Understanding Africa’s upliftment challenges should guide South Africa’s growth policies.
This continent’s underperformance traces to geographic isolation, geological endowments, and political dynamics that support cronyism at the expense of broad prosperity. We must accept that such circumstances preclude meaningful payoffs from regional integration.
Nations shaped by colonial ambitions amid tribal rivalries, geological riches, and a high prevalence of subsistence farming can be less averse to patronage-styled governments. This fuels resistance to the feudal-to-industrialisation transitions that reshaped other regions.
A half-millennium ago the variations in economic development among continents were modest. The dominant forms of organisation across regions were variations of feudalism. The most obvious variations were between major cities and isolated rural communities. This is still the case.
What has changed is that most people now live in cities. Africa is very much an outlier in this regard.
Whereas two centuries ago, nearly 90% of the world’s population was extremely poor, that key metric has flipped; more than 90% of people alive today are not extremely poor. As recently as 1980, such poverty prevalence had only declined to about 40%. Then, nearly two-thirds of Asians were extremely poor compared with less than 10% today.
Africa now accounts for two-thirds of the world’s extreme poverty despite a population less than a third of Asia’s. This reflects Africa’s modest industrialisation, which led to its participation in globalisation being concentrated around resource extraction. While it’s not impossible economically to leverage resource wealth to spur broad prosperity, it is difficult to create a political environment conducive to such an outcome. Rather, most commodity-exporting nations are poor; and most poor countries are commodity exporters.
Patronage politics
Resource abundance encourages patronage politics which discourages the creation of a large, prospering middle class.
Greedy ruling elites of resource-endowed nations seek to stay in power by having their crony networks control key economic avenues. They simultaneously gain political leverage through creating dependencies. The political support of poor people can often be bought with modest giveaways, such as meagre grant programmes.
It is reasonable to see the rise of Asia in terms of industrial proliferation or globalisation; however, at a more basic level, what happened was tremendous urbanisation. High volume migration from rural areas to cities happens in Africa but this continent’s geography and geology are not helpful.
Most of the world’s major cities are located along navigable rivers that provide low-cost access to food from the countryside while supporting regional and global trading through open-ocean access. Cairo, the centre of one of humanity’s earliest major civilisations, illustrates this well.
Leaders of resource-rich nations are not motivated to encourage urbanisation and industrialisation as they can live lavishly by skimming from commodity exports. It suits them to have a majority of their population rely on subsistence farming. This is the primary form of employment in Africa.
At first glance, South America somewhat resembles Africa. Topographical maps, however, highlight the massive mountain range which stretches from the north to the south of that continent and the valuable navigable rivers it feeds. East Asia benefits from the world’s tallest mountain range and the array of commercial waterways it spawns.
Africa’s river networks are vastly less supportive of commerce than those in Asia, Europe, or the Americas.
Digitalisation is different
Africa largely missed out on industrialisation and globalisation, but digitalisation is different. Distance doesn’t matter.
That is easy to appreciate. What is less obvious is how dreadful education outcomes are less of an impediment than is frequently presumed.
It can seem that city folk are quicker and sharper than their rural brethren. The real difference is that cities house a much broader range of skills and specialised knowledge. In this important sense, cities are smarter than rural communities.
The key factor is the range of specialised skills. When rural people have migrated to cities in search of work they have typically started as a specialist at some low-skilled job. That is what life in the big city is about: specialisation.
Very often such migrants would not even speak the prevailing language, yet they could be employed to perform a routine on a factory floor or in a kitchen. Many digital jobs will require reasonably high language proficiency. Others will demand various forms of creativity, and the lack of a common language will be a minor consideration.
What will determine the viability of the coming era’s new digital jobs? As with the industrial era, the primary determinant will be what affluent consumers will pay for.
Currently, big spending consumers have access to high-end concierge-styled customer support. As the world’s population of affluent senior citizens surges, various personalised services will be designed and delivered.
National interests
Africa’s greatest development impediments have long been its isolation-inducing geography and its politically divisive geology. These challenges are compounding as the global order is being reshaped in ways that require national leaders to reassess how their international relations policies advance their national interests.
China remains the world’s largest importer of most commodities and it has become the largest funder of major projects on this continent. Patronage-focused leaders of commodity-exporting nations are consequently inclined to prioritise China in their foreign policy strategies.
The problem with African countries kowtowing to China is the same as it is for countries in other regions. China’s overproduction of strategic goods greatly undermines job-creating prospects in countries that don’t place adequate tariffs on China’s subsidised production.
China’s growing trade surplus already exceeds a trillion dollars per year. According to the OECD, “[f]or Chinese firms, almost 60% of their global market share gains can be explained by the subsidies they received”.
A new era
Africa still lacks a path to reverse its long-term underperformance; nevertheless, the world is shifting into a new era, economically and geopolitically.
The US is actively resisting various challenges from Iran, China and Russia. European, Middle Eastern, and various Asian countries are learning that they can’t rely on the US – if the US feels it can’t rely on them. The Middle East’s star economic performer, the UAE’s, closing off trade with Iran evidences a new hard-edged realism.
Of course, Africa is a foreign relations priority for SA; nonetheless, from a jobs-creation perspective the region has little to offer. Likewise, maintaining close ties with Iran, Russia and China while displaying strident anti-Western biases betrays our jobseekers’ already dim hopes.
High-volume job creation requires adding value to exports destined for high-income markets.
[Image: by wirestock]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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