For all its size and diversity, Africa has been marginalized as of little consequence to the rest of the world, says Ernst Stetter.
But he warns that neglecting Africa could turn out to be a disastrous.
Africa’s economic weakness when compared to most other developing regions may partly be why it is regarded with apathy by a world struggling with so many other massive problems. It may even be argued, or offered as an excuse, that Africa’s very weakness may now be its advantage. The line is that, at least initially. Many African countries will not be greatly affected by the crisis. Its impact will probably not be as cruel as elsewhere, it is claimed, because Africa accounts for such a small share of global markets, with only 1.3% of world stock market capitalization, 0.2% of debt securities and 0.8% of bank assets. And such foreign direct investment as there is representing just 4% of the world’s total â€“ is concentrated in Africa’s handful of resource-rich countries.
This is a mistaken view, of course. One way or another, the African continent will suffer from the effects of the crisis. The economic recession in developed countries will weaken demand for African exports. Wealthier African countries like South Africa, Nigeria and Algeria that have a degree of exposure to the rest of the world may face more problems than just the loss of their export markets. And in the medium and long-term foreign investment in Africa is likely to shrink, thus so too will foreign aid to its poorest countries.
Only four years ago the then UK Prime Minister Tony Blair spoke of the Year of Africa and of the willingness of richer countries to bring Africa into the world economy, his stirring call was the culmination of a process that had seen the African continent climb close to the top of the international agenda after years of relative neglect. Once the Cold War was over, Africa became a victim of the general apathy of a West at peace with the countries of the former Soviet Union. Blair’s message was a reminder that Africa is important; its abundance of natural resources providing an alternative to the volatile Middle East as a source of energy and raw materials. Productive cooperation in Africa by Europe and the United States was made all the more urgent, by the rise of China as a major investor in the continent.
All this is just as valid now as it was then, despite the world’s preoccupation with the deepening financial crisis. Also, with the crisis as yet showing no sign of abating, it is important for Africa to make its voice heard above the hubbub, and to set out a convincing case for why it still matters.
What should be discussed in this reinvigorated dialogue? Factors that have increasingly contributed to the continent’s marginalization range from its political weaknesses to the destabilizing effects of AIDS. Globalization should have been as valuable to Africa as it has been elsewhere, but because many African countries have not been in a position to open up their economies and attract investment and trade, they missed out.
It’s important to point out here that some parts of Africa have witnessed, since 2004 in particular, upturns in economic growth that are far more than a passing phenomenon, even if this is mostly fueled by high prices for raw materials. This demonstrates that Africa has it in its power to move forward and achieve sustainable development, provided that Africa and the industrial world can work together.
On a positive note, it is very significant that many African countries have become more politically stable over the past decade, yet with the tragedy of AIDS, the public image of the continent is so often associated with hunger, poverty, disease and conflict fails to capture Africa’s diverse reality. Take a look at the other Africa with its strong market performance in recent years, driven by better regulatory regimes, structural reforms, higher growth rates, rising foreign direct investment and foreign exchange reserves, robust export performance, and lower debt levels. This is the Africa of the future that has been attracting a lot of support from the European Union, China, Japan and the U.S. Encouraged by these positive developments, donor countries have become less reticent about attaching conditions to aid and trade with Africa as a means of encouraging good governance and democracy.
With the crisis as yet showing no sign of abating, it is important for Africa to make its voice heard above the hubbub, and to set out a convincing case for why it still matters
Africa now has to develop a strategy that will allow itself to convert its gains into long-term economic stability and sustainable growth. My suggestions for such a strategy are as follows:
Many resource-rich African countries are in a position of power, but they are also at the mercy of the ups and downs of commodity prices. These countries need to learn from the diversification strategies and growth trajectories of other resource-rich countries, for instance Malaysia, Norway, Australia and New Zealand.
Reforming Africa’s political and economic governance is clearly a priority, but it is first and foremost an internal problem in Africa. For more than 30 years, outsiders have tried to support and contribute to more democracy, greater economic growth and good governance. However Africa’s political and economic elites still seem unwilling or incapable of developing their full potential so that the continent can take its fair place in the international system.
These are opportunities that need to be grasped if a revitalized Africa is to play a greater role in tackling the international challenges that directly affect the continent but are at present dealt with by institutions where African influence is marginal. Multi-lateralism does not mean the yielding of sovereignty, yet global governance structures have held Africa hostage for many years and made it impossible for it to take its rightful place in the international system.
China’s interest in the continent and Chinese investment there have raised concerns in Europe and in the U.S, yet these concerns supply us with the answer to the question does Africa matter? I would offer five key reasons why Africa matters, and particularly why it matters to Europe:
Africa’s post-colonial history has been a history of integration into the European economy and its markets. If Africa matters to Europe, it matters to the globalized world.
Environmentally, Africa matters to the world because it has the greatest capacity for maintaining equilibrium in the biosphere and avoiding further depletion of the ozone layer.
Africa offers easy market access to Europe as well as to the U.S. and China, and can in some cases extend extraordinary investment opportunities with high rates of return. Africa’s historical links and its geography provide European investors with a comparative advantage over North America and Asia, including China. The political climate in the continent is gradually changing towards democracy, respect for the rule of law and the protection of human rights.
Africa has an abundance of natural resources. The continent ranks as the world’s No 1 in its reserves of bauxite, chromites, cobalt, diamonds and gold. It is rich in palladium, phosphates, platinum group metals, titanium minerals, vanadium and zircon. African production accounts for 80% of the world’s platinum group metals, 55% of chromites, 49% of palladium, 45% of vanadium and up to 55% of gold and diamonds.
Cooperation with China. The Chinese have signaled their readiness for a dialogue with the African Union on matters of mutual interest. Europe in particular should get involved in such a dialogue, putting forward proposals for Chinese participation in European initiatives.
Despite its relative isolation in world trade in terms of the amount of goods involved, the African continent should be considered as a having a great future, economically and politically. What the countries of Africa now have to do is to work to become a strategic international force, pioneering coherent and inclusive development plans for the world.