of a commodity, in this case oil, at the expense of the vast majority of a country's people. Partly because of the competition for oil revenues within a small elite, Nigeria has experienced political violence, social unrest, long periods of military rule, massive corruption, a continuing lack of basic services, and extreme poverty. Disparities between rich and poor are still vast, and decent basic infrastructure and health and education remain, in the eyes of most Nigerians, beyond reach. By some accounts, Nigeria has earned $400 billion in oil revenues since independence, of which perhaps $380 billion has been mismanaged.35 In 1998, Nigeria returned to a system of democratic governance; however, it is reported that many Nigerians are losing their conviction that democracy will lead to development, greater equality and equity, and a more farsighted use of Nigeria's oil income.
An additional, crucial element in the difficulties Africa has had in accessing the benefits of the global economy has been the policies of the World Bank, the IMF, and developed-country governments. In the 1980s, the Common Agricultural Policy of the European Union restricted access to Africa's agricultural products, while the World Bank and IMF's structural adjustment policies emphasized commodity development over diversification. One of the conditionalities imposed through structural adjustment programs and, more recently, debt relief initiatives is that poor countries further open their markets to goods from the developed world, as a way to bring in foreign currency and stimulate foreign investment.
But this call for open markets has not been reciprocated. The European Union, the United States, and some East Asian countries still protect their own producers of cotton, wheat, sugar, and other products either by subsidizing their industries or by placing tariffs on such products and others from outside. The unwillingness of the industrialized nations to remove these subsidies, coupled with developing countries' growing concerns about food security in the wake of high prices for oil and staple grains, led to the collapse of global trade talks in 2008.
Sometimes what seems like a breakthrough in trade is actually a further impediment in disguise. For instance, the 2000 African Growth and Opportunity Act, passed by the U.S. Congress, gave Kenya and other African nations a chance to manufacture cotton products and sell them into the American market. One of the catches, however, was that Kenyans had to use American yarn, even though Kenya also grows cotton. This means that Kenya was, in effect, subsidizing U.S. cotton growers and cutting off a market for its own producers. In this way, less powerful states can be flattered by the international community or individual nations to feel they're more important than they are, or they can be bullied into providing advantageous trade terms to wealthier countries.
Despite this difficult environment, it would not be in Africa's best interes
ts to shut up shop; Africa cannot avoid the fact of globalization. Indeed, the exponential growth in the telecommunications industry in such countries as Kenya, South Africa, Ghana, Namibia, and even war-torn Somalia is just one example of the enormous potential of emerging markets in sub-Saharan Africa.36 These present Africans with opportunities to increase their standard of living, expand intra- and inter-African trade, and develop their economies beyond the extraction of natural resources and the export of commodities. Indeed, Africa has an opportunity to add value to those commodities by generating finished products. The cocoa of West Africa could be turned into chocolates in that part of the world rather than in Belgium; the coltan of Congo could be added to capacitors in the same country it is mined from; or the abundant sunshine of many parts of Africa could be harvested by solar panels built on the continent.
One of the ways in which the friends of Africa can help is by making education in science and technology, as well as the required technical assistance, available and affordable to African countries. African governments have a responsibility, too. Unless they nurture an environment that encourages creativity and innovation and supports the same, their countries will remain backward in a world where technology dominates—despite the huge amount of resources at their disposal. Achieving this will involve increasing the capacities of Africa's young people through education, in particular in the areas of science and technology. Investing in people and in relevant education can lead to the refining of gold or oil—something understood by the Asian economic “tigers,” who made education in science and technology a national priority while too many African nations invested in “security” and wars.
Nevertheless, the recent expansion of some African economies is a hopeful sign that Africa can move beyond aid toward self-reliance, and perhaps in so doing realign the imbalances in the international trading system. In 2007, domestic investment was a record 22 percent of GDP, while in 2006, according to the OECD's Development Assistance Committee, the $48 billion of private capital that flowed to sub-Saharan Africa—four times what it was in 2000—surpassed official development aid ($40 billion) for the first time.37
Greater private investment and capital flows, however, are not panaceas for underdevelopment. While Africans are using cellular technology productively to help facilitate business and transfer money,38 and a few African entrepreneurs are becoming very wealthy by establishing cell phone connections, even in remote areas, Africans as a whole are still only talking on cell phones and not making them; likewise, they are watching televisions rather than generating content for them or manufacturing the sets themselves. One way to ensure that African countries are more self-reliant and competitive is for industrialized nations to transfer technology—with a priority on green technologies—to those nations that are technologically less advanced. But African countries themselves should also invest in science and technology.
The clear need for capital investments to generate wealth for citizens and promote development does not obviate the equally clear need that the wealth created be produced and distributed in a manner that is fair and just. Investors must work closely with governments to promote businesses that benefit the people, and not take advantage of the weaknesses or corruption of those governments, or their laws and regulations, to exploit citizens.
Of course, one of the reasons politicians allow their people and the nation's resources to be exploited is because they have been co-opted—made directors of investors' businesses, offered opportunities to invest themselves, or given lucrative kickbacks. What more governments in Africa need to appreciate is that the inequities that characterize their societies, which are perpetuated by governance and economic systems that are inherently unjust, will only fuel violence and conflict. Sooner or later, the grievances of the local populations will come to the fore, whether encouraged by politicians during elections or when the politicians themselves are aggrieved; injustices can be contained only for so long.
The repayment of debts, the realignment of trade, and the capitalization of African economies all depend on a rebalancing of globalization. One of its main arbiters, the World Trade Organization (WTO), doesn't operate on a level playing field: developed countries demand that developing nations open their markets, but they do not reciprocate sufficiently by opening their own. In the WTO, all countries sit as equals, even though it's self-evident that all countries are not equal.39 Each representative is, of course, trying to get the best deal for his or her country, but given that the combined GDPs of the East African nations of Kenya, Tanzania, and Uganda (with a total population of one hundred million) are less than that of the small American state of Delaware, with a population of fewer than one million, it's clear that African states, with limited bargaining power, can continue to be taken advantage of.
One of the ways for Africa to get a better deal at the WTO or in other arenas where trading rules are being negotiated is to band together, as a continent or in regions. President Kwame Nkrumah of Ghana foresaw this need fifty years ago, when he called for a united Africa to offset the political power of Europe, the United States, and the Soviet Union. Today, the axes have altered slightly. Outside the leverage supplied by the oil-producing states, it is now the European Union, the United States, and East and South Asian economies that exert the most influence over international trade.
During the Cold War, Africa tried to respond to Nkrumah's call through the Organization of African Unity. Various regional associations were also created. In 1967, Kenya, Tanzania, and Uganda formulated arrangements to create a stronger political and economic union, the East African Community. It lasted for a decade before geopolitical interests and internal political conflict led to its collapse. If it had been nurtured, the East African Community could have taken the region very far by removing the artificial economic and political barriers created by the colonial powers and continued by the postcolonial African leadership.
In 2002, to meet the needs and opportunities of Africa in a rapidly globalizing world, the OAU joined with the African Economic Community to become the African Union (AU). Numerous regional trading blocs have also been created in recent years, such as the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), the Economic Community of West African States (ECOWAS), the Customs and Economic Union of Central Africa (UDEAC), and, in 2002, the New Partnership for Africa's Development (NEPAD).40 Unfortunately, these have not performed as well as they should have, and many ordinary Africans are not even aware of them.
New efforts are being made to re-create the East African Community, this time including the original three members plus Burundi and Rwanda, with the objectives of expanding and strengthening cooperation between the nations. Regrettably, such efforts are, as they have been for years, riddled with suspicion and mistrust between both governments and citizens of the countries concerned, so movement toward the unity and development the community envisions is very slow. As a consequence, the imbalances in trade between Africa and the industrialized world remain.
Outside of Africa, other political-economic blocs have fared better. In the same year that Ghana became independent, the European Economic Community was founded, with France, Italy, West Germany, Belgium, the Netherlands, and Luxembourg as member states. Today, its successor, the European Union (EU), has twenty-seven members, with a total population nearing five hundred million, a GDP in 2007 of nearly $15 trillion, and a per capita GDP of around $32,000.41 As it has expanded, the EU has helped once relatively poor countries like Ireland, Spain, Greece, and nations in eastern Europe develop and stabilize. Although the political and economic integration of the EU has not been without its difficulties, it does demonstrate that with political will, and if leaders put their people first, much can be achieved.
For too long, Africans have been falsely divided and weakened by Cold War politics, Great Power rivalries, greed, petty squabbles, and conflicts trumped up by demagogues and tyrants. By raising their voices in unison at
a regional and continent-wide level, Africans can both demand and achieve more in the negotiating rooms and halls of power. It is not too much to say that unless African leaders embrace their common goals and work together to make their individual nations and the whole continent stronger, Africa will remain a victim of globalization and unfair global trade rules, not a beneficiary.
The world is not going to wait for Africa. History suggests that it will move forward without her, and exploit her resources for as long as they are exploitable. Africa can no longer stand still; like the Angolan people with the flying fish of Luanda, she must grasp the opportunities that are right before her eyes.
THE IMPACT OF THE EAST
In recent years, China and other Asian nations have been assuming a larger role in African affairs. Drawing upon common experiences with Africa as victims of imperialism, countries like China have begun to form bilateral arrangements, offering African nations development aid and construction assistance on the one hand, and seeking access to oil and mineral deposits to fund its own exponential growth on the other. For instance, currently China gets nearly a third of its oil from Africa. Chinese development assistance to African nations is around $2 billion, while trade between Africa and China increased from $10 billion in 2000 to $70 billion in 2007. China's direct investment was $2.5 billion in 2006, a nearly fivefold increase since 2003.42 China considers herself a friend of Africa and works closely with the Group of 77, the largest intergovernmental organization of developing states in the United Nations, comprised of 130 countries, many of them former colonies of European powers. China, as one of only five countries with veto power on the UN Security Council, can, and indeed has, used this power to protect the interests of African states.
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