Economic development in any country or region is not an isolated
process. Globalization has resulted in a
high level of interdependency (Stonehouse, Campbell, Hamill & Purdie, 2004). The development of the European Union (EU)
after hundreds of years of conflict has opened the door to increased political
and economic stabilization and growth (McGiffen,
2005). When China opened its doors to
foreign investment and increased its involvement in the global marketplace, it
altered the trajectory of its economy (Solso & Chinyanta, 2010). For Africa, involvement in globalization has
historically been one sided. The wealth
and resources of Africa have often been exploited in one way relationships
based on dependence and not interdependence (Rodney, 1973). However, more recently, African countries are
beginning to step out of the shadows of dependency and are attracting a new
wave of investment from inside and outside of the continent (Nibbe & Sita, 2013).
The literature, though, is
largely one sided in its analysis.
Either articles or books are written from the perspective of the foreign
investor or, they are written
from the perspective of Africans. The
reality is that successful economic development in Africa will be a result of
the development of mutually beneficial interdependent relationships. Any analysis of the status of African
economic development must include both perspectives. Any meaningful plan for African development
must result from a synergy of efforts and ideas coming from all perspectives.
This paper represents an attempt to
exemplify a synergistic analysis regarding the economic and political
development of Africa. The objective is
to glean from a sample of the available literature, ideas from the perspective
of Africans and of persons elsewhere. To
do this, two very different, but highly regarded African countries (when it
comes to investment attractiveness) will be analyzed. Rwanda, after the devastating genocidal
rampage that occurred in 1994, has experienced nearly two decades of economic
growth and development (Hernandez, 2013).
Nigeria, one of the oil giants of Sub-Saharan Africa, is the most
populated country on the continent and is also growing economically while
showings signs of increasing political stability (Nibbe & Sita, 2013).
The Historical Context
In the thousands of years prior to
consistent European contact with Africa many great kingdoms rose and fell
(Rodney, 1973). However, much of
Africa’s political and economic structures were based on highly localized
village kingdoms that related to each other both economically and
socially. Most parts of Sub-Saharan
Africa continue such structures up to the present day. In modern society, village rulers exist side
by side within the structure of democratically elected representatives. Such
ancient structures continue to be highly respected and relied upon for
leadership at the village level.
At the same time that European contact
with Africa was increasing, respected European scholars such as George Cuvier
of France had already developed a science of the superiority of the white
race. He wrote: “The Negro race ...
is marked by black complexion, crisped or woolly hair, compressed cranium and a
flat nose. The projection of the lower parts of the face, and the thick lips, evidently
approximate it to the monkey tribe: the hordes of which it consists have always
remained in the most complete state of barbarism” (Cuvier, 1835, p.
50). Many
scholars supported what were considered scientific conclusions that Northern
Europeans were the genetically superior race among humans. Africans were often categorized as barely
above apes. Thus, the entry of Africa
into the modern global economy (that was largely controlled by Europe) was characterized
by attitudes and beliefs that did not view Africans as deserving of being equal
partners. In the earliest days of trade
involving Europe and Africa, human beings, bought and sold as slaves, were the
most valuable commodity.
As the slave trade was slowly coming to
an end, the major European powers carved up Africa into colonies under the
jurisdiction of each respective government.
The dissection of Africa, in 1844 by European powers meeting in Berlin, was
done without regard to how the various ethnic groups were organized
geographically. The only interests that
were considered were those of the European nations involved (Rodney,
1973). In the 19th and first
half of the 20th century the role of Africans in the global economy
was reduced primarily to that of laborers working for companies that were now
getting rich from products and natural resources extracted from Africa.
By the early 1960’s nearly all African
countries had achieved “independence.”
However, as the British, French, Belgian, Portuguese and Dutch turned
over political control, they did not turn over economic control. The major extraction industries that had been
established in Africa remained in the control of the colonial companies. Thus the practices of exploitation and unfair
partnerships with indigenous peoples continued.
Kwame Nkruma became the first elected
President of Ghana after its independence in 1957. At the time, the British were cooperating
with Nkruma to build a major dam on the Volta River. Nkruma believed that the dam would generate
enough electrical power to support significant industrial and infrastructure
development in Ghana. Unfortunately, the
British withdrew from the project long before its completion. Undaunted, Nkruma sought other sources of financing
and was able to get the support of the World Bank and other foreign investors
after a deal was negotiated with Kaiser Aluminum. The dam was finally completed in 1967, but
Kaiser (the biggest consumer of electricity from the dam) demanded ultra-low
rates that resulted in residential consumers increasingly subsidizing the
operating expenses of the aluminum company. Fifty years after Ghana’s independence, the
country’s aluminum sector has helped US-based companies Kaiser and Alcoa profit
while showing little benefit to the country’s economic or industrial
development (The Drop Squad, 2013). Such
unbalanced contracts were typical in post-colonial Africa and have had a lasting
negative impact on economic development and political stability.
The view of Africans as less than human
gradually abated but did not evolve into a view of Africans as equals or
deserving of the same treatment given broken economies and political systems in
Europe and Asia after World War II.
Instead there was seemingly an intentional strategy to keep Africa poor
(Iheriohanma, 2010). Intense poverty
became the way of life for the majority of Sub-Saharan Africans after
independence and soon the societal destructiveness of that poverty began to
boil over as leaders made promises that they couldn’t or were not allowed to
keep. A pattern of military coups and
civil war became the norm for nearly three decades throughout Africa. Yet, many leaders of the struggling African
countries did not allow their hopes for a better Africa to be dashed. They pushed on.
Today, Africa is still recovering from
over a century of abuse and neglect from outside of Africa and many
self-inflicted wounds. In spite of all
the damage and underdevelopment, many African leaders of today are implementing
strategies to more effectively engage the global market while lifting its
citizens out of poverty. Leaders like
Paul Kagame, the President of Rwanda, and Ngozi Okonjo-Iweala, Finance Minister
of Nigeria, have demonstrated a clear understanding of the need to reduce their
country’s foreign debt and dependency on aid (Building Rwanda, 2012; Keating, 2013).
The African Worldview
Ntibagirirwa (2009), in his discussion
of the need to incorporate African cultural values into any meaningful plan for
economic development, argues that neoliberal views of economic development have
been generally assumed to be universal.
He points out that the cornerstone ideas of great European thinkers like
Descartes, Rousseau, Locke, Hume, Adam Smith and others have formed the foundation
of theories of economic development that are thought to be applicable to all
human societies. An initial flaw in this
line of thinking is that these great thinkers did not view Africans as equal to
Europeans or capable of development in any way similar to Europeans. It has not been until relatively recently
that European scholars began to widely accept that Africans are human beings on
the same footing. Even now there are a
few remaining detractors. Nevertheless,
Africans are in fact human beings on the same footing with all other humans. Our differences lie in our cultural beliefs,
values, and worldviews.
Ntibagirirwa (2009) goes on to identify
the basic components of the cultural value system common throughout Sub-Saharan
Africa. In short, he describes what has
become to be known as “Ubuntu.” Ubuntu can be described by the saying, “I am
human because we are human” or simply “I am because we are.” This idea of self/group-awareness is in
contrast the Descartes statement of, “I think, therefore, I am.” With Ubuntu, the individual and the group are
interdependent. Traditional European
philosophy and cultural values are more individualistic. The community is made up of a group of
independent individuals.
Another aspect common to the African
worldview relates to the relationship between the material and spiritual
realms. The idea of interdependency is
carried onto the relationship between material and spiritual. Material and spiritual are interdependent and
inseparable. Everything that is material
has a spiritual component and everything that is spiritual has a material
component (Jackson & Sears, 1992). The entire universe is seen as dynamic web of
interdependent energy patterns. Thus,
the individual is seen as an inclusive part of a single spiritual/material
universe. Everything and everybody is
connected and interdependent. Ntibagirirwa (2009) suggests that a
meaningful and effective plan for economic development in Sub-Saharan Africa
must be based in the cultural values and worldviews of Africans.
In the struggle for independence, and
shortly after, it appears what was known at the time as “African Socialism” may
have been an early attempt to incorporate African cultural values and worldview
into the developing economic and political systems of several African
countries. Unfortunately, this attempt
occurred in the middle of the Cold War.
In the US and in Western Europe, ideas resembling communism or socialism
were largely demonized. Thus, African
leaders that espoused such ideas were viewed as being on the wrong side of the
Cold War and perceived as possible threats.
An interesting side note is the term
“Third World” developed out of the Cold War rivalries. The “First World” was the US, Western Europe
and its committed allies. The “Second World”
was the Soviet Union and its allies. The
“Third World” was the designation for non-aligned countries which included most
of the countries of Africa. However,
before the end of the Cold War, “Third World” became synonymous with poverty
and underdevelopment.
In an increasingly interdependent world,
the question remains regarding what exactly would an economic and political
system consist of that is firmly based in African cultural values and an
African worldview? The need for African
leaders and for governments of African countries would be for them to have the
ability to be both African and “global” at the same time. African government and business leaders must
be able to communicate and effectively connect to both the citizens in their countries
and their global partners. However, such
relationships depend not just on the skills of the African leaders but also on
the openness and receptiveness of other world political and business leaders.
Perception versus Reality
Africa has been known as the “Dark
Continent” not because of the dark complexion of its people but because so much
about Africa is unfamiliar or unknown to the rest of the world. Even at the present time much of the
perception of Africa, its countries and its people is clouded by unflattering
bias and racism. However, there appears
to be hope. With increased exposure, old
biased perceptions are giving way to a more realistic view (Nibbe & Sita, 2013).
Even when taken as whole, perceptions of
Africa as a place for future investment have been steadily improving. What is most striking is that when the
perception of companies currently doing business in Africa is compared with
companies not currently in Africa, the differences in perception is very
clear. Those established in Africa tend
to evaluate the attractiveness of Africa for business nearly twice as high as
those not established in Africa (Nibbe & Sita, 2013). The
conclusion is that those established in Africa are basing their perceptions on
actual experience while those not established in Africa may be basing their
perceptions on old biases and stereotypes.
On the other side of the coin is the
perception of Africans about Africa. In
discussing the result of a Gallup Poll on the perceptions of Africans regarding
governance and institutions, Rheault & Tortora (2011) reported that people
generally had more confidence in religious institutions and the military than
in the government and judicial systems.
Many governments in Africa experience a credibility gap with its
citizens. Perhaps part of the problem relates to what was discussed in the previous section. African leaders must be
skilled at communicating with Africans from the perspective of African cultural
values while also being able to communicate effectively with global
partners.
Finally, related to issues of
perception, it is also important to understand that in spite of the many biases
and misperceptions that may be present regarding Africans, the individual
African tends to view him or herself as a human being who is a part of this
world just like everyone else. It makes
no sense to an African that there should be a bias against them simply because
of where they come from or how they look.
Rwanda and Nigeria
To explore the topic of African economic
development further it would be helpful to evaluate the examples of Rwanda and
Nigeria. The two countries are very
different in many respects. While
Nigeria is the most populated country in Africa with over 170 million people,
Rwanda has only 12 million people. Nigeria
is rich in natural resources especially oil and is a member of OPEC. Rwanda has little in the way of natural
resources. Nigeria’s GDP (PPP) is
$485.194 billion with a per capita rate $2,866.
Rwanda, with its much smaller population has a GDP (PPP) of $16.937
billion and a per capita rate of $1,592.
These numbers represent vast improvements for both countries over the
past 20 years and are the result of very active economic development plans by
their governments. Nigeria has had
successive democratically elected governments since 1999 and Rwanda has had
democratic elections since 1994.
Both Nigeria and Rwanda rank near the
middle of the pact when it comes to ease of doing business there (Nibbe &
Sita, 2013). Nigeria ranks second to South Africa regarding
the amount of capital invested for infrastructure improvements. Both Nigeria and Rwanda have dramatically
reduced the size of external debt in relation to gross national income. Rwanda went for a high of 63.1% in the 1990’s
to a 14.2% in 2010. Nigeria went from
118% down to 4.5% during the same period (Nibbe & Sita, 2013).
It is probably no coincidence that such
improvements in the economies in of Rwanda and Nigeria have all came after the
end of the Cold War. Attempts to
manipulate internal politics and foreign policy are no longer as urgent for
either of the former Cold War foes. It
appears that it has resulted in giving Africa some breathing room to develop on
its own and garner greater interest in global investment that actually leads to
growth and not dependency.
While economic conditions are improving
for both countries they are still very far from being comparable to any country
in Europe or North America. Yet, with so
much room for additional growth it appears investors are beginning to recognize
many golden opportunities and the governments are better prepared to manage the
growth (Solso & Chinyanta, 2010).
Since 1994, Rwanda has experienced
relative political calm. There have been
no military coups and the current President, Paul Kagame was re-elected with
overwhelming support. That is not to say
that Kagame’s government is not without its critics. Desrosiers & Thomson (2011) attempt to make
the case that Kagame is actually no different than his dictatorial predecessor. They claim that Kagame has established a
system of fear and repression. He is
controlling his own people and fooling the international community. However, the World Bank and many other
international observers do not agree with their assessment (Hernandez, 2013). On the contrary, the World Bank views Rwanda
under Kagame’s leadership as having established a sustainable path for economic
development and moving its citizens out of poverty.
Nigeria too, is heavily criticized for
corruption and “sectarian” violence.
Royal Dutch Shell is constantly victimized by extremely organized and
capable thieves that still thousands of barrels of oil per day from pipelines (Shell Global, 2013). It is often speculated that Nigerian
government officials are paid off as a part of keeping the scheme going. In the North, Nigeria is attempting to deal
with the Boko Haram, an Islamic extremist group that has been responsible for
the deaths of about 10,000 Nigerians (mostly Muslim) during the past 12
years. Violence in the North may cause
investors to pause, but companies familiar with Nigeria continue to recognize
the potential there and know how to steer clear of hot spots.
Rwanda and Nigeria
are more of the norm in today’s Africa rather than the exception. They represent the enthusiasm and optimism of
many African countries in spite of more than century of tragedy, internal
conflict, foreign abuse, financial manipulation, unfair trading practices,
exploitation and more. While there are
many challenges still to meet, there is cause for optimism and foreign
investors are beginning to agree (Solso & Chinyanta, 2010).
A Comment about Corruption
Whenever there is a discussion about
economic development in Africa the mention of corruption is not far
behind. However, very often the term is
used without adequate quantification. A
policemen taking a bribe at a check point that may amount to a couple of
dollars is put into the same category as the high government official that
embezzles millions. In a review of the
book Corruption in
Africa: Causes, consequences and cleanups, Abdul-Korah (2010)
indicates the book even identifies school children as culprits in the problem
of corruption.
When discussing
corruption it must be quantified in terms of the amounts of money involved and
the potential damage to economic development.
The most damaging types of corruption are those that result in the
extraction of billions of dollars out of the home country. A distinction should also be made between
corruption and confidence schemes. In
much of the literature all of these distinctly different activities are grouped
together as corruption (Ebegbulem, 2012).
Additionally, when large amounts of money are being embezzled and being
taken out of the country, it most often requires the cooperation of foreign
banks. Should these banks be identified
as being involved in the corruption or theft from the home countries? Or should they be allowed to take advantage
of the large deposits and be held harmless?
Most recently many
of the biggest acts of corruption in history have been committed by some of the
world’s largest and richest banks.
Earlier this year HSBC agreed to pay $1.9 billion to resolve charges it enabled Latin American drug cartels to
launder billions of dollars. HSBC was
accused of failing to monitor more than $670 billion in wire transfers and more
than $9.4 billion in purchases of U.S. currency from HSBC Mexico, allowing for
money laundering (Smythe, 2013). If
such numbers were associated with an African leader it would mean utter
disgrace and severe damage to the economy of his country. HSBC paid the fine and continued with business
as usual. No criminal charges were filed
for any HSBC executive involved.
Also, notable is JP Morgan's involvement in making illegal representations about mortgage securities to investors. Their deception, involving 100 of billions of dollars, contributed to the financial collapse that reverberated around the globe in 2008 and 2009. Economies in the US and Europe were all damaged severely. Consequences have been limited to fines totaling into the billions of dollars, with no criminal charges having been filed to date. The fact that, after doing so much damage on an international scale, companies like HSBC and JP Morgan are allowed to continue to exist suggests that much of our global economic system continues to be vulnerable to a level of corruption that dwarfs anything that has ever occurred in Africa.
Also, notable is JP Morgan's involvement in making illegal representations about mortgage securities to investors. Their deception, involving 100 of billions of dollars, contributed to the financial collapse that reverberated around the globe in 2008 and 2009. Economies in the US and Europe were all damaged severely. Consequences have been limited to fines totaling into the billions of dollars, with no criminal charges having been filed to date. The fact that, after doing so much damage on an international scale, companies like HSBC and JP Morgan are allowed to continue to exist suggests that much of our global economic system continues to be vulnerable to a level of corruption that dwarfs anything that has ever occurred in Africa.
In Africa, there is a direct link
between corruption and poverty. The desire for money when it is limited creates
temptation in some people and they succumb.
Others have bad intentions from the beginning. However, there is evidence that high level governmental
corruption in Africa is on the decline (Abdul-Korah, 2010). As economies improve and more
people are able to make a decent wage, the motivation for small time corruption
will decrease as well.
Conclusions and Recommendations
When a long look is taken of the
Africa’s history and underdevelopment it is amazing that the current
possibilities that are surfacing are coming to fruition. Economically and politically Africa is
finally facing what she has been dreaming of for decades. In modern times, Africa, especially
Sub-Saharan Africa, more than any other region of the world has faced attack
and atrocities that have cut to the core of her being. Yet, she has survived. Like an adult with a history of trauma and
abuse, she has been scarred and sometimes the distortion of those wounds has
resulted in further self-inflicted damage.
At present in some parts of Africa those suicidal tendencies continue,
but in other parts the healing has taken root.
World economic events of the past four or five years have created the
opportunity for Africa to be highlighted as a good place for future
investment. While most of the world was
falling into recession, Most African nations were exhibiting healthy growth. As a result, the world is now taking a new
look at Africa and the possibilities for economic development. A growing Africa could mean huge profits for
many global companies as well as many Africans coming out of poverty.
When evaluating where to go from here, a
couple of new realities must be recognized.
First, nearly all Sub-Saharan African countries have substantially
decrease its proportion of debt compared to Gross National Income. That means that Africa is finding its way out
of dependency and rapidly moving toward true financial independence. Second, the investment in to Africa will also
be from within. Countries like South
Africa and Nigeria, while focused on their own development, are also looking
for good investments in their own neighborhood.
The size of the middle class in many African countries is increasing,
that means an expanded consumer base for many consumer products.
As the world increases the attention it
is paying towards Africa in a very favorable way, so too must Africans look at
themselves with more favor and confidence.
Over a century of foreign domination, decades of poor governance,
economic exploitation, war and instability have traumatized many Africans to
the point of perpetual pessimism. A new
reality is dawning that will require the citizens of the countries of Africa to
respond with hope and optimism. One of
Africa’s strengths as it goes through this economic transformation is that it
has a very young population. Half of the
population of Sub-Saharan Africa is under the age of 18. That means the potential for an energetic,
enthusiastic, and optimistic workforce that spans all professions is a
reality. However, the challenges of all
this potential must be met by current political and business leaders in
Africa. Ideally, they will have the
honest and sincere support of governments and business leaders from around the
world that recognize the current potentials and seek to nurture their
development and not simply exploit for their own gain. The cooperation among European nations and
the expansion of the EU has benefited the populations of many countries. If that same atmosphere of cooperation is
established in Africa it too will thrive.
Finally, the leaders of Africa must
become skilled at speaking the language of the global marketplace, while also
connecting to their people from the perspective of an African worldview;
sharing and living traditional cultural values that support coming together to
make all of Africa and the world a more livable place for everyone.
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