Untold News from Africa
Tired of bad news from Africa? Here's an article that presents some hope.
I got out my African atlas and did some more Googling on the subject, and found that there's quite a few African nations posting respectable economic growth lately. Also, the article seems to undersell Ethiopia, saying they've had %7 growth, while there are some newspaper articles on the net that insist it's been doing better than %10 for a few years now. Normally I'd rate The Economist as more reliable, but I recall when India first started growing at %7, the big business papers still referred to earlier predictions and insisted it was only %5. Western business papers are notoriously sheep-like, up-playing traditional cynicism and downplaying criticism of the 'big hype', it seems to me. The CIA world factbook says Ethiopia is growing at more like %9, so I reckon The Economist can take a leap on that one.
Of course it's too early to get excited -- the corruption is horrible, government is generally bad, and the hurdles to be overcome are enormous. But I think something fundamental has changed. For one thing, African governments have run out of excuses. Socialism has proven a disaster worldwide, and yesterday's Asian basketcases are today's dynamos. African nations could always deflect comparisons to China because China has such a different, cohesive society that is alien to most African societies. But then India took off, and how quickly people forget that for a long time, India was considered in worse shape than a lot of African nations.
Reading various articles, I get the impression that for the first time, African leaders are acknowledging what's possible, and taking seriously issues like financial responsibility. That's the China-India affect in one dimension. The other dimension is the simple hypothesis of the rising tide, in a global economy, lifting all ships.
Couple of points: Oil prices are way high, largely thanks to China-India demand. Ditto metals. So African suppliers are suddenly making a lot more money. Also, China is trying to win friends and secure those supplies with friendly investments in infrastructure and the like, while India is investing more just because there's money to be made, and Indian companies know more about making money in poor countries than most. As those trade ties develop, those are two huge new markets for Africans to sell into, and enormous emerging sources of investment and technology, too. Also, India was instrumental, along with South Africa and Brazil, in beating up the western agricultural lobby in the latest WTO rounds, and will surely get better deals for third world farmers in the future, as their general clout grows stronger. That's good for Africa too.
But mostly, a lot of African leaders are now saying that India is an alternative model. It's a model that doesn't rely on western aid, it isn't about cash crops that plunge in value when there's a market glut, or the weather turns bad, and it doesn't rely on just digging stuff out of the ground. Ethiopia for one is investing big in higher education, and I bet their wages would make Bangalore's look astronomical. Nigeria is talking about it too. Maybe soon those dinner-time phone calls will be coming from Lagos or Addis Ababa. Ethiopia has half its 70 million population living on land that's barely fertile -- one bad season, one more famine. There's no future in agriculture, and all this talk of agricultural growth and a 'green revolution' in Africa is bullshit. What they need is industry, services, technology. But first, they have to believe that poor third-worlders can actually do more than just grow bananas.
I've always believed, and I think the more China, India and some others continue to succeed, the more ordinary Africans will start to believe also. All the aid in the world will ultimately do no more than apply bandaids. The solutions to Africa's problems can only be found in Africa, and it always (that's worth repeating -- ALWAYS) comes back to economics in the end. I'll be keeping an eye on this one, and hoping.
I got out my African atlas and did some more Googling on the subject, and found that there's quite a few African nations posting respectable economic growth lately. Also, the article seems to undersell Ethiopia, saying they've had %7 growth, while there are some newspaper articles on the net that insist it's been doing better than %10 for a few years now. Normally I'd rate The Economist as more reliable, but I recall when India first started growing at %7, the big business papers still referred to earlier predictions and insisted it was only %5. Western business papers are notoriously sheep-like, up-playing traditional cynicism and downplaying criticism of the 'big hype', it seems to me. The CIA world factbook says Ethiopia is growing at more like %9, so I reckon The Economist can take a leap on that one.
Of course it's too early to get excited -- the corruption is horrible, government is generally bad, and the hurdles to be overcome are enormous. But I think something fundamental has changed. For one thing, African governments have run out of excuses. Socialism has proven a disaster worldwide, and yesterday's Asian basketcases are today's dynamos. African nations could always deflect comparisons to China because China has such a different, cohesive society that is alien to most African societies. But then India took off, and how quickly people forget that for a long time, India was considered in worse shape than a lot of African nations.
Reading various articles, I get the impression that for the first time, African leaders are acknowledging what's possible, and taking seriously issues like financial responsibility. That's the China-India affect in one dimension. The other dimension is the simple hypothesis of the rising tide, in a global economy, lifting all ships.
Couple of points: Oil prices are way high, largely thanks to China-India demand. Ditto metals. So African suppliers are suddenly making a lot more money. Also, China is trying to win friends and secure those supplies with friendly investments in infrastructure and the like, while India is investing more just because there's money to be made, and Indian companies know more about making money in poor countries than most. As those trade ties develop, those are two huge new markets for Africans to sell into, and enormous emerging sources of investment and technology, too. Also, India was instrumental, along with South Africa and Brazil, in beating up the western agricultural lobby in the latest WTO rounds, and will surely get better deals for third world farmers in the future, as their general clout grows stronger. That's good for Africa too.
But mostly, a lot of African leaders are now saying that India is an alternative model. It's a model that doesn't rely on western aid, it isn't about cash crops that plunge in value when there's a market glut, or the weather turns bad, and it doesn't rely on just digging stuff out of the ground. Ethiopia for one is investing big in higher education, and I bet their wages would make Bangalore's look astronomical. Nigeria is talking about it too. Maybe soon those dinner-time phone calls will be coming from Lagos or Addis Ababa. Ethiopia has half its 70 million population living on land that's barely fertile -- one bad season, one more famine. There's no future in agriculture, and all this talk of agricultural growth and a 'green revolution' in Africa is bullshit. What they need is industry, services, technology. But first, they have to believe that poor third-worlders can actually do more than just grow bananas.
I've always believed, and I think the more China, India and some others continue to succeed, the more ordinary Africans will start to believe also. All the aid in the world will ultimately do no more than apply bandaids. The solutions to Africa's problems can only be found in Africa, and it always (that's worth repeating -- ALWAYS) comes back to economics in the end. I'll be keeping an eye on this one, and hoping.
4 Comments:
But I just like the bad news from Nigeria. I don't get to see such an unstable OPEC nation so often.
Oil can be a curse, no question. But, if used correctly, it can be an opportunity. Unfortunately, the United Arab Emirates are probably the only nation on Earth to have used oil revenues properly, instead of wasting them on socialist nanny states, or as is more common in Nigeria, flat out corruption.
Dubai in particular is using its oil to build all kinds of market-enhancing infrastructure, and to subsidize business activity and investment (it's a tax haven). The result has been stupendous growth. Angola is the African nation currently having an oil boom, I think they went from being a nine-billion to a 28 billion dollar economy in five years. Unfortuantely, with the corruption, I doubt if much of it will reach the ground. But given where Angola came from (civil war, and terrible poverty even by African standards) it's at least a chance. If only the international community could put some scrutiny on Angola's leaders to ensure they actually spend the money on society and the economy...
I've read a lot of scare pieces about an ascendant China in the media (especialy american media) over the past 8 or so years. But it may very well turn out that an ascendant China turns out to be a good thing for the world at large.
I agree. As an unapologetic capitalist, I think it's pretty obvious that when you dramatically expand the wealth base, everyone benefits.
But good things can have bad side effects too, and I don't think all the scare peices are wrong, either. State controlled economies can collapse (see SE Asian economic crisis, 1997) and China will at some point have to transition to democracy... and may not do so peacefully.
Long term, I'm still much more positive on India than China. China will do very well I'm sure, but I think India could be spectacular.
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