September 6, 2010

Prospects and challenges for a resurgent Africa- Amb.H.H.S.Viswanathan

Prospects and challenges for a resurgent AfricaLecture at Ranchi University by Amb.H.H.S.Viswanathan.
6,September,2010

Image of Africa in the past

Africa has been in the news in a very positive way in June and July this year because of the FIFA World Cup. It was a proud moment for Africa for having organized one of the best, if not the best ever, World Cup. Players like Drogba and Gyan became household names. We marveled at the meticulous organization of the event. But Africa, unfortunately, has not been getting such positive coverage traditionally. In fact, the awareness about Africa is both low and distorted. It is depicted as a Continent of war, disease and poverty with no hope of progress. Hardly any of the success stories of Africa would be reported. It is true that Africa, as a continent, has had more than its share of misfortunes. There have been historical reasons for this. Today, we see a new resurgent Africa. In my presentation, I will go into both these aspects.


The colonial and post colonial periods have been traumatic for Africa. During these periods the only narratives about Africa we heard were those of the colonial masters. And hence the distortion in the images appeared. There is a very perceptive African proverb which says “until the day the lions have their own story teller, the story of the hunt will glorify the hunters.”

The colonial exploitation of Africa is too well known for me to go into great details. Did things improve after decolonization and the independence of the colonies? Sadly this did not happen. Most of the countries did not have strong national institutions to face a hostile world. They did not have sufficient trained human resources to develop the newly independent states. Added to this were two important factors—the cold war and the control of vital mineral resources in the hands of foreign companies. Many countries suffered from military coups and counter coups actively abetted by foreign forces. With national resources being exploited with no accountability, there was no economic and social development worth the name. There was also a vested interest of the exploiting forces to continue portraying Africa in a bad light and Africans as under-developed and violent people. Nothing could be farther from the truth. Traditionally, Africans have been a peace loving, non- violent and tolerant people. Traditional African society was very distributive and just. Colonialism, with its concept of divide and rule, favoured economic and other advantages to certain groups which distorted the traditional balance and led to irreconcilable differences, the effects of which are seen even today in many countries, the case of Rwanda a few years ago, being an ideal example. The traditional African society is not very dissimilar to our own Indian society in the sense that community is considered more important than the individual. There is an African saying “I am, because you are”. Many prominent African writers have argued that to understand Africa it is imperative to recognize it in its totality along with the differences and contradictions. It is not as if there was no resistance to the colonial and post colonial exploitation. Freedom fighters from many African countries raised their voices; many of them followed the example of Mahatma Gandhi’s non-violent struggle. On a continental scale, this took the forms of negritude, pan-Africanism or African Socialism.

Throughout 60’s and the 70’s, even though the African nations could not make a break-through in the economic and developmental fields, they played an important role through the Non- aligned Movement. Many African leaders like Kwame Nkruma of Ghana, Sekou Toure of Guinea, Abdul Gamal Nasser of Egypt adopted Pandit Jawaharlal Nehru’s idea of Non-alignment and actively nurtured it in Africa. The movement reduced the adverse effects of a bitter cold war on the African Nations. Both the USA and the USSR had to be sensitive to the way the African countries would react in the inter-national for a taking into account the Non-aligned positions on various issues. This gave the African nations political space as well as relevance on the international scene.

Another important forum for the African countries to interact with each other and with the rest of the developing world was the G-77. This forum has a played a major role in protecting the interests of the developing countries.

Diversity of Africa

It is a continent of 54 countries and almost a billion people with huge diversities among nations and within nations. While there are large countries like Nigeria and South Africa, there are 20 countries with a population of less than 5 million. Another 20- plus countries have a GDP less than $5billion. There are 60 international river basins shared by many countries. The diversity can also be found within countries. Since most of the colonial borders were drawn arbitrarily with no respect for ethnic or linguistic aspects, most countries have many such groups living across borders.

A new emergent Africa
The African scenario changes from the beginning of the 90’s. Various reasons contributed to this change. A major factor was the end of the cold war. Another factor was the emergence of new powers China and India on the international scene. A third factor was the beginning of the globalization process which picked up momentum in the 90’s. This process started to bring the African countries into its fold in an economic sense. Since free global trade was the Mantra, some of the African states, with relatively more developed economies could start playing a role. The period also was marked by an increase in commodity prices, particularly minerals like cobalt, bauxite, manganese, iron ore etc. Crude oil has always been in demand and the occasional spike in their prices greatly helped countries like Nigeria, Angola, Algeria, Gabon and Sudan. A sudden surge in the growth rates in China and later in India also helped in the increase in commodity prices. New technologies encourage demand for new raw materials. For example, the new cell phone industry needs two minerals which are vital for the production of these phones—and they are coltan and cassiterite. The Democratic Republic of Congo holds an estimated 70 pre cent of the world’s coltan and 34 per cent of cassiterite. With the world churning out 25 cell phones every second one can imagine the level of demand for these minerals.
The resurgence of Africa as a continent is both on the political and economic spheres. Let us take the political sphere first. In the last ten years, there has been a visible decrease in the number of violent conflicts. A recent McKinsey report says that the number of serious conflicts in which more than 1000 people died annually declined to an average of 2.6 a year in the 2000s from 4.8 in the 1990s.The number of military coups have also come down drastically. In a continent which was notorious for military coups and counter coups in the 60s,70s and 80s, these acts have become unfashionable and rare. According to an Economic Intelligence Report, the number of successful coups in Africa were around 20 in the 60s, 70s and 80s, but these numbers reduced to16 in the 90s and very significantly to just 7 in the 2000s.

Multi-Party democracy has started to take roots in the African Continent. Today more than 80per cent of all African countries have embraced multi-party democracy. There are, of course, many flaws in the democratic processes, but the fact remains that there is an overall improvement in the Governance and Transparency issues. Those countries which do not have multi-party democracies are facing considerable International and African pressure to change the system of governance.

Regular elections have become a common feature in the Continent. This was unheard of only a decade ago. This year would see an unprecedented number of elections. Burundi has just had one; so has Guinea. A few months earlier, Ethiopia and the semi-autonomous region of Somaliland held their elections. The recent Rwandan elections were considered a landmark in African politics. Other elections in the line are Tanzania and Chad. Even if the electoral processes are sometimes not up to Western standards, the voters are making politicians more and more accountable. This, by itself, is a great progress.

Another significant process of consulting the people in a democratic manner was the recent Referendum in Kenya which has led to the adoption of a new Constitution.

A very unique concept that has evolved in Africa in the last decade is the African Peer Review Mechanism (APRM). 24 countries have submitted themselves to this mechanism and many others are in the process of doing so. Under this, governance is judged by a group of “wise men”, usually retired elder statesmen of the continent. They give an objective view on the transparency and governance of the concerned countries. This is a case of the lions having their own story teller.

Another positive initiative has been the establishment of NEPAD (New Partnership for Africa’s Development) in 2001.It was an initiative taken solely by the African leaders to place African countries individually and collectively on a path of sustainable growth and development and to halt the marginalization of Africa in the globalization process. This is a vision of a new generation of African leaders broadly on the parameters of market economy. This initiative has been actively supported by the international community. For eg. India has contributed more than $500 million to the NEPAD fund.

A major factor that has contributed to a positive image of Africa is the resolution of many conflicts within countries and between countries. A decade ago Rwanda, Liberia and Sierra Leone were breaking up due to civil wars. These have been resolved satisfactorily. The conflict between Nigeria and Cameroon over the Bakassi Peninsula has also been resolved to the satisfaction of both countries.

The other major political development in the continent is the increasing role being played by the African countries in International Organisations and on international issues. Big countries like Nigeria and South Africa are active in the United Nations, particularly on the question of the reform of the Organisation and the expansion of the Security Council. Most of the countries have also started effectively articulating their positions on global issues like climate change and the Doha Round of multilateral Trade negotiations. These are issues of vital importance to the continent.

Now, let us have a look at the economic resurgence of Africa in the last decade. According to an IMF report, Sub-Saharan Africa has been growing at an average of more than 5% per year during the period. Some of the States have registered even spectacular rates like Chad-34%, Angola-28% and Sudan-14%. Africa is only one of the two regions—the other being Asia –where the collective economy rose through the global recession of 2009 by 1.4%. This could be because of the limited integration of the Africa with the Global economy. But, we cannot take the credit away from the countries for the right mix of reform and economic policies. The Continent’s GDP is expected to grow by 3.8% in 2010 and by 4.6% in 2011. A significant factor of the growth is the steep rise in commodity prices like those of oil and minerals such as bauxite, cobalt, gold, cassiterite, coltan and diamonds due to the demand from emerging economies like China and India. The three largest oil producers of the Continent—Algeria, Nigeria and Angola earned $1 trillion during the period 2000 to 2008 compared to $300 million in the 1990s. But this does not mean that countries with poor mineral resources did not grow. The McKinsey report to which I referred to earlier says that commodity prices directly accounted for only about a quarter of the increase in the growth in the 2000s. There has been growth in 27 of the 30 largest economies, both resource rich and resource poor alike. Those with resources grew at 5.4% while those not so grew at 4.6%.

The all round growth has had a trickle down effect on poverty reduction and job creation to a certain extent, though it could be argued that the countries could have achieved much better results with a better management of the revenues. Collective inflation rate fell to 8% after 2000 from 22% in the 1990s. Budget deficits declined to 1.8% of the GDP from 4.6%. FDI surged to $62 billion in 2008 from $9 billion in 2000.

A glance at the consumption levels again indicates a very positive trend. Since 2000, 316 million people have got cell phone connections-ie. More than the population of the United States. Africa’s billion people spent $860 billion in 2008, more than India with a population of 1.2 billion. Thus Africa, as a whole, is turning into a very significant market and hence the renewed interest of the international community in the continent.
The Sovereign currency ratings of many African countries have also seen favorable revisions by professional agencies. This has helped them to access loans at reasonable interest rates.o

The remarkable recovery of the African economy has many reasons—the most important among them are the reduction in violent conflicts, greater political stability, improved governance, rising commodity prices and sound macro- economic measures.

While talking of the positive trends on the economic side, it is necessary to mention the attempts being made to accelerate the sub-regional and regional integration of the economies that are taking place. I had earlier mentioned the fact of the existence of many small countries. Developmental projects for them can be envisaged only if a group of countries are bunched together. Similarly, large industries can become viable only if economies of scale are exploited. With these ideas in mind, the different regions are intensifying their efforts to strengthen and deepen the integration process. The SADC of the Southern African Region, the ECOWAS of the West African region and similar organizations in East and Central Africa are taking measures to become customs free zones. Free movement of goods, services and people in the respective regions will go a long way in realizing the full potential of these economies.

The African continent has its own development bank, the African Development bank and development Fund. The headquarters used to be in Abidjan, Cote d’ivoire. But due to the problems in that country, the headquarters has been temporarily shifted to Tunis, the capital of Tunisia. All the African countries are members and there are about 24 non- regional members. India is anon-regional member. Over the years, the Bank has done good work in addressing the African Development issues in a larger, continental scale to find holistic solutions. But, in my view, if we take into account the amount of money spent by the Bank, the results could be much better. One reason for a below optimum performance is the bloated bureaucracy of the bank and the enormous administrative costs. The other reason is the stress on conference and seminar related activities rather than on small, practical solutions. With periodical reforms in the procedures of the Bank, it can play a crucial role in the development of the continent at this defining moment.

Challenges

The positive picture of Africa depicted so far should not make us think that the continent has solved most of its problems and overlook the challenges. Continued efforts are needed to consolidate the gains achieved so far. Countries like Somalia and the Democratic Republic of Congo are still conflict-ridden and behave like failing states. For a sustained development path, peace and stability in the continent are of paramount importance. Resettlement of the people affected by the various conflicts of the past is a major exercise. Any delay in this effort would only provoke new grievances.

The rise in commodity prices which, as we saw, has led to economic growth has a flip side to it. This is what the currency experts call the “Dutch disease”. The increase in the export earnings of minerals leads to an increase in the value of the local currency which makes their manufactured goods uncompetitive. This only adds to the existing negative factors which make manufacturing unviable in many countries, such as a high interest rate, bad infrastructure, shortage of power, serious transport bottle-necks etc. For eg. I have been told that it costs more to move a container from the Lagos Port in Nigeria to an inland province like Kaduna than shipping it from Mumbai to Lagos.

Agriculture is the area of greatest concern to the continent. Agriculture contributes to a very high share of the GDP and employment in many countries, but poverty still persists in the rural areas. African agriculture suffers from a low technological input, lack of viable micro-financing and most importantly the absence of a viable value addition chain from the farmer to the consumer. In many places the imported food grains and vegetables are cheaper than the locally produced. The agricultural subsidies in the US and EU aggravate the problem. Countries like Benin, Mali and Burkina Faso which depend mainly on the export of one commodity like cotton have been severely hit by the American subsidy to the cotton farmers in the US. The African countries have realized the seriousness of the issue and have become very vocal in the Doha round to take care of their vital interests.

Closely associated with the issue of agriculture is the question of climate change. For many countries in the Sahel region this is a matter of life and death. Increased desertification is causing a major problem for the livelihoods of the people there. Here again, the African countries have been articulating their concerns fairly effectively in the Climate Change talks.

It is also a matter of concern that most of the countries are lagging behind in achieving the Millennium Development Goals (MDG) envisaged by the UN in 2000.
These economic and social targets were to be achieved by 2015 but many states are far from the targets, particularly in the social sectors like health and education. One study shows that an amount of $93 billion is required annually to achieve the MDGs; but at present the amount available is only $45 billion. There has to be greater international involvement in the developmental process.

On the political side, the countries need to further consolidate the democratic processes with better organized elections and greater transparency. Multi-party democracy is new to many African states and they need time to have the concept fully assimilated into their traditional milieu. For political democratization to be successful, there has to be economic decentralisation. Much work remains to be done in this area.

Other major challenges are the spread of terrorism, drug smuggling and human trafficking. The bombings in Uganda in July this year by the terrorist group Al Shabab in Somalia is a grim reminder of the fact that the menace is spreading in Africa. There are reports that many sleeper cells are in operation in the weakly governed States in Africa. In all these three issues there has to be an international strategy to tackle them.

The most important challenge is the increasing aspirations of the people. Good governance will be judged by how the effective the governments are in the delivery of the promises they make.

Conclusion

What is the overall picture that we get from all this. I would conclude that the overall scenario is definitely positive. Africa, as a continent has never looked so vibrant, so promising. We also have to take into account the demographic dividend of the continent. The growing population of Africa is a young population. With aging populations throughout the world including China, Africa will have a considerable advantage in becoming a future hub for manufacturing, processing of minerals and also services. Even if it will take time to achieve this dream, the optimistic indicator is the fact after decades of struggles and false starts, the continent seems to be moving in the right direction.

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