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Africa’s slow recovery from the Washington Consensus

The Real African|| By Dumani Mandela

In the book, The Historical Roots of the ANC (Understanding the ANC Today) Adekeye Adebajo deals effectively with the effects of The Washington Consensus on developing states.

Although initially aimed at Latin America their application was wide ranging to developing nations on the African continent. The Washington Consensus is a set of 10 economic policy prescriptions considered to constitute the “standard” reform package promoted for crisis-wracked developing countries by Washington, D.C. based institutions such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department.

It was coined in 1989 by English economist John Williamson. The prescriptions encompassed policies in such areas as macroeconomic stabilization, economic opening with respect to both trade and investment, and the expansion of market forces within the domestic economy.

The ten points of the Washington Consensus were:

John Williamson himself goes on the discuss the disasters brought about in 2002 by the West’s neo liberal policies by saying the following:

“It is difficult even for the creator of the term to deny that the phrase “Washington Consensus” is a damaged brand name. Audiences the world over seem to believe that this signifies a set of neoliberal policies that have been imposed on helpless countries by the Washington-based international financial institutions and have led them to crisis and misery. There are people who cannot utter the term without foaming at the mouth”.

The neoliberal policies of the Washington Consensus brought about by the advent of globalization, culminated in debt strapped African nations whom focused mostly on export lead growth and import substitution as a result of these policies.

As we all know this export lead growth lead to African states not being able to design their own secondary and tertiary industries of local production and relied mostly on exporting raw materials where they would be turned into finished goods in the West and the sold back to African states at a premium.

Also a lot of these African states were not able to protect their own local industries in a post colonial era because of trade liberalization and import substitution which also resulted in the wide scale selling of national assets for very low costs in order to maintain the debt positions to the IMF and World Bank.

The former World Bank Chief Economist Joseph Stiglitz had the following to say about the impacts of globalization on developing nations like those in Africa;

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“The critics of globalization accuse Western countries of hypocrisy and the critics are right. The Western countries have pushed poor countries to eliminate trade barriers, preventing developing countries from exporting their agricultural products and depriving them desperately of export income. But even when not guilty of hypocrisy, the West has driven the globalization agenda ensuring that it garners a disapropriate share of the benefits, at the expense of the developing world”.

But however in the new millennium Africa is beginning to deal constructively with the effects of neo colonialism and globalization on its markets and beginning to develop indigenous growth structures, which are propelling African nation states in an upward trajectory towards global market normalization.

To a large degree the NEPAD document outlines Africa’s response to the globalization question of the Washington Consensus of how Africa should respond to the complexities of the effects of globalization on African states. NEPAD  -The New Partnership for Africa’s Development (NEPAD) is a VISION and STRATEGIC FRAMEWORK FOR AFRICA’s RENEWAL.

Its mandate is to develop an integrated socio-economic development framework for Africa. The International Relations and Corporation Department of South Africa describes NEPAD in the flowing manner:

“NEPAD is designed to address the current challenges facing the African continent. Issues such as the escalating poverty levels, underdevelopment and the continued marginalization of Africa needed a new radical intervention, spearheaded by African leaders, to develop a new Vision that would guarantee Africa’s Renewal”.

The primary Objectives of NEPAD are to: eradicate poverty, place African countries, both individually and collectively on a path of sustainable growth and development, halt the marginalization of Africa in the globalization process and enhance its full and beneficial integration into the global economy; and to accelerate the empowerment of women.

In due course NEPAD will slowly lift Africa from the continental effects of the Washington consensus. African nations are beginning to demand more preferable negotiation terms for global trade in order to foster a new continental self determination which is founded on Pan African ideals which is allowing the continent to be able to determine the grounds for its own manifest destiny.

FORMER Deputy Governor of Central Bank of Nigeria (CBN), Founder and Chief Executive Officer (CEO) of Sogato Strategies LLC, Dr Kingsley Chiedu Moghalu

In his book: Emerging Africa, Kingsley Chiedu Moghalu has the following to say about the potential of Africa in the new millennium:

“And yet to others, Africa is the new frontier – the last, really, since virtually all others have opened up – in the relentless march of globalization. It is, in this view, a frontier with limitless opportunities for wealth creation for the agents of global capital and a few Africans who can now count on the newly emerging continent of 900 million consumers – a profitable market. The market is all the more imperative because the Western World epicenters of the global economy have recently been battered by economic and financial crisis the magnitude of which just slightly fell short of the Great Depression”. 

Africa however still has a long way to go. Africa’s share of world trade is about 3% with less than 5% of global Foreign Direct Investment Flows (FDI). According to Kinglsley Chiedu Moghalu in Emerging Africa, the combined GDP that makes up the 54 countries that make up the continent was barely equal to that of India.

The GDP of the entire Sub Saharan Africa, including South Africa is less than that of Sweden and Norway combined. In 2010, 100 000 people in Africa accounted for 80% of Africa’s GDP. Clearly there is a need in Africa to spread the wealth it generates in order to meet the demands of change for its population of 900 million people.

There must be holistic development, which encompasses human development as a reflection of the real quality of life for Africans. Focusing on economic growth should translate into more jobs for its citizens and better education and healthcare. Africa needs indigenous growth model, which manufactures goods for its own markets and thereby create economic advantage.

The market in Africa should not simply become a playground for globalization, but growth in Africa should be transformative.

African economic growth cannot be derived purely from economic growth and statistics and dependence on primary products, but it should be a self-sufficient player based on indigenous growth. Deeper thinking about the continents place in the global market place is required, and what interventions can be made to fast track the African development paradigm. 

Africa needs to develop a new worldview in the market place that is uniquely African, and it is beginning to do that in the new Millennium. This worldview beyond Pan Africanism will constitute the thinking of all African nations about the development prerequisites for Africa as a whole and not just each nation for their own, in the development global debate.

Africa’s new worldview should determine who is responsible for Africa’s future and who is not. It should determine exactly what is globalization in the African context and how the increasing interconnectedness of economies affects nation states in Africa and their sovereignty, commercial and financial flows.

The NEPAD document sets out Africa’s worldview to a certain extent and addresses some of the concerns around capital formations flows but it is only a start. Africa needs to ensure it can protect its own gains with globalization.

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