The Chief Economist of the African Development Bank may need to unlearn some of the Economics that he has studied and practiced. He should do more thinking outside the box.
China's trade with Africa may be driving Africa's economic growth presently but is this the type of growth that Africa needs or deserves, in other words good for Africa? This is growth based on the reckless exploitation and sale to China of Africa's natural (raw) materials. Every truly knowledgeable Economist knows that value adding to raw materials is a more durable and a better driver of economic growth than natural resources' exploitation and sale. Has anyone noticed that China is bountifully endowed with natural (raw) materials but she always chose not to export them. China rightly and wisely adds value to natural resources before exporting them. China would rather export steel that iron ore. The Chinese learn economics different than many Africans do. The Indians learn banking different than many Africans do. Nigeria for example, grew a phony middle class (cash and carry contractors, and their enablers and agents in government and outside) by exporting natural resources (crude petroleum) and imported finished petroleum products like petrol, kerosene and others. Ditto with cocoa, groundnuts, and palm produce.
The story now is that Africa's middle class is growing again. Is this growth sustainable? More durable and desirable growth, is growth that pulls all economic classes up at the same time. Exporting raw materials has never done that well. Exploiting and exporting natural resources create larger and growing under class. Recall Colonial and Apartheid South Africa. This was the economics behind colonization of African countries by some Europeans countries. This was the economics of comparative advantage. Everyone knows now that the economic theory of comparative advantage has real limitations. Capacity and advantage are almost always more acquired than natural.
oa
________________________________________
From: usaafricadialogue@googlegroups.com [usaafricadialogue@googlegroups.com] On Behalf Of Hetty ter Haar [oldavenue@googlemail.com]
Sent: Sunday, July 11, 2010 10:40 AM
To: USA Africa Dialogue Series
Subject: USA Africa Dialogue Series - Africa's untold story is of a booming continent and a growing middle class
Africa's untold story is of a booming continent and a growing middle
class
Images of war, poverty and famine are being replaced by expanding
economies and a new global potential
David Smith in Johannesburg
Sunday July 11 2010
The Observer
http://www.guardian.co.uk/business/2010/jul/11/africa-recovery-global-recession
Ten years ago the Economist pulled no punches in a cover story about
Africa with its headline: "The hopeless continent." Now Africa is
leading the way with a "spectacular" recovery from the global
recession thanks to decades of market reform and strong trade ties
with China, the African Development Bank's (ADB) chief economist said
last week.
Mthuli Ncube, predicted a growth rate of 4.5% for the continent's
economies this year. The bank expects more than 5% growth next year,
then a return to the average of about 6% Africa enjoyed between 2003
and 2008 before the recession bit.
"Africa is leading, believe it or not, global economic recovery in the
sense of being such a strongly recovering zone compared, for instance,
to Europe or the US," Ncube told the Observer. "If you look at the
ranking, it's China, India, then Africa and then Brazil. That is the
untold story about Africa."
He predicted that China will double its investment in Africa in the
next few years, with the establishment of manufacturing parks likely
to be the next big development: "At the moment East Africa is the
shining zone: Ethiopia, Rwanda, Tanzania. These are countries that
basically rely on agriculture and services."
The Ethiopian famine that inspired Bob Geldof's Live Aid concert 25
years ago this week was the defining image of a war-torn continent,
eternally hungry, helpless and dependent on foreign aid. But the ADB
is the latest voice to argue that Africa is poised to become a serious
global player. Many argue that, after failed socialist experiments, it
is now embracing capitalism and reaping the rewards.
A report last month from consulting firm McKinsey & Company concluded
that "global business cannot afford to ignore the potential" of Africa
and lauded its governments for acting in recent years "to end
political conflicts, improve macroeconomic conditions and create
better business climates".
Africa has huge mineral reserves, underexploited farmland and a
booming young population. Trade and foreign investment have increased
fourfold in a decade. Numerous problems, including entrenched poverty,
political instability and an Aids epidemic, still cast a shadow, but
Ncube estimates that one in three Africans is now part of a burgeoning
middle class: "We do worry about the bottom of the pyramid in Africa,
but there's something to be said about the middle of the pyramid. We
say very little about the African middle class.
"These are your consumers and they want the same things. They want
mobile phones, they want to travel, they want to send their children
to the best schools. The issue now is capacity to live out and achieve
those aspirations."
From hopeless to hopeful continent, symbolised perhaps by the first
African World Cup that ends today. But there is still a very long way
to go.
Iguardian.co.uk Copyright (c) Guardian News and Media Limited. 2010
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