Africa’s Shaky Resurgence

Via STRATFOR (subscription required), an interesting look at Africa, a region that many have been optimistically positioning as a strong market in the near term:

Emotion clouds analysis about Africa. Because so many in the West want to erase the stains of racism and slavery, there is a tendency to announce optimism about Africa even if the evidence does not fully support it. The latest bout of optimism centers on economic growth rates. Some estimates see growth approaching seven percent annually in countries south of the Sahara; other figures are as low as 4.5 percent. Six percent on average seems about right. Either way, because of the global financial downturn in the West and in Asia, Africa may be the fastest growing region in the world. Some analysts have labeled Africa the new Asia.

That is going too far. Fifteen of the top 20 failed states in the world are in Africa, according to Foreign Policy magazine’s July/August issue. Moreover, population growth in Africa hovers above two percent, which knocks down per capita economic growth by more than a third. Asian economic growth, which has occurred for decades under more stable demographic conditions, is now half that of Africa. Meanwhile, the number of youths in Africa will double by 2045. With much more than half of Africa’s unemployed between 15 and 24 years old, this raises the specter of more rebellions, given that political violence throughout history is almost always driven by young males.

Moreover, what is not always stated in the celebration of these high economic growth rates is the fact that to a significant extent they have been generated by the extraction of energy resources and strategic minerals and metals, the profits of which are rarely spread throughout the society. Offshore oil exploration in places like Angola, Nigeria and Equatorial Guinea; oil drilling and uranium mining in Niger; copper mining in Zambia; and diamond mining in Botswana have affected growth rates upward. Relatedly, another upward economic factor has been the general worldwide rise in prices of commodities such as gold, copper, coal and cocoa, which are abundant in Africa. Should commodity prices as well as demand for commodities from Africa drift downward, the days of calling Africa the new Asia may be short-lived. Oil-rich Angola is a signature example of an African dilemma: lots of new wealth concentrated in the hands of few in the capital of Luanda and little having made its way into the interior. On the plus side, sub-Saharan Africa contains vast tracts of rich agricultural land that has yet to realize its potential.

Economic growth that is sustainable over the long term is usually tied to the development of a manufacturing base, which itself is coupled with the formation of robust institutions and an attendant decline in corruption as well as of random crime. That is the Asian story. Bolstered by Confucian values, which emphasize the respect for family, order and authority, Asia, beginning in the latter-Cold War decades, built remarkably clean and efficient state bureaucracies under such enlightened autocrats as Park Chung Hee in South Korea, Lee Kuan Yew in Singapore and Mahathir bin Mohamad in Malaysia. Japan, the world’s second-largest economy from 1968 to 2011, achieved that status under a system that was formally democratic but was for decades a de facto one-party state. Meanwhile, communist regimes in China and Vietnam applied capitalistic features to ignite their economies in largely crime-free settings that, therefore, attracted significant foreign investment. Africa’s leaders, whether elected or not, with a few exceptions, have not achieved that level of institutional development. Nelson Mandela of South Africa may be a great moral figure of the 20th century, but he is far less important in terms of the history of development strategies than a Park Chung Hee or a Lee Kuan Yew.

In fact, one of the few places south of the Sahara with a manufacturing base is South Africa, and that is because the Apartheid regime built and required such a base as a response to economic sanctions. As for manufacturing today in South Africa, productivity is low and labor costs are high by Asian standards, even as significant subsidies are required to keep it going.

Without the building of efficient and responsive government bureaucracies, the mere holding of elections is often of limited significance. Good governance is more important for growth than whether a state is democratic or not. In fact, one might even argue that the fall of dictatorships in many places has led only to a more impartial form of corruption rather than its elimination. Chinese companies extracting African natural resources now have to line the pockets of a whole gamut of locals rather than just those of the strongman.

Another argument in favor of Africa turning a corner is that tribalism is being diminished by migration to cities where people interact across tribal lines. Some academics have posited that tribalism is being replaced by organized religion along vaguely Western models. That may be correct, but it avoids other problems that may be incubating. Namely, the growth of megacities in Africa often means the growth of sprawling shantytowns with poor or nonexistent municipal services that can breed a whole new layer of unrest. Urban societies are more challenging to govern because they require infrastructure, such as street lighting, garbage collection, electricity and police forces that are less necessary in rural environments. And such services, in turn, require efficient institutions. Urban populations are also more sensitive to the prices of basic commodities than rural ones who can live partially off the land. This adds another element of instability.

The end of tribalism should not be declared, however. Nigeria maintains a power-sharing arrangement among the nation’s regions, referred to as zoning, where ethnicity demands significant attention. Widespread interethnic violence engineered by aspiring political candidates brought Kenya to a halt in 2008 and may very well repeat itself when elections are next held in 2013. Zimbabwe’s ruling Zimbabwe African National Union – Patriotic Front (ZANU-PF) and its Shona elite resist apportioning power to their Ndebele colleagues. South Africa’s African National Congress (ANC) party struggles to balance tribalism within its leadership and ranks. Rising discontent and protests in South Africa over government service delivery reveals popular pressures that its institutions are strained to accommodate. Moreover, who says that religious divisions are less lethal than tribal ones? Just look at Nigeria with its Christian religiosity and Islamic terrorist outfits.

Meanwhile, South Sudan is in a state of low-level war with Sudan. Mali, once a democratic hope of regional analysts, is in a state of, well, anarchy, featuring a tottering military regime in the south and an ethnic-Tuareg insurrection in the north that is itself divided from within. (A mob actually physically assaulted the interim civilian president in the capital of Bamako.) Across the whole Tuareg belt of the Sahara, governments with few functioning institutions are on edge. Foreign armies still confront Islamic militants in Somalia. The eastern Congo is ungovernable. South Africa is stable under the dominant control of the ANC, and it is mineral resource-rich, but an otherworldly rate of crime has for two decades constrained its potential as an attractor of foreign capital. Then there are the coups that have occurred in recent years in Niger, Guinea, Guinea-Bissau, Ivory Coast and Madagascar.

And there is something more fundamental that is rarely acknowledged: Peace in former civil war-wracked societies like Liberia, Sierra Leone and Ivory Coast has not led to the building of strong state structures and the garnering of significant foreign investment that creates jobs for young males, allowing Africa to compete with Asia. What you have in such countries is a combination of battle fatigue and intense international oversight that prevents a return to mass violence. The hard question that analysts should be asking themselves is whether such places are actually going anywhere. (To wit, there were reports of a fresh coup attempt in Ivory Coast in early June.) In the early 1990s, analysts predicted democratic evolution for Sierra Leone and Ivory Coast, but those countries collapsed into anarchy in the late 1990s and 2000. So one should be careful about declaring success stories in West Africa, Ghana famously excepted.

Clearly, something vast and positive is going on overall in Africa, organized around the widespread growth of middle-classes, cell phone technology and its second-order social and business effects, agricultural innovations, and the like. And one of us, Robert D. Kaplan, wrote as much in the book Monsoon: The Indian Ocean and the Future of American Power (2010). But the road forward is crooked and will involve a number of detours. To simply call Africa the new Asia ignores the complexity of two different development patterns.

This entry was posted on Sunday, July 1st, 2012 at 9:36 am and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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