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Africa’s socio-economic conundrum

Things could get worse. The world economy is at a crossroads again, if not in a mess. As some have said before, certain challenges present opportunities — this is, in my view, one of those challenges (ie the current global financial crisis), which presents another opportune moment for humanity as a whole. The gist of the current global economic “Armageddon” can be summarised by one phrase: internal contradictions of capitalism, as Karl Marx argued, or simply contradictions that Mao reflected on.

Although we do not as yet know what would be the exact impact of the global economic crisis we find ourselves in the midst of, we have a sense of how long the recession will last and an idea of the possible outcomes — one thing for sure, the world will be a different place after the recession has run its course. The lives of many people will have changed for worse or rather humanity is once again put on a “resilience litmus test”.

Without doubt, international policy has a critical role to play in ensuring the vulnerable are protected — ranging from better targeting to trade reform. In the same vein, domestic policies and programmes can do a lot to mitigate the anticipated fallouts. Inevitably there are things that Africa, in partnership with the rest of the world, must do to rescue the world from this mess. Perhaps the entry point or a guiding framework for whatever we do should be our preoccupation with our future — our children. At what point can we interrupt the chain transmitting costs to future generations — every generation, for centuries, seems to pay for the “sins” of the preceding generation. This point also addresses each one of us at an individual level: what can we do better and what can we do together against the normal adversities and given the contradictions and trial and tribulations of life.

Beatrice Okoh, an extraordinary character in Achebe’s instructive Anthills of the Savannah, finds herself in a position that many of us could identify with. She has, for a long time, been trying to bring “together as many broken pieces of this tragic history”. For weeks, I have been hoping to reflect on socio-economic matters relevant for our Africa. As I listened to analysts, commentators, opinion makers, newspaper editors, editorials and so on I sunk into a sense of despair and gloom — an epitome of what seems to be the general consensus about our Africa. This sense of helplessness rid me of all temerity I had gathered earlier this year to bite the bullet and share my views about our socio-economic future.

Beatrice finally summons the necessary strength to unpack the “tragic history” she has been contemplating to “put down” something on. As she explains her country’s “tragic history”, I was reminded of Prospero in one of Shakespeare’s timeless plays, The Tempest, characterising the trials and tribulations of traumatic events of his surroundings. In an effort to transform chaos into order, Prospero appeals to his regiment that:

“You do look, my son, in a mov’d sort,
As if you were dismay’d: be cheerful sir,
Our revels now are ended …
Leave not a rack behind: we are such stuff
As dreams are made on …
Bear with my weakness, my old brain is troubled:
Be not disturbed with my infirmity”

Our continent’s circumstances, with or without the global economic crisis, continues to demand of us to be resilient and soldier forward. It demands of policy makers and relevant stakeholders to be vigilant and do the right thing. It demands, as argued before, a particular kind of leadership. Important policy lessons should be drawn from the past crises. For instance, we have learnt important lessons from countries such as Malawi, South Africa and Zambia that seem to have handled the challenge of escalating food prices well. Among the key issues is the need for better early warning systems to protect the most vulnerable from lack of food items, especially staple food-stuffs. Another important issue of policy relevance is what should be done jointly across affected societies, respectively, to ensure the negative impact of the global economic crisis is cushioned where feasible. In essence, “social compacts” that ensure the social protection of the most vulnerable are critical. Each stakeholder can do something but from experience it matters more that public policies and policy makers do the “right” things.

The following are some of the “headlines” that present relevant socio-economic prospects for Africa in particular:

  • International trade is projected to significantly decline — global export volumes are expected to reduce for the first time since the early 1980s (world trade volume is estimated to contract to -2.1% in 2009 before bouncing back to 6% in 2010 — irreparable damage on the lives of individuals and those losing their jobs and houses is painfully staggering.
  • Although food and oil prices are expected to decline (food prices to decline by more than 20% compared with the 2008 average and oil prices to average about $70 a barrel this year), higher food prices remain a challenge: both the incidence and severity of poverty, especially on our continent, has gone up (implying that Africa will be set back further in meeting the targets of the Millennium Declaration). In addition, although food demand is slowing as population growth slows, biofuels will likely increase crop demand more rapidly than estimated.
  • Although, commodity prices are declining as a response to slowing gross domestic product (GDP) growth — the commodity market boom is coming to a dead end — high commodity prices continue to challenge the poor, particularly in consuming countries. This, among other things, has dire implications for the current account of the balance of payments (especially as we return to the “age of twin deficits”: fiscal and balance of payments deficits!)
  • Global GDP growth will be less than 1% in 2009 (Organisation for Economic Cooperation and Development countries, Eurozone, Japan and US, etc clearly leading the pack in negative growth territory), before a rebound to about 3% in 2010 — thanks to sub-Saharan Africa GDP growth estimated at about 4% this year and reaching about 6% next year as a result of estimated respectable growth rates of countries such as Nigeria and Kenya.
  • These economic developments, as well as revised estimates of income poverty, suggest that the Sub-Saharan Africa Millennium Development Goal (MDG) target of 20.9% will be missed by a massive 5% or so for sub-Saharan Africa in 2015. The share of those living in extreme poverty (less than $2 a day) will, sadly, remain far above the MDG related target of 29%. In the context of rising inequalities worldwide, projected figures of those who will still be in extreme poverty by 2015 rings alarm bells in relation to numerous social cleavages especially given the simmering tensions and strained social fabric in many countries.

    Bill Clinton, in his outstanding autobiography, submits that “Africa was a continent that America had too often ignored”. In the context of his philosophy, the Third Way, he argues that: “The interdependent world we live in is inherently unstable, full of both opportunity and forces of destruction. It will remain so until we find our way from interdependence to a more integrated global community of shared responsibilities, shared benefits, and shared values — put a more human face on globalisation.”

    The Third Way has been able to take the world a step in the correct direction, although some have criticised it for making fairness and opportunity a junior partner to wealth creation. The fundamental question remains, for me, how some can be so destitute in the world of plenty. As such, the notion of a completely “new world order” seems more appealing: a system that ensures equitable distribution of wealth and resources. It might be that the current economic crisis presents the world with the opportunity to change global economic and political relations and the distribution of power or better use of such power.

    Hopefully in future, we will not have the difficulty that Okoh had in thinking about describing our situation. Similarly, we should not find ourselves in the “storm” that Prospero tried to calm down. Indeed, “we are such stuff as dreams are made on”. We should seize this rare moment — poverty should remain our enemy. Is it not, for instance, time to move with speed towards regional integration? Shouldn’t we be looking forward for a better future: in which policy makers are agile but not careless, where leaders do the “right” things and where each one of us do our bit — a better future for our kids?

    Author

    • Vusi Gumede is a professor at the University of South Africa, also with the Thabo Mbeki African Leadership Institute. He was previously an associate professor at the University of Johannesburg and he has also lectured public policy at the Graduate School of Public and Development Management (now the School of Governance) at the University of Witwatersrand. He worked for the South African government, in various capacities, for about twelve years. He serves on various boards and committees, including the Presidential Economic Advisory Council, the International Preparatory Committee of the Pan-African Federalist Movement and the National Council of the South African Association of Political Studies. He holds postgraduate qualifications in economics and policy studies, including a Ph.D in Economics (2003) from the erstwhile University of Natal (now the University of KwaZulu-Natal). He has been Distinguished Africanist Scholar at Cornell University and Yale World Fellow at Yale University, among other fellowships. He was in the boards of Southern Africa Trust and ActionAid South Africa and he is the former coordinator of Afrocentricity International for the South African chapter. He currently also holds an Honorary Professorship at the University of Cape Town. He has published 14 books and numerous journal papers & book chapters as well as written many essays and opinion articles and blogs. He is Editor-in-Chief for Africanus & Africa Insight as well as serving in various Editorial Boards/Committees.