Africa's Metamorphosis: Are Transatlantic Partners Prepared?
This policy brief argues that Africa’s demographic and economic changes call for a more reflective and constructive public discussion in the transatlantic community.
Content
Economic Policy Program
Aid & Development
Policy Brief
January 11, 2011
Summary: Africa is re-emerging as a strategic piece on the global chessboard. It is facing an unprecedented demographic explosion, with social, economic, and political implications for both Africans and the rest of the world. Sub-Saharan Africa, encompassing a market of 1.8 billion inhabitants by 2050, will have a considerable impact on the planet in terms of migration, security, environment, and trade. While new global players are actively engaging with Africa, transatlantic partners are seemingly reluctant to adapt to the shifting realities on the ground. Africa’s metamorphosis, which involves profound risks and opportunities for the transatlantic community, calls for a more reflective and constructive public discussion on Africa.
Africa’s Metamorphosis: Are Transatlantic Partners Prepared?
by Jean-Michel Severino and Olivier Ray*
Introduction It is high time to rethink policies toward Africa and its future. Indeed, public debates continue to portray the space south of the Sahara as a blighted and marginalized land, untouched by globalization. This view of Africa has to a large degree overlooked the changes deeply affecting African societies, changes which few have fully grasped. Now in the early 21st century, while the world’s emerging actors observe African developments attentively and actively reconsider their relationships with the continent, the transatlantic community seems to be hesitating. Sub-Saharan Africa’s population is approaching the 1 billion mark, and by 2050 is expected to reach 1.8 billion inhabitants.1 This demographic dynamic is imposing a dizzying pace on the continent’s economic, social, and political transformations. In view of the speed and amplitude of the
* The authors would like to thank Sean Mulvaney, Jonathan White, Asha Davis, and Maggie Geiger from GMF’s Economic Policy Program, as well as David Held, John Thompson, and Sarah Lambert of Polity Press, for their dedicated support. They also thank the participants of GMF’s September 2010 Africa roundtable for their comments on a draft version of this brief. 1 Unless stated otherwise, all demographic figures in this brief originate from the “World Population Prospects, 2008 revision,” United Nations Population Division, 2009.
metamorphosis underway, it is worth scouting out the road ahead. This policy brief seeks to provide that longterm perspective. Four decades ago, a renowned economist wrote on the “Asian drama,”2 predicting that underdevelopment would remain the main feature of Asia, in part due to the burden of a rapidly expanding population. China, the former sleeping giant, rose to become the world’s second largest economy in 2010. Africa is the sleeping giant of the early 21st century. The purpose of this brief is not to predict whether it will thrive or stumble, nor to determine who might then be held accountable or take credit for progress made. What matters is that policies are reshaped to be in step with the present and foreseeable opportunities and risks that stem from its demographic trends, and what we perceive as the strategic re-emergence of Africa. An Africa of 1.8 billion inhabitants will rapidly gain a stake in the globalization game. If transatlantic partners do not sufficiently commit to cohesive and forward-looking policies toward Africa, we risk facing the domestic consequences (in the United States and Europe) of its great trans-
In this policy brief, the authors draw some of the policy implications from the analysis developed in their book, Africa’s Moment, forthcoming through a Polity Press - GMF partnership.
1744 R Street NW Washington, DC 20009 T 1 202 745 3950 F 1 202 265 1662 E [email protected]
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Gunnar Myrdal, Asian Drama: An Inquiry into the Poverty of Nations, 1968.
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formation. Africa’s re-emergence calls for changes in conventional thinking and public policy. Africa’s Billions Sub-Saharan Africa has seen its population multiply by seven in the span of only a century, increasing from under 100 million in 1900 to nearly 700 million by 2000. A baby born in Nigeria in 1950 came into the world in a country of 37 million inhabitants; its grandchild today would be born in a land of some 160 million. Africa south of the Sahara, which in 1990 counted only 8 inhabitants per square kilometer, today has 36.3 This sudden densification has been the motor of radical transformations, including the tumultuous history of African independence movements, the economic convulsions of the 1980s, the violent crises on the continent that followed the fall of the Soviet Union, and the unexpected spell of economic growth on the continent since the turn of the century. Looking ahead, Africa is only halfway through its remarkable transformation. Africa’s population explosion will continue over the coming decades. While the tempo of growth has declined in relation to the peak of the 1980s, its population continues to rise at a rate of close to 2.5 Chart 1 percent per year – twice the average for developing countries. United Nations (UN) studies estimate in their median scenario that the population south of the Sahara will double again in the span of 40 years, increasing from close to 860 million inhabitants today to some 1.8 billion in 2050. It is worthwhile to reflect on this figure for a moment. The countries south of the Sahara will be home to one out of five human beings by the mid-21st century. SubSaharan Africa will become larger than India, and have 25 percent more inhabitants than China. The population of Africa south of the Sahara will therefore have multiplied by a factor of 10 in the course of a century, from 180 million in 1950 to 1.8 billion in 2050.4 China’s population, by comparison, will increase by “only” 2.5 times during the same period. In terms of demographic trends, there has been no equivalent phenomenon in human history. This vigorous demographic explosion of growth is accompanied by a process of massive urbanization. During the second half of the 20th century, the population of sub-Saharan Africa’s cities multiplied 11 times. By
4 The figure of 1.8 billion is in no way a ‘high’ scenario, but rather at the lower end of the range of possibilities. If Africa is to remain on the path leading to 1.8 billion inhabitants in 2050, African fertility rates will have to steadily fall from its present level of 5.5 children per woman to 2.0 in 2050, which implies the use of modern methods of contraception by more than 60 percent of women. This rate currently lies under 20 percent. Thus, if a doubling of the sub-Saharan population between now and 2050 is practically certain, it can in no way be ruled out that the actual figure will be considerably higher, and that subSaharan Africa will pass the 2 billion mark by the middle of the century.
Chart 2
3 This average conceals tremendous regional differences. While Gabon and the Central African Republic have very low densities (respectively 5 and 6 inhabitants per square kilometer), Rwanda and Nigeria have, respectively, 390 and 171.
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2030, half of all Africans will live in towns. Until then, its countries will experience a doubling of their urban populations, which will grow from around 300 million to over 600 million in total. The Drivers of Africa’s Economic Transformation The African continent has long lagged behind others in the global economic growth process. As a result, it is perceived as the world’s basket case, especially by the Western public, and as the prototypical story of failure by its economists. But both have missed an important part of the story. The persistence of poverty has helped validate the thesis of an “African economic mystery” in the eyes of many commentators. A study of the economic history of the last 50 years has even led some American economists to speak of a genuine tragedy of African economic growth.5 Yet even with a decade of statistical regressions and bitter academic debates, experts have not managed to get to the root of the “African dummy variable” (the unexplained statistic indicating that African countries are penalized in terms of economic growth simply by virtue of the fact that they are African countries). The transatlantic community needs to better understand the reasons for Africa’s growth in the first decade of this century in order to best assess its risks and opportunities. Analysis of Africa’s long period of stagnation helps to explain why growth is now possible, how sustainable it is, and where its fragilities lie. While it is not the focus of this policy brief to analyze the last 25 years of Africa’s economic crisis, we contend that there is no mystery behind the “African tragedy.” Africa’s economic decline in the 1980s and 90s was the logical and virtually inevitable consequence of a conjunction of circumstances that were both particular and historically dated. No country, no people could have grown and developed under such circumstances – two decades marked by a debt crisis, and major policy mistakes as well as deteriorating terms of trade. Importantly, the Africa we see today is moving away from being stuck in its underdeveloped recent past. The transatlantic policy community is slow to recognize the great changes underway on the African continent.6 Most people fail to realize that the sub-Saharan economies grew at an average rate of 6 percent each year between 2003 and 2010, compared to less than 5 percent for Latin America and less than 2 percent for the eurozone. More than one African in three lives in an economy that has had a growth rate over 4 percent for at least a decade.7 Sub-Saharan Africa has taken its place in recent years among regions with a relatively high growth rate, thus marking a radical break with the previous two decades. Is this renewed growth likely to last? Where certain analysts see the growth rates of the last few years simply as the effect of an export boom in raw materials, we see the beginnings of a process of structural economic growth. Africa’s demographic explosion, the increasing population density of its territories, and its galloping urbanization are changing the nature of economic growth within its reach: a growth that is becoming more structural, more endogenous, and thus potentially more sustainable. Although vulnerabilities remain and new risks have sprung up, Africa has entered a new cycle. Several factors explain this transformation. Firstly, the demographic explosion is significantly affecting the age structure of African societies. The continent’s population is the youngest on the planet. In the 1980s and 90s, this meant that Africa had the highest dependency ratio8 in the world. At the worst of its economic crisis, Africa counted less than one worker for each dependent child or elderly person, whereas Southeast Asia, in full economic takeoff, had more than two workers for each dependent. With the steady fall in the birth rate, a reduction in the dependence rate has now also set in. This trend should continue at a steady pace for the next 40 years – a ratio between active and inactive identical to that which permitted the Asian “economic miracle” of the 1980s (see chart 3). Africa could benefit in turn from a demographic dividend– a window of opportunity for growth.
6 Exceptions are all the more important to outline, and may signal a gradual shift of perceptions in certain circles: Cf. Steve Radlet’s Emerging Africa: How 17 Countries Are Leading the Way, CG Dev, October 2010, and “Lions on the Move: Progress and Potential of African Economies,” McKinsey Global Institute, June 2010. 7 8
50 Things You Didn’t Know About Africa, World Bank, 2007.
W. Easterly and R. Levine, “Africa’s growth tragedy, policies and ethnic divisions,” Quarterly Journal of Economics, November 1997, CXII.
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The rate of dependence of a population expresses the number of young (under 15) and old (over 64) people who depend on the income generated by the active population (between 15 and 64).
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Chart 3 of production, cannot be sufficiently remunerative for farmers. Both the volumes produced and the sale prices are too low for investment in irrigation, seed, and fertilizer to be profitable.10 Historically, this process of population concentration has generated substantial gains in productivity, opportunities for trade, and thus a certain tempo of economic growth. However, none of these necessary conditions for growth are sufficient by themselves. If Africa is able to exploit its new potential for growth in the early years of the 21st century, it will happen because these long socio-economic transformations coincide with a new macroeconomic landscape. Thirdly, then, Africa’s transformation will be fuelled by its improving macroeconomic environment. The sovereign debt of the sub-Saharan countries has fallen from over 85 percent of GDP in 2000 to 40 percent of GDP at the end of the decade,11 releasing new margins of manoeuvrability for public expenditure in these countries. Public investment has finally begun to take its place in African government policies: steadily rising now for several years, the rate of such investment reached an average of 22 percent in 2008. Africa has seen a radical fall in inflation, which had taken a devastating toll on African macroeconomic stability in the past. As a result of global demand and price increases for the continent’s commodities, Africa’s terms of trade have improved substantially.12 For the first time since the early days of African independence, the main macroeconomic indicators have turned from red to green in the majority of sub-Saharan economies. Is sub-Saharan Africa the world’s next “emerging market”? It would certainly be too soon to assert this. Yet the comparison with the Association of Southeast Asian Nations
10 Rapid urbanization is already resulting in important transformations today in Africa’s rural economy. Investment in agriculture is becoming ever more profitable, such that the sub-Saharan countryside is in the process of gaining the means of its modernization. 11
Secondly, Africa’s transformation will be shaped by the massive changes in population density and distribution. Africa has until recently been underpopulated and largely rural. As such, it lacked sufficient human resources for endogenous growth. Its double explosion – demographic and urban – makes the emergence of a vast regional market possible. Sub-Saharan Africa’s 1 billion extra inhabitants between now and 2050 will have to feed themselves, house themselves, move, and communicate. Whether formal or informal; local, national, or international, economic activity will emerge to respond to these needs. No region has developed without a young and abundant labor force concentrated in urban centers. This is precisely what has been absent in Africa and is now occurring, accelerating the division of labour and catalyzing an opening to the world.9 The Danish economist Ester Boserup noted that “demographic development is the determining factor for technological change in agriculture.” Sub-Saharan Africa’s agriculture and urbanization will be the next illustration of this. When towns make up only 5 to 10 percent of the population, the urban market, often remote from the site
9 Adam Smith’s postulate means the same for Africa in the early 21st century as it meant for England in the 18th: the concentration of population encourages the development of trade and a rise in productivity. The power of the Roman Empire 2,000 years ago, the birth of European and American industry in the 18th and 19th centuries, the emergence of the Asian tigers in the 1980s, and the recent rise in China’s international economic power were all driven by a young and abundant labor-force concentrated in the urban centers.
“The median sovereign debt of the sub-Saharan countries.” Cf. Global Economic Outlook, 2008, IMF, p. 14.
12 The previous decline in terms of trade was largely responsible for the collapse of African economies excessively dependent on the export of raw materials. But from oil and natural gas to aluminium and gold, the prices of the minerals and hydrocarbons, in which African sub-soils are so rich, have risen significantly during the first decade of the century – a trend that has every likelihood of continuing in the longer term, propelled by the combined effects of strong demand from the emerging economies and growing awareness of the limits of world supplies.
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(ASEAN) countries (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) around 1980, for which the term “emerging markets” was first employed, is a telling one. Sub-Saharan Africa has a lower rate of inflation, greater reserves of foreign currency, and receives more foreign direct investment than the ASEAN countries did on the eve of their economic takeoff – countries whose economic governance at the time, moreover, did not display the “good” practices that the World Bank and IMF define today. These underlying factors driving the continent’s transformation indicate that the African Giant is awakening.13 Still, many factors of vulnerability remain. What could make Africa stumble and fall back into its long economic coma of the 1980-1997 era? Chart 4 prodigious increase in the continent’s population density is taking place at the very moment in history during which humankind is discovering the limited supply of natural resources. As we encounter the limits of nature, Malthus’ theories are coming back into fashion. Finally, Africa will be forced to undergo the somersaults of its demographic growth under the lenses of CNN, the gaze of the international community, and an ever more constricting web of international norms. Violent conflicts in sub-Saharan Africa have declined in number and intensity over the last decade. The number of states involved in war (civil or international) has halved from 1999 to 2009, distancing the continent from the peak of violence reached in the early 1990s.15 While this trend is undeniably good news, it is not set in stone: because any movement is made of instability, Africa’s metamorphosis is likely to produce new human tragedies. Research estimates that Africa loses close to $20 billion per year to armed conflict – exclusive of the immaterial costs of warfare.16 The African states that will be furthest from reaching the Millennium Development Goals (MDGs) in 2015 are those states that have known high levels of violence over the last decade. Investing in the prevention and management of violent conflict thus represents a crucial investment in favor of economic growth. The aid programs of the 1980s and 90s severely underestimated the role of the state in the development process. It was only after the implosion of public authorities in several African countries during the 1990s that the role of public authorities was rehabilitated. But the vast “nation-building” programs of these years sinned in the opposite direction: seeing the fragility of the state, they remained blind to the underlying socio-economic vulnerabilities. Treating the symptoms of the problem, they failed to attack its causes. Beneath the layer of political mobilizers (be they ethnic or religious-based) lies a series of structural weaknesses that are likely to further violence in Africa’s future.17
15 For an analysis of the developmental trends in African conflicts, see The Human Security Report, 2005, op. cit. 16 17
Source: IMF, 2010
Addressing the Political and Security Perils of Transition Despite the tremendous opportunities this demographic transition provides Africa, three factors make it particularly perilous compared to the experiences of other regions in the past. First, the African cauldron will be refused the safety-valve of distant migration14 that was so valuable to 19th century Europe and 20th century Asia. Secondly, this
See McKinsey, “Lions on the Move: The Progress and Potential of African Economies,” June 2010.
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We understand by this term massive migration to other continents. Internal migration with Africa will remain an important feature of the continent’s transformations in the coming decades.
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“Africa’s missing billions,” IANSA, Oxfam, and Saferworld, October 2007
DFID, “Drivers of Fragility: What Makes States Fragiles?”, PRDE Working Paper #7, April 2005, 33p.
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Growing competition for agricultural land has, for example, played a determining role in the Rwandan genocide of the mid-1990s, in Côte d’Ivoire’s protracted civil war, or in Kenya’s 2008 post-electoral violence. Tension regarding overexploited natural resources (water, wood, or pasture) between increasingly vulnerable communities has also made it easier for the governments of Sudan and Chad to foment violence in the region of Darfur. The urban crisis – made of social uprooting, poverty, and massive unemployment – facilitates the mobilization of disenfranchised youth. In the Democratic Republic of the Congo, Nigeria, and Sierra Leone, unemployed men make a readily-available force for entrepreneurs of violence. Socio-economic inequalities – both vertical and horizontal18 – are particularly acute in societies in the midst of economic takeoff. This is feeding urban criminality that is reaching unprecedented levels in parts of Western Africa. In rural Niger, Mali, Chad, and Mauritania, feelings of injustice by rural components of the society have long fuelled Tuareg movements;19 they have begun to feed the small but expanding circle of the Al-Qaeda Organization in the Islamic Maghreb (AQIM).20 If kept unchecked, these structural vulnerabilities will plant the seeds of tomorrow’s violence. The transatlantic development community ought to set itself the goal to go beyond the “do no harm” principle21 by tackling state fragility at its roots and strengthening the resilience of vulnerable societies.22 Could rural development projects strengthen the resilience of societies faced with environmental stress by abating the latter? Could they create incentives for actors to adopt institutional models for the sharing of scarce environmental resources? Can they contribute to the redistribution of economic, political, or cultural capital in a context of strong inter-group and inter-personal inequalities? This agenda is ambitious, as it implies that the development community explores new paths, bridging the gap between social science research and development practice. The alternative
18 Vertical inequalities refer to the difference of economic, political, and cultural capital between social classes. Horizontal inequalities refer to the difference of these three forms of capital between culturally-determined groups. See Stewart, F., “Horizontal Inequalities: A Neglected Dimension of Development,” CRISE Working Paper, 2002. 19
is to wait for violence to erupt before acting – and bear the (visible and hidden) costs of violent conflict. After two decades of trial and error in conflict prevention and postconflict peace-building, the transatlantic community needs to revisit some of its policies in these arenas.23 Redefining Transatlantic Engagement with Africa Helping African societies manage rapid socio-economic change will also imply moving away from essentialist discourses on good governance, democracy, and economic growth. Many have sought to establish a relationship of linear causality between these three variables. But the economic takeoffs in China, Malaysia, and Vietnam, which managed to raise hundreds of millions out of poverty over the last few decades, did not wait for the advent of pluralist democracy. Even its first shoots are scarcely visible in most of these countries. Why should it be any different in Africa? The fact that the pioneers of development on the African continent are not all such models of democracy has not prevented them from experiencing periods of rapid and sustained growth. It is time to recognize that economic growth and democratization are different stories, which respond to different needs, processes, and timelines. John Stewart Mill’s message is no less true for 21st century Africa than it was for 19th century Europe:24 as anywhere else in the world, democratization in Africa will result from an endogenous struggle, the eminently legitimate one of constructing a state run by and for its citizens. While it is perfectly legitimate for the transatlantic community to promote its values by providing active support to African democrats, linking democracy and economic growth is both a counterfactual and counterproductive exercise. How then do things stand with “good governance”?25 The concept of good governance refers to transparency in state actions, control of corruption, the free operation of markets, democracy, and the rule of law – in other words, a set of characteristics that more or less describe the mode of organization of the so-called developed countries. But African economic successes of the last decade force us
23 Caplan, R., “From Collapsing States to Neo-Trusteeship: The Limits to Solving the Problem of ‘Precarious Statehood’ in the 21st Century,” Third World Quarterly 28:2 (March 2007). 24 25
Guichaoua, Yvan, “Circumstantial Alliances and Loose Loyalties in Rebellion Making: The Case of Tuareg Insurgency in Northern Niger (2007-2009)” (November 25, 2009). MICROCON Research Working Paper No. 20. Available at SSRN: http://ssrn.com/abstract=1559196 “Vulnerabilities and factors of insecurity in the Sahel,” OECD Sahel Club, August 2010. “Do No Harm: How Aid Can Support Peace—or War,” Mary B. Anderson.
20 21 22
Mill, J.S., On Liberty, 1859.
Jozan, R., Ray, O., “From fragility to violence: international organisations to the test,” dossier of Afrique Contemporaine 232, December 2009.
The analysis offered in this paragraph is inspired by the work of Nicolas Meisel and Jacques Ould Aoudia, Is “Good Governance” a Good Development Strategy?, Working paper no. 58, AFD, January 2008.
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to qualify the idea of a correlation between good governance and the pace of economic development. The Asian economic performers such as China and Vietnam – like their African counterparts, Ghana and Uganda – are not the best performers in terms of good governance. Mozambique and Madagascar, states that both have relatively poor levels of governance (high level of corruption, embezzlement, nepotism, etc.), have seen very divergent growth rates over the last ten years. Similarly, international companies do not orient their investments towards the model countries of “good governance,” as such. Rather they invest in dynamic economies where systems of regulation are in force, whether formal or informal, that enable them to operate without excessive harassment.26 If neither democracy nor good governance, nor even the absence of corruption provides the discriminating factor between countries in a phase of takeoff and the others, what then does? The development process, oriented as it is towards the future, requires a reliable institutional framework that makes it possible to reduce the uncertainties of economic actors, and thus extend their time horizon. For instance, three pioneers in Africa’s growth – Mozambique, Burkina Faso, and Ghana – have each, in different ways, provided public institutions capable of coordinating economic actors and bringing their individual choices to converge around the same national project. More than democracy or good governance in these cases, credible institutions were what made investment decisions and economic growth possible. The difficulty in demonstrating an unambiguous correlation between good governance, democracy, and economic growth should lead us to question efforts to export institutional and political models ready-made from our own societies. Interventions in the field of governance ought to aim at consolidating local governance structures, processes, and institutions. This includes a heightened recognition of the necessary social contract that binds the state and society (the provision of security, justice, and basic social services), which strengthens African societies’ resilience to violence. It implies working on a “good enough governance”27 agenda, most particularly in Africa’s most fragile states. This means sequencing and prioritizing institutional changes, based
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on in-depth analyses of countries’ specific socio-political trajectories. Such sequencing is a sine qua non condition for achieving lasting change. Seizing Africa’s Growth Potential As Africa enters this period of massive transformation, accelerating sub-Saharan Africa’s economic growth is an imperative: it will not be able to reduce poverty or keep violence in check without a yearly rate of growth in the 8 to 10 percent bracket. The visionary policy decisions on which Africa’s renewed growth is predicated fundamentally depend on African states and leaders themselves. However, the international community, whose aid accounts for an important part of state investments, and whose policy recommendations inform budgetary decisions, also has a crucial role to play. Wisely oriented, its private investments can help Africans seize the opportunity of this new economic era. Shrewdly allocated, its development aid can tackle some of the structural vulnerabilities that challenge it. Well-inspired, its policy advice can help African states jump some of the hurdles of its metamorphosis. Investing in Domestic Markets Rather than Extraverted Economies To seize Africa’s economic growth potential, transatlantic partners must urgently revisit the export-oriented development paradigm that has shaped economic discourse and development practice in the 1990s and 2000s. The Asian miracle inspired a new development creed: “export and thou shall develop.” This is not surprising, as extraverted economic models have indeed produced extremely rapid growth in East-Asian economies, pulling millions of people out of poverty. However, absolute priority to export activities does not make for a development strategy. The series of international crises witnessed in the early 21st century have shown some of the limits of such economic orthodoxy – especially when adopted by countries adding up to roughly one-fifth of humanity. Characterized by large trade and current-account surpluses, and often fuelled by undervalued currencies, this economic model produces important social, environmental, and financial externalities, both locally and internationally. Domestic wage levels are kept down artificially, which can breed social unrest and delay the formation of domestic markets. Product
N. Meisel and J. Ould Aoudia (2008), op. cit., p. 35.
Grindle, Merilee S., “Good Enough Governance Revisited.” Development Policy Review, Vol. 25, No. 5, pp. 533-574, September 2007.
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components are shipped several times across the world in their manufacturing process, while pollution is largely concentrated in the producing countries. Finally, important amounts of liquidity that are not invested domestically feed asset bubbles and contribute to the frenzy of international financial markets. Each of these disequilibria can be managed so long as small economies operate in niches. However, the financial crisis has shown that when a country such as China adopts it as its national development strategy, the stress is excessive. salvaging fundamental social services was arguably the first necessity of international aid. This explains the vast realignment of development aid in favor of social sectors (see chart 5). Chart 5
ODA to Africa by Sector
Given that Africa’s population will surpass China’s near 2040, this lesson from the Chinese experience ought to lead the international community and Africans to reconsider the merits of extraverted development policies. African economies cannot rely on the sole export of petrol, minerals, cash crops, and a few industrial goods: a new development paradigm needs to be forged that takes Africa’s endogenous growth potential seriously. This implies major investments Source: OECD Development Assistance Committee, 2010 in the development of the private sector and social business, in the modernization of agriculture as well as in large infrastructures. Although sub-Saharan Africa has Today, as most African states gradually regain margins of some of the world’s most important hydroelectric poteninvestment, what is required is a pragmatic, on-the-ground tial, it sees its growth capped by two points every year due assessment of the immediate bottlenecks of economic to the dearth of electricity. Investing in Africa’s market of growth. Given that the effect of economic growth on access 1.8 billion people also implies efforts to advance regional to basic services is more notable and immediate than vice integration. Finally, this new African growth agenda calls for versa, the choice of massive investment in primary educainvesting in the efficiency of African cities, as well as their tion and health care, which has too often been made at connection with their agricultural hinterland. the expense of investment in infrastructures, needs to be reconsidered. By removing important obstacles to growth, investment in energy, transport, or agriculture may ultiTackling the Main Bottlenecks of Growth mately prove more effective in reaching objectives of access This leads us to the second important policy reorientation to health care and education than the long-term subsidizing for the transatlantic development community: the excesof education and health systems. Indeed, this latter policy sive concentration of the development industry on social choice is likely to reinforce dependency on international sectors, at the expense of other determinants of sustainable resources. socioeconomic development. To the extent that budgetary Economic takeoff in China, Malaysia, and Korea, three constraints inexorably imply prioritization of investments, models of 20th century development, did not wait for it is crucial to ask where the international community’s universal primary education; rather, these states were able added value lies in these years of transition. to invest massively in the education of their people once In the 1990s, when Africa was suffering from the consetheir national income was rising at 8 or 10 percent a year. quences of the structural adjustments, national public Similarly, the African success stories are those of countries investments in education, health, sanitation, and other basic that have managed to invest in their social systems because social services declined. While more ought to have been they did not neglect their agriculture, energy supply, and done to preserve aid to agriculture and infrastructures,
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transport infrastructure – three powerful brakes on growth in an Africa with an expanding population. While this clearly does not mean neglecting the social sectors, it calls for ensuring that aid does not crowd out other investments or substitute for legitimate national investments. Caring for the sick, educating the children, ensuring national food security – these essential functions of a state form part of the social contract, a social contract that was broken in many sub-Saharan countries during the era of the structural adjustment programs. Promoting Africa’s Unmatched Environmental Capital Africa’s takeoff is occurring at a time when humanity is realizing the limits of the planet’s resources. African societies are bound to come up against the global environmental crisis along their development path. Given the present state of knowledge and technology, the continent will not have sufficient reserves to finish the race of economic convergence with developed economies. Alongside massive political unrest and misguided economic policy decisions, excessive environmental degradation represents one of the most fundamental liabilities for a continent midway in its demographic transition. Conversely, the form of growth that Africa chooses will be one of the determinant variables in the future of the green planet. The global environmental crisis will affect Africa in two ways. First, exploitation of the continent’s nonrenewable raw materials remains one of the engines of its growth. This undermines the fragile foundations of the continent’s economic upturn. Secondly, the continent’s populations will be the first collateral victim of environmental degradation – whether local or global. Two-thirds of all Africans derive their incomes from the environment. The decline of natural systems in the wake of soil exhaustion, deforestation, over-fishing or the pollution of rivers thus directly threatens the poorest populations’ means of production. This “green peril” goes hand-in-hand with a brown one: the 320 million city-dwellers that Africa now has are ever more exposed to an omnipresent urban pollution. Owing to the lack of sanitation networks, seasonal rain transforms the informal residential quarters that surround the continent’s big metropolises into vast open sewers. The expected rise of sea level also threatens the 250 million inhabitants of Africa’s coasts; the vast West-African conurbation that is forming in the lagoon areas from Abidjan to Lagos is most particularly at risk. Preservation of the environment is sometimes presented as a whim of the rich, a subject “for later,” as opposed to an immediate imperative of economic growth. No belief could be more fallacious. Energy shortage, climate peril, soil exhaustion, the return of global food scarcity: the different components of the world environmental crisis represent as many threats on Africa’s long term economic growth in this phase of transition. The environment, however, is not only a source of risk for Africa. For all that we do not know about the environmental future of our planet, one thing is certain: the African continent, one of the first victims of the global environmental crisis, also holds some of the most powerful solutions for the growing ecological trap. This gives the African nations a singular position, from which they have a great deal to gain. Africa holds a treasure of natural resources that are still unexploited, and coveted by others in this time of shortage. In a context of growing world tension over food supply, the African continent contains some of the largest reserves of agricultural land, on par with Latin America. At a time when humanity is discovering the value of the genetic heritage of the planet’s living species and worrying of the pace of their extinction, it constitutes the largest reservoir of biodiversity. While carbon sinks are becoming scarce, Africa’s equatorial forests constitute the planet’s second biggest lung. The world of the 21st century will be caught in such an ecological bind that this natural heritage can yield Africans a substantial rent.28 If Africa manages to preserve this heritage and turn it to profit, it will form one of its major comparative advantages in the 21st century economy. Given its unique environmental capital, Africa is setting out on the environmental race with a long lead. It will keep this lead on condition that it is able to capitalize on its comparative advantage. But this scenario is not written, and the window of opportunity is brief. There is nothing inexorable about the energy crisis, the urban peril, the food crisis, or even the erosion of Africa’s natural capital: there are only bad policies. In each of these fields, sub-Saharan Africa is today paying dearly for the choices of its colonial rulers, its first post-independence leaders, and the gurus of structural
28 The international community is in the process of setting up schemes of remuneration for environmental services.
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adjustment. Beyond each of these impasses of public policy lie the keys for the competitiveness of African economies on a path of sustainable growth. Conclusion At the turn of the last century, Africa embarked on a new era, one that closes the overly long chapter of decolonization. Freed from the burden of debt, its states are discovering new margins of investment in their future. Steadily casting off the tutelage of the IMF and the World Bank, African nations are taking back control of their economic policies. Courted by the new actors on the international chessboard, they are free to form political alliances with whomever they choose. This new African independence – the real independence, we are tempted to say – is accompanied by a change in the status of the “forgotten continent.” It is high time to see Africa for what it has become: a continent of both opportunities and risks for the transatlantic community. Leaving compassionate language and assistantship to a foregone era, the transatlantic community should learn to speak the language of mutual interests – a wager of credibility to the ears of Africans exasperated by paternalistic discourses. And it should convince itself that it is in its interest for Africa not to take too many wrong turns in that continent’s turbulent metamorphosis. Seizing its opportunities and mitigating its risks imposes urgent policy responses, while their efficiency implies a minimum level of transatlantic consensus. In sub-Saharan Africa, as elsewhere in the developing world, it is urgent for the transatlantic development community to trade its outdated approach to “official development assistance” for a results-based approach to development finance.29 Importantly, this should be done in partnership with Africans with a deeper appreciation for their unique institutions and development contexts – moving beyond development ideologies of the past.
Authors
Jean-Michel Severino currently serves as the general inspector of finances at the French Ministry of Finance, and Chairman of French Partnership for Water (FPW). From 2001 to 2010, Severino was the CEO of France’s international development agency, Agence française de développement (AFD). Severino is also a GMF senior nonresident fellow based in Paris, France. Olivier Ray currently works as an economist for the Middle East and North Africa Division at Agence Française de Développement (AFD). Previously, he was previously part of the Conflict Prevention and Post-Conflict Recovery Unit at AFD. From 2007 to 2010, he was special assistant to Jean-Michel Severino, helping him with research and publications.
About GMF
The German Marshall Fund of the United States (GMF) is a non-partisan American public policy and grantmaking institution dedicated to promoting better understanding and cooperation between North America and Europe on transatlantic and global issues. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by convening leaders and members of the policy and business communities, by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to foster renewed commitment to the transatlantic relationship. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has six offices in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, and Bucharest. GMF also has smaller representations in Bratislava, Turin, and Stockholm.
29 Severino, J.M.., Ray, O., “The End of ODA (I): Death and Rebirth of a Global Public Policy”; “The End of ODA (II): The Birth of Hypercollective Action.” Center for Global Development Working Papers #167 and #218, March 2009 and June 2010.
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Policy Brief
January 11, 2011
Summary: Africa is re-emerging as a strategic piece on the global chessboard. It is facing an unprecedented demographic explosion, with social, economic, and political implications for both Africans and the rest of the world. Sub-Saharan Africa, encompassing a market of 1.8 billion inhabitants by 2050, will have a considerable impact on the planet in terms of migration, security, environment, and trade. While new global players are actively engaging with Africa, transatlantic partners are seemingly reluctant to adapt to the shifting realities on the ground. Africa’s metamorphosis, which involves profound risks and opportunities for the transatlantic community, calls for a more reflective and constructive public discussion on Africa.
Africa’s Metamorphosis: Are Transatlantic Partners Prepared?
by Jean-Michel Severino and Olivier Ray*
Introduction It is high time to rethink policies toward Africa and its future. Indeed, public debates continue to portray the space south of the Sahara as a blighted and marginalized land, untouched by globalization. This view of Africa has to a large degree overlooked the changes deeply affecting African societies, changes which few have fully grasped. Now in the early 21st century, while the world’s emerging actors observe African developments attentively and actively reconsider their relationships with the continent, the transatlantic community seems to be hesitating. Sub-Saharan Africa’s population is approaching the 1 billion mark, and by 2050 is expected to reach 1.8 billion inhabitants.1 This demographic dynamic is imposing a dizzying pace on the continent’s economic, social, and political transformations. In view of the speed and amplitude of the
* The authors would like to thank Sean Mulvaney, Jonathan White, Asha Davis, and Maggie Geiger from GMF’s Economic Policy Program, as well as David Held, John Thompson, and Sarah Lambert of Polity Press, for their dedicated support. They also thank the participants of GMF’s September 2010 Africa roundtable for their comments on a draft version of this brief. 1 Unless stated otherwise, all demographic figures in this brief originate from the “World Population Prospects, 2008 revision,” United Nations Population Division, 2009.
metamorphosis underway, it is worth scouting out the road ahead. This policy brief seeks to provide that longterm perspective. Four decades ago, a renowned economist wrote on the “Asian drama,”2 predicting that underdevelopment would remain the main feature of Asia, in part due to the burden of a rapidly expanding population. China, the former sleeping giant, rose to become the world’s second largest economy in 2010. Africa is the sleeping giant of the early 21st century. The purpose of this brief is not to predict whether it will thrive or stumble, nor to determine who might then be held accountable or take credit for progress made. What matters is that policies are reshaped to be in step with the present and foreseeable opportunities and risks that stem from its demographic trends, and what we perceive as the strategic re-emergence of Africa. An Africa of 1.8 billion inhabitants will rapidly gain a stake in the globalization game. If transatlantic partners do not sufficiently commit to cohesive and forward-looking policies toward Africa, we risk facing the domestic consequences (in the United States and Europe) of its great trans-
In this policy brief, the authors draw some of the policy implications from the analysis developed in their book, Africa’s Moment, forthcoming through a Polity Press - GMF partnership.
1744 R Street NW Washington, DC 20009 T 1 202 745 3950 F 1 202 265 1662 E [email protected]
2
Gunnar Myrdal, Asian Drama: An Inquiry into the Poverty of Nations, 1968.
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formation. Africa’s re-emergence calls for changes in conventional thinking and public policy. Africa’s Billions Sub-Saharan Africa has seen its population multiply by seven in the span of only a century, increasing from under 100 million in 1900 to nearly 700 million by 2000. A baby born in Nigeria in 1950 came into the world in a country of 37 million inhabitants; its grandchild today would be born in a land of some 160 million. Africa south of the Sahara, which in 1990 counted only 8 inhabitants per square kilometer, today has 36.3 This sudden densification has been the motor of radical transformations, including the tumultuous history of African independence movements, the economic convulsions of the 1980s, the violent crises on the continent that followed the fall of the Soviet Union, and the unexpected spell of economic growth on the continent since the turn of the century. Looking ahead, Africa is only halfway through its remarkable transformation. Africa’s population explosion will continue over the coming decades. While the tempo of growth has declined in relation to the peak of the 1980s, its population continues to rise at a rate of close to 2.5 Chart 1 percent per year – twice the average for developing countries. United Nations (UN) studies estimate in their median scenario that the population south of the Sahara will double again in the span of 40 years, increasing from close to 860 million inhabitants today to some 1.8 billion in 2050. It is worthwhile to reflect on this figure for a moment. The countries south of the Sahara will be home to one out of five human beings by the mid-21st century. SubSaharan Africa will become larger than India, and have 25 percent more inhabitants than China. The population of Africa south of the Sahara will therefore have multiplied by a factor of 10 in the course of a century, from 180 million in 1950 to 1.8 billion in 2050.4 China’s population, by comparison, will increase by “only” 2.5 times during the same period. In terms of demographic trends, there has been no equivalent phenomenon in human history. This vigorous demographic explosion of growth is accompanied by a process of massive urbanization. During the second half of the 20th century, the population of sub-Saharan Africa’s cities multiplied 11 times. By
4 The figure of 1.8 billion is in no way a ‘high’ scenario, but rather at the lower end of the range of possibilities. If Africa is to remain on the path leading to 1.8 billion inhabitants in 2050, African fertility rates will have to steadily fall from its present level of 5.5 children per woman to 2.0 in 2050, which implies the use of modern methods of contraception by more than 60 percent of women. This rate currently lies under 20 percent. Thus, if a doubling of the sub-Saharan population between now and 2050 is practically certain, it can in no way be ruled out that the actual figure will be considerably higher, and that subSaharan Africa will pass the 2 billion mark by the middle of the century.
Chart 2
3 This average conceals tremendous regional differences. While Gabon and the Central African Republic have very low densities (respectively 5 and 6 inhabitants per square kilometer), Rwanda and Nigeria have, respectively, 390 and 171.
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2030, half of all Africans will live in towns. Until then, its countries will experience a doubling of their urban populations, which will grow from around 300 million to over 600 million in total. The Drivers of Africa’s Economic Transformation The African continent has long lagged behind others in the global economic growth process. As a result, it is perceived as the world’s basket case, especially by the Western public, and as the prototypical story of failure by its economists. But both have missed an important part of the story. The persistence of poverty has helped validate the thesis of an “African economic mystery” in the eyes of many commentators. A study of the economic history of the last 50 years has even led some American economists to speak of a genuine tragedy of African economic growth.5 Yet even with a decade of statistical regressions and bitter academic debates, experts have not managed to get to the root of the “African dummy variable” (the unexplained statistic indicating that African countries are penalized in terms of economic growth simply by virtue of the fact that they are African countries). The transatlantic community needs to better understand the reasons for Africa’s growth in the first decade of this century in order to best assess its risks and opportunities. Analysis of Africa’s long period of stagnation helps to explain why growth is now possible, how sustainable it is, and where its fragilities lie. While it is not the focus of this policy brief to analyze the last 25 years of Africa’s economic crisis, we contend that there is no mystery behind the “African tragedy.” Africa’s economic decline in the 1980s and 90s was the logical and virtually inevitable consequence of a conjunction of circumstances that were both particular and historically dated. No country, no people could have grown and developed under such circumstances – two decades marked by a debt crisis, and major policy mistakes as well as deteriorating terms of trade. Importantly, the Africa we see today is moving away from being stuck in its underdeveloped recent past. The transatlantic policy community is slow to recognize the great changes underway on the African continent.6 Most people fail to realize that the sub-Saharan economies grew at an average rate of 6 percent each year between 2003 and 2010, compared to less than 5 percent for Latin America and less than 2 percent for the eurozone. More than one African in three lives in an economy that has had a growth rate over 4 percent for at least a decade.7 Sub-Saharan Africa has taken its place in recent years among regions with a relatively high growth rate, thus marking a radical break with the previous two decades. Is this renewed growth likely to last? Where certain analysts see the growth rates of the last few years simply as the effect of an export boom in raw materials, we see the beginnings of a process of structural economic growth. Africa’s demographic explosion, the increasing population density of its territories, and its galloping urbanization are changing the nature of economic growth within its reach: a growth that is becoming more structural, more endogenous, and thus potentially more sustainable. Although vulnerabilities remain and new risks have sprung up, Africa has entered a new cycle. Several factors explain this transformation. Firstly, the demographic explosion is significantly affecting the age structure of African societies. The continent’s population is the youngest on the planet. In the 1980s and 90s, this meant that Africa had the highest dependency ratio8 in the world. At the worst of its economic crisis, Africa counted less than one worker for each dependent child or elderly person, whereas Southeast Asia, in full economic takeoff, had more than two workers for each dependent. With the steady fall in the birth rate, a reduction in the dependence rate has now also set in. This trend should continue at a steady pace for the next 40 years – a ratio between active and inactive identical to that which permitted the Asian “economic miracle” of the 1980s (see chart 3). Africa could benefit in turn from a demographic dividend– a window of opportunity for growth.
6 Exceptions are all the more important to outline, and may signal a gradual shift of perceptions in certain circles: Cf. Steve Radlet’s Emerging Africa: How 17 Countries Are Leading the Way, CG Dev, October 2010, and “Lions on the Move: Progress and Potential of African Economies,” McKinsey Global Institute, June 2010. 7 8
50 Things You Didn’t Know About Africa, World Bank, 2007.
W. Easterly and R. Levine, “Africa’s growth tragedy, policies and ethnic divisions,” Quarterly Journal of Economics, November 1997, CXII.
5
The rate of dependence of a population expresses the number of young (under 15) and old (over 64) people who depend on the income generated by the active population (between 15 and 64).
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Chart 3 of production, cannot be sufficiently remunerative for farmers. Both the volumes produced and the sale prices are too low for investment in irrigation, seed, and fertilizer to be profitable.10 Historically, this process of population concentration has generated substantial gains in productivity, opportunities for trade, and thus a certain tempo of economic growth. However, none of these necessary conditions for growth are sufficient by themselves. If Africa is able to exploit its new potential for growth in the early years of the 21st century, it will happen because these long socio-economic transformations coincide with a new macroeconomic landscape. Thirdly, then, Africa’s transformation will be fuelled by its improving macroeconomic environment. The sovereign debt of the sub-Saharan countries has fallen from over 85 percent of GDP in 2000 to 40 percent of GDP at the end of the decade,11 releasing new margins of manoeuvrability for public expenditure in these countries. Public investment has finally begun to take its place in African government policies: steadily rising now for several years, the rate of such investment reached an average of 22 percent in 2008. Africa has seen a radical fall in inflation, which had taken a devastating toll on African macroeconomic stability in the past. As a result of global demand and price increases for the continent’s commodities, Africa’s terms of trade have improved substantially.12 For the first time since the early days of African independence, the main macroeconomic indicators have turned from red to green in the majority of sub-Saharan economies. Is sub-Saharan Africa the world’s next “emerging market”? It would certainly be too soon to assert this. Yet the comparison with the Association of Southeast Asian Nations
10 Rapid urbanization is already resulting in important transformations today in Africa’s rural economy. Investment in agriculture is becoming ever more profitable, such that the sub-Saharan countryside is in the process of gaining the means of its modernization. 11
Secondly, Africa’s transformation will be shaped by the massive changes in population density and distribution. Africa has until recently been underpopulated and largely rural. As such, it lacked sufficient human resources for endogenous growth. Its double explosion – demographic and urban – makes the emergence of a vast regional market possible. Sub-Saharan Africa’s 1 billion extra inhabitants between now and 2050 will have to feed themselves, house themselves, move, and communicate. Whether formal or informal; local, national, or international, economic activity will emerge to respond to these needs. No region has developed without a young and abundant labor force concentrated in urban centers. This is precisely what has been absent in Africa and is now occurring, accelerating the division of labour and catalyzing an opening to the world.9 The Danish economist Ester Boserup noted that “demographic development is the determining factor for technological change in agriculture.” Sub-Saharan Africa’s agriculture and urbanization will be the next illustration of this. When towns make up only 5 to 10 percent of the population, the urban market, often remote from the site
9 Adam Smith’s postulate means the same for Africa in the early 21st century as it meant for England in the 18th: the concentration of population encourages the development of trade and a rise in productivity. The power of the Roman Empire 2,000 years ago, the birth of European and American industry in the 18th and 19th centuries, the emergence of the Asian tigers in the 1980s, and the recent rise in China’s international economic power were all driven by a young and abundant labor-force concentrated in the urban centers.
“The median sovereign debt of the sub-Saharan countries.” Cf. Global Economic Outlook, 2008, IMF, p. 14.
12 The previous decline in terms of trade was largely responsible for the collapse of African economies excessively dependent on the export of raw materials. But from oil and natural gas to aluminium and gold, the prices of the minerals and hydrocarbons, in which African sub-soils are so rich, have risen significantly during the first decade of the century – a trend that has every likelihood of continuing in the longer term, propelled by the combined effects of strong demand from the emerging economies and growing awareness of the limits of world supplies.
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(ASEAN) countries (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) around 1980, for which the term “emerging markets” was first employed, is a telling one. Sub-Saharan Africa has a lower rate of inflation, greater reserves of foreign currency, and receives more foreign direct investment than the ASEAN countries did on the eve of their economic takeoff – countries whose economic governance at the time, moreover, did not display the “good” practices that the World Bank and IMF define today. These underlying factors driving the continent’s transformation indicate that the African Giant is awakening.13 Still, many factors of vulnerability remain. What could make Africa stumble and fall back into its long economic coma of the 1980-1997 era? Chart 4 prodigious increase in the continent’s population density is taking place at the very moment in history during which humankind is discovering the limited supply of natural resources. As we encounter the limits of nature, Malthus’ theories are coming back into fashion. Finally, Africa will be forced to undergo the somersaults of its demographic growth under the lenses of CNN, the gaze of the international community, and an ever more constricting web of international norms. Violent conflicts in sub-Saharan Africa have declined in number and intensity over the last decade. The number of states involved in war (civil or international) has halved from 1999 to 2009, distancing the continent from the peak of violence reached in the early 1990s.15 While this trend is undeniably good news, it is not set in stone: because any movement is made of instability, Africa’s metamorphosis is likely to produce new human tragedies. Research estimates that Africa loses close to $20 billion per year to armed conflict – exclusive of the immaterial costs of warfare.16 The African states that will be furthest from reaching the Millennium Development Goals (MDGs) in 2015 are those states that have known high levels of violence over the last decade. Investing in the prevention and management of violent conflict thus represents a crucial investment in favor of economic growth. The aid programs of the 1980s and 90s severely underestimated the role of the state in the development process. It was only after the implosion of public authorities in several African countries during the 1990s that the role of public authorities was rehabilitated. But the vast “nation-building” programs of these years sinned in the opposite direction: seeing the fragility of the state, they remained blind to the underlying socio-economic vulnerabilities. Treating the symptoms of the problem, they failed to attack its causes. Beneath the layer of political mobilizers (be they ethnic or religious-based) lies a series of structural weaknesses that are likely to further violence in Africa’s future.17
15 For an analysis of the developmental trends in African conflicts, see The Human Security Report, 2005, op. cit. 16 17
Source: IMF, 2010
Addressing the Political and Security Perils of Transition Despite the tremendous opportunities this demographic transition provides Africa, three factors make it particularly perilous compared to the experiences of other regions in the past. First, the African cauldron will be refused the safety-valve of distant migration14 that was so valuable to 19th century Europe and 20th century Asia. Secondly, this
See McKinsey, “Lions on the Move: The Progress and Potential of African Economies,” June 2010.
13
We understand by this term massive migration to other continents. Internal migration with Africa will remain an important feature of the continent’s transformations in the coming decades.
14
“Africa’s missing billions,” IANSA, Oxfam, and Saferworld, October 2007
DFID, “Drivers of Fragility: What Makes States Fragiles?”, PRDE Working Paper #7, April 2005, 33p.
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Growing competition for agricultural land has, for example, played a determining role in the Rwandan genocide of the mid-1990s, in Côte d’Ivoire’s protracted civil war, or in Kenya’s 2008 post-electoral violence. Tension regarding overexploited natural resources (water, wood, or pasture) between increasingly vulnerable communities has also made it easier for the governments of Sudan and Chad to foment violence in the region of Darfur. The urban crisis – made of social uprooting, poverty, and massive unemployment – facilitates the mobilization of disenfranchised youth. In the Democratic Republic of the Congo, Nigeria, and Sierra Leone, unemployed men make a readily-available force for entrepreneurs of violence. Socio-economic inequalities – both vertical and horizontal18 – are particularly acute in societies in the midst of economic takeoff. This is feeding urban criminality that is reaching unprecedented levels in parts of Western Africa. In rural Niger, Mali, Chad, and Mauritania, feelings of injustice by rural components of the society have long fuelled Tuareg movements;19 they have begun to feed the small but expanding circle of the Al-Qaeda Organization in the Islamic Maghreb (AQIM).20 If kept unchecked, these structural vulnerabilities will plant the seeds of tomorrow’s violence. The transatlantic development community ought to set itself the goal to go beyond the “do no harm” principle21 by tackling state fragility at its roots and strengthening the resilience of vulnerable societies.22 Could rural development projects strengthen the resilience of societies faced with environmental stress by abating the latter? Could they create incentives for actors to adopt institutional models for the sharing of scarce environmental resources? Can they contribute to the redistribution of economic, political, or cultural capital in a context of strong inter-group and inter-personal inequalities? This agenda is ambitious, as it implies that the development community explores new paths, bridging the gap between social science research and development practice. The alternative
18 Vertical inequalities refer to the difference of economic, political, and cultural capital between social classes. Horizontal inequalities refer to the difference of these three forms of capital between culturally-determined groups. See Stewart, F., “Horizontal Inequalities: A Neglected Dimension of Development,” CRISE Working Paper, 2002. 19
is to wait for violence to erupt before acting – and bear the (visible and hidden) costs of violent conflict. After two decades of trial and error in conflict prevention and postconflict peace-building, the transatlantic community needs to revisit some of its policies in these arenas.23 Redefining Transatlantic Engagement with Africa Helping African societies manage rapid socio-economic change will also imply moving away from essentialist discourses on good governance, democracy, and economic growth. Many have sought to establish a relationship of linear causality between these three variables. But the economic takeoffs in China, Malaysia, and Vietnam, which managed to raise hundreds of millions out of poverty over the last few decades, did not wait for the advent of pluralist democracy. Even its first shoots are scarcely visible in most of these countries. Why should it be any different in Africa? The fact that the pioneers of development on the African continent are not all such models of democracy has not prevented them from experiencing periods of rapid and sustained growth. It is time to recognize that economic growth and democratization are different stories, which respond to different needs, processes, and timelines. John Stewart Mill’s message is no less true for 21st century Africa than it was for 19th century Europe:24 as anywhere else in the world, democratization in Africa will result from an endogenous struggle, the eminently legitimate one of constructing a state run by and for its citizens. While it is perfectly legitimate for the transatlantic community to promote its values by providing active support to African democrats, linking democracy and economic growth is both a counterfactual and counterproductive exercise. How then do things stand with “good governance”?25 The concept of good governance refers to transparency in state actions, control of corruption, the free operation of markets, democracy, and the rule of law – in other words, a set of characteristics that more or less describe the mode of organization of the so-called developed countries. But African economic successes of the last decade force us
23 Caplan, R., “From Collapsing States to Neo-Trusteeship: The Limits to Solving the Problem of ‘Precarious Statehood’ in the 21st Century,” Third World Quarterly 28:2 (March 2007). 24 25
Guichaoua, Yvan, “Circumstantial Alliances and Loose Loyalties in Rebellion Making: The Case of Tuareg Insurgency in Northern Niger (2007-2009)” (November 25, 2009). MICROCON Research Working Paper No. 20. Available at SSRN: http://ssrn.com/abstract=1559196 “Vulnerabilities and factors of insecurity in the Sahel,” OECD Sahel Club, August 2010. “Do No Harm: How Aid Can Support Peace—or War,” Mary B. Anderson.
20 21 22
Mill, J.S., On Liberty, 1859.
Jozan, R., Ray, O., “From fragility to violence: international organisations to the test,” dossier of Afrique Contemporaine 232, December 2009.
The analysis offered in this paragraph is inspired by the work of Nicolas Meisel and Jacques Ould Aoudia, Is “Good Governance” a Good Development Strategy?, Working paper no. 58, AFD, January 2008.
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to qualify the idea of a correlation between good governance and the pace of economic development. The Asian economic performers such as China and Vietnam – like their African counterparts, Ghana and Uganda – are not the best performers in terms of good governance. Mozambique and Madagascar, states that both have relatively poor levels of governance (high level of corruption, embezzlement, nepotism, etc.), have seen very divergent growth rates over the last ten years. Similarly, international companies do not orient their investments towards the model countries of “good governance,” as such. Rather they invest in dynamic economies where systems of regulation are in force, whether formal or informal, that enable them to operate without excessive harassment.26 If neither democracy nor good governance, nor even the absence of corruption provides the discriminating factor between countries in a phase of takeoff and the others, what then does? The development process, oriented as it is towards the future, requires a reliable institutional framework that makes it possible to reduce the uncertainties of economic actors, and thus extend their time horizon. For instance, three pioneers in Africa’s growth – Mozambique, Burkina Faso, and Ghana – have each, in different ways, provided public institutions capable of coordinating economic actors and bringing their individual choices to converge around the same national project. More than democracy or good governance in these cases, credible institutions were what made investment decisions and economic growth possible. The difficulty in demonstrating an unambiguous correlation between good governance, democracy, and economic growth should lead us to question efforts to export institutional and political models ready-made from our own societies. Interventions in the field of governance ought to aim at consolidating local governance structures, processes, and institutions. This includes a heightened recognition of the necessary social contract that binds the state and society (the provision of security, justice, and basic social services), which strengthens African societies’ resilience to violence. It implies working on a “good enough governance”27 agenda, most particularly in Africa’s most fragile states. This means sequencing and prioritizing institutional changes, based
26 27
on in-depth analyses of countries’ specific socio-political trajectories. Such sequencing is a sine qua non condition for achieving lasting change. Seizing Africa’s Growth Potential As Africa enters this period of massive transformation, accelerating sub-Saharan Africa’s economic growth is an imperative: it will not be able to reduce poverty or keep violence in check without a yearly rate of growth in the 8 to 10 percent bracket. The visionary policy decisions on which Africa’s renewed growth is predicated fundamentally depend on African states and leaders themselves. However, the international community, whose aid accounts for an important part of state investments, and whose policy recommendations inform budgetary decisions, also has a crucial role to play. Wisely oriented, its private investments can help Africans seize the opportunity of this new economic era. Shrewdly allocated, its development aid can tackle some of the structural vulnerabilities that challenge it. Well-inspired, its policy advice can help African states jump some of the hurdles of its metamorphosis. Investing in Domestic Markets Rather than Extraverted Economies To seize Africa’s economic growth potential, transatlantic partners must urgently revisit the export-oriented development paradigm that has shaped economic discourse and development practice in the 1990s and 2000s. The Asian miracle inspired a new development creed: “export and thou shall develop.” This is not surprising, as extraverted economic models have indeed produced extremely rapid growth in East-Asian economies, pulling millions of people out of poverty. However, absolute priority to export activities does not make for a development strategy. The series of international crises witnessed in the early 21st century have shown some of the limits of such economic orthodoxy – especially when adopted by countries adding up to roughly one-fifth of humanity. Characterized by large trade and current-account surpluses, and often fuelled by undervalued currencies, this economic model produces important social, environmental, and financial externalities, both locally and internationally. Domestic wage levels are kept down artificially, which can breed social unrest and delay the formation of domestic markets. Product
N. Meisel and J. Ould Aoudia (2008), op. cit., p. 35.
Grindle, Merilee S., “Good Enough Governance Revisited.” Development Policy Review, Vol. 25, No. 5, pp. 533-574, September 2007.
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components are shipped several times across the world in their manufacturing process, while pollution is largely concentrated in the producing countries. Finally, important amounts of liquidity that are not invested domestically feed asset bubbles and contribute to the frenzy of international financial markets. Each of these disequilibria can be managed so long as small economies operate in niches. However, the financial crisis has shown that when a country such as China adopts it as its national development strategy, the stress is excessive. salvaging fundamental social services was arguably the first necessity of international aid. This explains the vast realignment of development aid in favor of social sectors (see chart 5). Chart 5
ODA to Africa by Sector
Given that Africa’s population will surpass China’s near 2040, this lesson from the Chinese experience ought to lead the international community and Africans to reconsider the merits of extraverted development policies. African economies cannot rely on the sole export of petrol, minerals, cash crops, and a few industrial goods: a new development paradigm needs to be forged that takes Africa’s endogenous growth potential seriously. This implies major investments Source: OECD Development Assistance Committee, 2010 in the development of the private sector and social business, in the modernization of agriculture as well as in large infrastructures. Although sub-Saharan Africa has Today, as most African states gradually regain margins of some of the world’s most important hydroelectric poteninvestment, what is required is a pragmatic, on-the-ground tial, it sees its growth capped by two points every year due assessment of the immediate bottlenecks of economic to the dearth of electricity. Investing in Africa’s market of growth. Given that the effect of economic growth on access 1.8 billion people also implies efforts to advance regional to basic services is more notable and immediate than vice integration. Finally, this new African growth agenda calls for versa, the choice of massive investment in primary educainvesting in the efficiency of African cities, as well as their tion and health care, which has too often been made at connection with their agricultural hinterland. the expense of investment in infrastructures, needs to be reconsidered. By removing important obstacles to growth, investment in energy, transport, or agriculture may ultiTackling the Main Bottlenecks of Growth mately prove more effective in reaching objectives of access This leads us to the second important policy reorientation to health care and education than the long-term subsidizing for the transatlantic development community: the excesof education and health systems. Indeed, this latter policy sive concentration of the development industry on social choice is likely to reinforce dependency on international sectors, at the expense of other determinants of sustainable resources. socioeconomic development. To the extent that budgetary Economic takeoff in China, Malaysia, and Korea, three constraints inexorably imply prioritization of investments, models of 20th century development, did not wait for it is crucial to ask where the international community’s universal primary education; rather, these states were able added value lies in these years of transition. to invest massively in the education of their people once In the 1990s, when Africa was suffering from the consetheir national income was rising at 8 or 10 percent a year. quences of the structural adjustments, national public Similarly, the African success stories are those of countries investments in education, health, sanitation, and other basic that have managed to invest in their social systems because social services declined. While more ought to have been they did not neglect their agriculture, energy supply, and done to preserve aid to agriculture and infrastructures,
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Economic Policy Program
Policy Brief
transport infrastructure – three powerful brakes on growth in an Africa with an expanding population. While this clearly does not mean neglecting the social sectors, it calls for ensuring that aid does not crowd out other investments or substitute for legitimate national investments. Caring for the sick, educating the children, ensuring national food security – these essential functions of a state form part of the social contract, a social contract that was broken in many sub-Saharan countries during the era of the structural adjustment programs. Promoting Africa’s Unmatched Environmental Capital Africa’s takeoff is occurring at a time when humanity is realizing the limits of the planet’s resources. African societies are bound to come up against the global environmental crisis along their development path. Given the present state of knowledge and technology, the continent will not have sufficient reserves to finish the race of economic convergence with developed economies. Alongside massive political unrest and misguided economic policy decisions, excessive environmental degradation represents one of the most fundamental liabilities for a continent midway in its demographic transition. Conversely, the form of growth that Africa chooses will be one of the determinant variables in the future of the green planet. The global environmental crisis will affect Africa in two ways. First, exploitation of the continent’s nonrenewable raw materials remains one of the engines of its growth. This undermines the fragile foundations of the continent’s economic upturn. Secondly, the continent’s populations will be the first collateral victim of environmental degradation – whether local or global. Two-thirds of all Africans derive their incomes from the environment. The decline of natural systems in the wake of soil exhaustion, deforestation, over-fishing or the pollution of rivers thus directly threatens the poorest populations’ means of production. This “green peril” goes hand-in-hand with a brown one: the 320 million city-dwellers that Africa now has are ever more exposed to an omnipresent urban pollution. Owing to the lack of sanitation networks, seasonal rain transforms the informal residential quarters that surround the continent’s big metropolises into vast open sewers. The expected rise of sea level also threatens the 250 million inhabitants of Africa’s coasts; the vast West-African conurbation that is forming in the lagoon areas from Abidjan to Lagos is most particularly at risk. Preservation of the environment is sometimes presented as a whim of the rich, a subject “for later,” as opposed to an immediate imperative of economic growth. No belief could be more fallacious. Energy shortage, climate peril, soil exhaustion, the return of global food scarcity: the different components of the world environmental crisis represent as many threats on Africa’s long term economic growth in this phase of transition. The environment, however, is not only a source of risk for Africa. For all that we do not know about the environmental future of our planet, one thing is certain: the African continent, one of the first victims of the global environmental crisis, also holds some of the most powerful solutions for the growing ecological trap. This gives the African nations a singular position, from which they have a great deal to gain. Africa holds a treasure of natural resources that are still unexploited, and coveted by others in this time of shortage. In a context of growing world tension over food supply, the African continent contains some of the largest reserves of agricultural land, on par with Latin America. At a time when humanity is discovering the value of the genetic heritage of the planet’s living species and worrying of the pace of their extinction, it constitutes the largest reservoir of biodiversity. While carbon sinks are becoming scarce, Africa’s equatorial forests constitute the planet’s second biggest lung. The world of the 21st century will be caught in such an ecological bind that this natural heritage can yield Africans a substantial rent.28 If Africa manages to preserve this heritage and turn it to profit, it will form one of its major comparative advantages in the 21st century economy. Given its unique environmental capital, Africa is setting out on the environmental race with a long lead. It will keep this lead on condition that it is able to capitalize on its comparative advantage. But this scenario is not written, and the window of opportunity is brief. There is nothing inexorable about the energy crisis, the urban peril, the food crisis, or even the erosion of Africa’s natural capital: there are only bad policies. In each of these fields, sub-Saharan Africa is today paying dearly for the choices of its colonial rulers, its first post-independence leaders, and the gurus of structural
28 The international community is in the process of setting up schemes of remuneration for environmental services.
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Economic Policy Program
Policy Brief
adjustment. Beyond each of these impasses of public policy lie the keys for the competitiveness of African economies on a path of sustainable growth. Conclusion At the turn of the last century, Africa embarked on a new era, one that closes the overly long chapter of decolonization. Freed from the burden of debt, its states are discovering new margins of investment in their future. Steadily casting off the tutelage of the IMF and the World Bank, African nations are taking back control of their economic policies. Courted by the new actors on the international chessboard, they are free to form political alliances with whomever they choose. This new African independence – the real independence, we are tempted to say – is accompanied by a change in the status of the “forgotten continent.” It is high time to see Africa for what it has become: a continent of both opportunities and risks for the transatlantic community. Leaving compassionate language and assistantship to a foregone era, the transatlantic community should learn to speak the language of mutual interests – a wager of credibility to the ears of Africans exasperated by paternalistic discourses. And it should convince itself that it is in its interest for Africa not to take too many wrong turns in that continent’s turbulent metamorphosis. Seizing its opportunities and mitigating its risks imposes urgent policy responses, while their efficiency implies a minimum level of transatlantic consensus. In sub-Saharan Africa, as elsewhere in the developing world, it is urgent for the transatlantic development community to trade its outdated approach to “official development assistance” for a results-based approach to development finance.29 Importantly, this should be done in partnership with Africans with a deeper appreciation for their unique institutions and development contexts – moving beyond development ideologies of the past.
Authors
Jean-Michel Severino currently serves as the general inspector of finances at the French Ministry of Finance, and Chairman of French Partnership for Water (FPW). From 2001 to 2010, Severino was the CEO of France’s international development agency, Agence française de développement (AFD). Severino is also a GMF senior nonresident fellow based in Paris, France. Olivier Ray currently works as an economist for the Middle East and North Africa Division at Agence Française de Développement (AFD). Previously, he was previously part of the Conflict Prevention and Post-Conflict Recovery Unit at AFD. From 2007 to 2010, he was special assistant to Jean-Michel Severino, helping him with research and publications.
About GMF
The German Marshall Fund of the United States (GMF) is a non-partisan American public policy and grantmaking institution dedicated to promoting better understanding and cooperation between North America and Europe on transatlantic and global issues. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by convening leaders and members of the policy and business communities, by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to foster renewed commitment to the transatlantic relationship. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has six offices in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, and Bucharest. GMF also has smaller representations in Bratislava, Turin, and Stockholm.
29 Severino, J.M.., Ray, O., “The End of ODA (I): Death and Rebirth of a Global Public Policy”; “The End of ODA (II): The Birth of Hypercollective Action.” Center for Global Development Working Papers #167 and #218, March 2009 and June 2010.
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