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Dark continent can light up of its own accord

John Kane-Berman reports on a recent conference in Berlin where it was argued that Africa could do much more to help itself instead of being dependent on yet another ‘Marshall Plan’. This column appeared in Business Day on 6th December 2007.

Two months ago ‘The Star’ carried a satellite photograph of the globe lit up at night. The accompanying story was about World Bank plans to light up what the paper described as the ‘dark continent’, which most of Africa, apart from South Africa and bits along the Mediterranean, literally still was.

It is now seven years since ‘The Economist’ angered many people by referring to Africa as ‘hopeless’. Since then the continent has achieved rising growth rates, along with the decline of dictatorship and the rise of democracy. Progress is also evident in combating corruption, improving governance, and liberalising the business environment. Though fearsome political, economic, and security challenges lie ahead, there is now at least as much good news about Africa as bad. So why then does the World Bank have to have a plan to light up the continent? Major parts of the globe were lit up long before the bank was founded.

A conference last month in Berlin organised by the liberal Friedrich Naumann Foundation and the German Institute for International and Security Affairs revealed the persistence of striking divisions between those who believe Africa stills needs help from Europe and elsewhere and those who think Africa can do a great deal more to help itself. Nor were these divisions between Africans on the one hand and Europeans on the other so much as within Africa and Europe.

Apart from South Africa, participants came from countries that included Ghana, Senegal, Nigeria, Tanzania, Zimbabwe, Britain, France, Germany, Portugal, the EU, and the US. China was not there, but was nevertheless spoken about. Some of the 60-odd participants repeated long-standing demands for a ‘Marshall Plan’ for Africa, but others, notably among the Africans, said that the billions in aid already poured into Africa had merely propped up oppressive regimes. The advancement of economic freedom, along with good governance, had already shown the way for Africa to push up growth rates.

These are familiar themes. Another familiar theme was the subsidies given to European cattle, one participant wryly observing that these cattle had a much higher standard of living than most people in Africa. But the point was also made that African countries could do very much more to lift trade barriers between one another. One participant cited the example of Ghana, which sent far more of its exports to Europe than to its neighbours.

Indeed, an Australian study of south-south trade launched in Johannesburg in 2005 revealed that developing country tariffs were well above those of developed countries. Developing countries had reduced average applied tariffs to about a third of the levels they were in 1983. But the lower average of 12.6% was still higher than that of 3.4% applied by developed countries. In Africa average applied tariffs ranged from just under 6% to almost 31%.

Current debates about north-south trade policies tend often to obscure the extent to which trade within Africa is inhibited by African states’ own policies. Citing a 2003 World Bank report, the study said that ‘countries in sub-Saharan Africa typically levy very high tariffs on imports from other countries in the region’. The Australian study stated that 70% of the tariffs faced by developing country exporters were applied by other developing countries. Again citing the World Bank, it said that developing countries could make $62 billion a year in welfare gains if they removed their own manufacturing tariffs and agricultural trade barriers.

Though poverty in Africa is often blamed on globalisation, this was rejected by conference participants who argued that South Korea, Vietnam, and other East Asian countries had massively reduced poverty levels while being subject to the same globalising forces as everyone else.

Contrary to the view sometimes expressed that China’s increasing economic activity on the continent is a new form of imperialism, few of the African participants in the conference saw China as a threat. The Chinese were seen as having a more optimistic view of Africa than many Europeans have. China saw African countries as business partners. Several African participants also argued that China was more willing than Europe to invest in infrastructure and transfer technology.

But one European participant expressed the fear that China, since it invests irrespective of governance and human rights issues, might undermine the European drive to lay down ‘conditionalities’ for development assistance as a means of promoting good governance.