Why Africa’s projected economic boom is shaky
Written by Daniel S. |
The wind of change is blowing over Africa, a continent which has so far come to symbolize almost all the ugly realities of our world. At least in the main stream media and most of the intellectual circle, this was the case. But lately the tone has changed and we are witnessing a seemingly new chapter in the continent. In today’s world of economic crisis and financial meltdown that has seen even the strongest of economies shaking and frantically roaming about searching for a viable solution; Africa stood out marching in unprecedented manner in the economic lane of the world. At least, that is what the media have us believe. Though Africa’s potential has often been recognized as vast, the current flattering figures of a supposedly bright economic future of the continent can not be left unquestioned. As much as there is a need for optimism, which hitherto has been in short supply in the continent, one should never lose side of rationalism.
The mantra of Africa’s economic boom reminds one of a joke about economists, that goes like “an economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today”. No disrespect but looking at the magnitude of the current economic chaos in the world, one might be compelled to ask where the hell were all the distinguished economists. Needless to say economists can hardly be held responsible for the crisis as the bad decisions have been made by the politicians. Nonetheless predictions like the ones depicting sub-Saharan Africa as the second fastest growing region in the world for instance can be misleading. Perhaps the prediction as a figure could be correct; but declaring that this is an indication for stability and good times to come is absurdity if we take the enormous challenges the continent is facing. Especially so, when taking in to consideration that the hasty conclusions are being made at the wake of the current economic and financial crisis in the world, whose lesson should have been heeded before making such a declaration. After all, as it has been disclosed time and again, no one was prepared for such magnitude of crisis. Then how reliable can it be to predict Africa’s future based on the current figures? This can serve as a topic for a good debate. But the issue is not one that we can find a solution by addressing only this point. There are a lot of unanswered issues behind it.
The reasons given for the bright outlook for the continent are worth examining, particularly the two most important ones. Unsurprisingly African natural resources come at the forefront. In the midst of crisis, Africa has been registering record growth levels and has now become the prime focus of investors looking areas of growth to invest in. Africa’s natural resources, particularly minerals, will attract the bulk of foreign direct investment in the medium term. But this seems to have an error in its calculation to herald a new chapter in the continents history. We need to listen to the tones of what is being said here. The anticipated investment will be directed in the extraction of minerals and raw materials, which will still leave Africa as a supplier of raw materials to be processed elsewhere. And as we have witnessed time and again the price and demand of raw materials are highly vulnerable to world market fluctuation, hence what might seem favorable deal at the moment, might not remain so, making it hardly a reason for a steady stability. Indeed we have witnessed how political situations have affected the price of say oil across time. Instead therefore, the issue should have been focused on how Africa is processing its own resource to supply a finished product to the world, which is rather a meaningful and much more secured way of economic growth that will bring a real difference in the socio-economic and political aspect of African countries.
The other reason for the seeming bright future is that private capital is flowing to Africa, because the continent has become a friendlier and more profitable market. Again this seems to solicit a careful scrutiny. The world market has never been so fluid making investment easy to make and unmake. The multinationals that are at the pinnacle of the investments no longer has a solid base, making their move unpredictable. Indeed this very fact is one of the reasons for the current economic crisis and the consequent unemployment we are witnessing in the world today. There is no doubt that investment is a drive in economic wellbeing of nations but it has to be treated with caution. Moreover if the investment comes from outside, it calls for an even more carefulness, as it can go away as easy as it has come. And so if we depended much on this volatile source, it might become more of a recipe for chaos than the current reason for optimism.
Both the above two argument suggest that though they are not negative things per se, they are far from being reliable. And even if they are reliable, the reason for which they are being articulated bid for a big question mark. Even if we suppose that these two and other reasons would bring the anticipated economic growth, they can hardly be the remedy for Africa’s challenges for them to be considered as a reason for a bright future. Africa’s problems are much bigger and much complicated than an economic one. Therefore, the conclusion is wrong. In one of his recent articles, Amrtaya Sen has clearly put out the need to make a distinction between economic growth and quality of life. If we take this argument, Africa’s problem is more of a quality of life challenge than just an economic one. Of course economic growth can be of a great help in improving living standards, however, it entails a big problem to take economic growth as an end in itself. By juxtaposing India and Bangladesh, Sen has shown that economic growth need not necessarily mean an improved quality of life. India has a huge lead over Bangladesh with a GNP per capital of $1,170, compared with $590 in Bangladesh. The reason for this big difference has been India’s faster rate of recent economic growth. However if we look how this advantage has been translated in to the quality of life of Indian people, the result is not so gratifying. In areas of life expectancy, proportion of underweight children, mean years of schooling, female literacy rate, mortality rate of children, Bangladesh actually does better than India despite the huge difference in economic growth term. Hence, Sen concludes, single minded emphasis on growth has limitations that need to be clearly understood.
For any economic growth to have a real meaning in improving the standard of living of people there has to be justice in a way it is redistributed and put to use. The current chaos in the world, be it political, social or economic, has as its core problem the lack of justice. What good can it serve to talk about the growth in GDP or per capital income, if only very small section of the society is reaping its fruit? There has to be also a proper, stable, and accountable institutions and laws that are crucial in giving the people a sense of security and opportunity for improving their life. And these things are in critical shortage in Africa, and there is no doubt that they will be a big challenge that should be properly addressed before the bright future can become a reality. The surest way to go about addressing this problem is having social justice at the policy level.
In light of the above argument therefore, the claim for Africa’s bright future can be seen as an immature conclusion. Of course Africa needs an economic growth, but that in and on itself is by no means enough. Although it can be achieved, bright future still needs unwavering commitment and is still a far cry from reality in Africa.