Is there free lunch in this world? Are our development partners “real partners”? Is Africa benefiting from globalization? With Europe, United States of America and China’s dominance on this continent, what are their intentions? These questions come to mind when thinking about Africa’s inter-relation with the rest of the world.
Africa is now seen as the rising continent in the world. Decades ago, this continent was classified as the 'dark continent' because of abject poverty due to poor leadership. A continent of fifty-four (54) countries has witnessed severe wars caused by political rivalry, religious conflicts, Coup D'etats among others especially in Sub-Saharan Africa.
These wars have cost us millions of lives and rendered millions of people homeless (internally displaced persons and refugees). But the tables have turned; the world's satellite is now on Africa because the story economically and politically has changed. Most African countries are accepting democracy as the ideal way of governance and elections are conducted periodically in almost every country.
STATISTICS
According to the World Bank's report on global economies, seven (7) out of ten (10) fastest economies are found in Africa. Global foreign direct investment (FDI) inflows rose by 11% in 2013, to an estimated US$1.46 trillion - a level comparable to the pre-crisis average - reaching the upper range of UNCTAD's forecast. FDI flows to developing economies reached a new high of US$759 billion, accounting for 52% of global FDI inflows in 2013. At the regional level, flows to Latin America and the Caribbean, and Africa were up.
But let us not be over-excited about these capital inflows. I pose these questions; are these investors here to just make profit on their investments and leave or are they here to join to development agenda of this great continent?
A report jointly produced by Global Financial Integrity and the African Development Bank finds that developing countries lost $1.4 trillion in net resource transfers, which are comprised of both licit and illicit flows, including investment, remittances, debt relief, and illicit financial flows, from 1980-2009.The implications of this report are broad. Despite foreign aid, natural resource exports, and other transfers, developed countries still take away more resources than they give to Africa.
Again, according to a group of UK and East Africa NGO’s led by Health Poverty Action; Africa loses US$ 58 billion every year to the rest of the world. Whiles US$134 billion flows into the continent each year, predominantly in loans, foreign investment and aid, US$ 192 billion is taken out mainly in profits made by foreign companies, tax evasion and the costs of adapting to climate change.
The continent has an annual infrastructure deficit of about $93 million according to the Africa Infrastructure Country Diagnostic study. Even though, the individual countries and regional blocs are making massive investments in infrastructure but more needs to be done. Africa and its leaders must look out for the following in order to benefit from the investments coming home.
SOLUTIONS
Africa needs to ensure that that, there is political stability in every corner of this great continent. No investor wants to invest in a country or regional bloc where the environment is unsafe. Democracy, thus government of the people, for the people and by the people must be practiced in all countries to ensure rule of law and good governance and get rid of autocratic rule. There are thousands and millions of people on the continent who are poor as a result of political rivalry and conflicts. Twenty-first (21st) century African leaders must renew their way of thinking with respect to governance and leadership. The recent unrest in Mali, Central Africa Republic, Nigeria, Southern Sudan and Egypt among others cost the continent millions of investment capital and opportunities.
Again, for Africa to benefit fully from the 'boom at home', we need strong institutions. When President Barrack Obama visited Ghana in 2009, he made an assertion on the floor of parliament that is 'what Ghana needs is strong institutions'. This can be said of other African countries in their development agenda. Africa has the natural and human resources but the strong institutions to compliment development do not exist. I can't understand why Africans perform well when they are working in the diaspora but can't do same at home. This means that, we need to embark on robust institutional reforms starting from individual countries through regional blocs and the continent at large.
Africa and its leaders must take a second look at contracts awarded and tax incentives to foreign investors placing their country's interest first. Africa over the years has suffered from unfair terms of trade accounting for budget deficits and insurmountable debts. Issues of taxation, trade regulations, terms of trade, laws on repatriation of profits etc must be revisited to make Africa benefit from our interaction with the rest of the world.
Consequently, the quest for development in Africa will not be complete if we don't wage a fierce war against corruption. Corruption in Africa is an institution that emerged in direct response to colonial systems of rule which super-imposed an imported institutional system, different norms and values on an institutional landscape, despite the fact both conflicted and contracted each other.
Indeed it's about time Africa takes its destiny into its own hands. Foreign direct investments and trade relations with the rest of the world are good but it must benefit the continent fully. This is the time to gain our independence economically. The loopholes must be blocked to foster development on this great continent.
AMOAH-DARKWAH EMMANUEL
ASSOCIATE CHARTERED ECONOMIST
0245-683297
[email protected]