Building Momemtum in a Multi-Speed World: African Economic Transformation beyond Aid

by Stephen Bodybobton Antwi (Author) Ehizuelen Michael Mitchell Omoruyi (Author)

Scientific Essay 2013 16 Pages

Politics - International Politics - Topic: Development Politics




1. Introduction

2. The Realization of the New African Image: Building Suitable Entrepreneurship

3. Building Africa’s Knowledge Base

4. Principles of Good Governance in Africa

5. Technology Import Vision

6. Social Transformation: The Road Choice of the Future

7. Conclusion



This article examines the multiple economic and social problems Africa is facing, and concludes that the continent transformation rests not on ‘aid’ but momentum for ‘wealth creation’ which can be look at from these key pillars: entrepreneurship, knowledge, governance and technology. Africa needs to think outside the box when establishing and utilizing these pillars. However, to make these pillars work, mindset transformation is a precondition. Africa has to start having bigger ‘mental picture’, reflecting long-termist, rather than short-termist attitudes. The continent has to move from begging to borrowing and restructure its communities to push the perception of networks beyond closed ethnic networks. The continent also needs to include fresh actors in its development plans; for example, Africans in the Diaspora and the new-breed business class. Immigrant entrepreneurs in Africa, especially Asians, must be encouraged and supported to channel their investments towards the vital sectors. Better leadership and governance system would be established if the people are viewed as citizens and not subjects. In the same way, leaders in Africa should perceive infrastructure as the foundation of a successful economy. The success of Africa’s active involvement in global trade can only be actualized when Africans decide to learn lessons from the jungle, where the active pack is the king.

Keywords: Aid, Africa, China, Entrepreneurship, Governance, Wealth creation

1. Introduction

‘There's no such thing as a free lunch.’ – Milton Friedman (1912 - 2006). For the past fifty years underdevelopment has been the true picture for Africa. Most of the development projects embarked on after the independence of most African countries and prop up by Western aid have failed to accomplish its purpose. It was initially known as foreign aid, but now it goes by a more pleasing to the eyes names such as official development assistance and concessional resource transfers. According to Lancaster (2000), the word ‘concessional’ put forward the fact that foreign aid normally consist of at least 25 percent of the money given away freely as a grant element (the usual sum being over 60 percent) with the remainder being a loan carrying steeply discounted interest rates and lengthy reimbursement periods up to forty years or more. Aid has been given out in the trillions; Richard Dowden of the Royal African Society puts the figure at around $1 trillion in aid over the past 50 years, roughly $5,000 for every African living today, if distributed evenly at 2005 prices (I. Taylor, 2005). But it has been put forward by others at around $500 billion (Easterly 2005) still there is no improvement in the economic conditions in the continent. For instance in 1960s there was an upsurge in the per capita growth of 2.2 percent and it later reduced to 0 percent by the end of 1970s, with an average of 1.76 percent between 1981 and 1985, and remained in a negative position until 1995 (Fosu, 2009). On the account of aid received, Zambia‘s per capita income should have been $20,000 rather than $500. Aid is now seen as the cause for Africa‘s underdevelopment (Easterly, 2005; Moyo, 2009). Aid reduces incentive of governments to tax. The present fast growing emerging economies – like China, India, Brazil and Vietnam – are growing with little aid. Nevertheless, experts of aid debated that Africa would have been worse off without it because of the inherited circumstances surrounding the continent upon independence. Such circumstances have positioned the continent in an underdevelopment trap (Sachs et al, 2004; Collier, 2006).

Analysts have pushed aid as the focal point of debate about Africa development, placing it in a great position for and against. This is pathetic, as development is not connected with the problem of getting assistance to get out of the trap (Sachs et al., 2004) or being deprived of largesse and therefore force to act responsibly (Moyo, 2009). As proposed by the two-gap theory, aid is supposed to make up the two gaps and develop the recipient nation‘s economy. But the reality is that these receiving nations have done poorly despite the huge amount that is been pumped into their countries, (e.g. Afghanistan). On the contrary, nations have also received little or no aid and have done badly (e.g. Somalia). Some other recipient have done spectacularly well with the little aid they have received for example South Korea and Germany. Aid should not be seen as the basis for defining the development path a nation should follow. Additionally, recent research studies in the context of the Highly Indebted Poor Countries (HIPC) initiative propose that at present numerous African nations require more financial assistance, both to pay off their debt and to promote development.

There is a problem with the logic. The development of the continent can only occur when Africans think in ways that challenges conventions. This implies that the continent thought should go beyond aid as the main plank for its development strategies. As Lord Peter Bauer aptly points out, money is the outcome of economic success and not a prerequisite. Realizing development in Africa is about organizing available resources, obtaining the necessary capacity for the utilization of the resources, and assigning these resources properly. In what ways can Africans be involved in the activities that will lead to economic achievement? The key is to transform the mindset of fifty percent of the African population below age twenty to center on transforming Africa’s problems into opportunities (Shikwati, 2011). Changing mindset is much preferred to encourage wealth creation rather than implementing laws that will put people in fear. This paper will try to expound on the subject of transformation, drawing from Africa past—present and up-coming successes with out-of-the-box ideas for how the continent can move forward.

2. The Realization of the New African Image: Building Suitable Entrepreneurship

Dependency has always been Africa’s main economic problem. Several studies have been done on the continent and the general consensus is that until this key structural feature of the continent is transformed, Africa’s active involvement in the global economy will continue to diminish. The continent still relies deeply on the advanced nations for technology, investment resources, human and physical capital and it is on this ground that the then Organization of Africa Unity (OAU) once called the continent ‘the sick child of the world’ (Ikiara, 1994: Page 118). The continent is more characterized as an undiversified economy depending deeply on the production of trade in primary commodities coupled with poor socio-political and economic institutions (Mayer and Thomas, 1997: Page 327).

Entrepreneurship is the main engine of development in an economy. The initiative of Africans should be designed to move away from a charitable aid model for fighting poverty by building economic enterprises that create self-reliance rather than dependency. The continent has applied other techniques in combating unemployment problem with little success. Firstly, Africans have to accept entrepreneurship as one assured method of dealing with unemployment problem. This reconsideration need to justify entrepreneurship investment by African governments through the creation of a favorable business environment that can assist the development of entrepreneurship (The Entrepreneurship Africa, 2011). The strong spirit of entrepreneurship should not be underestimated, because a strong entrepreneurial spirit is very vital to the world and particularly to Africa. This is why the importance of immigrant entrepreneurs to the countries they immigrate to should not be undervalued for the reason that they bring an entrepreneurial spirit, technical and managerial skills and fresh networks. The immigrating of the Indians, Chinese and other Asian countries to the continent should be welcomed. Sometimes this immigrates may create competition with the locals for business and raise tension, but with time it is this tension that can forced the indigenous individuals to learn, imitate and compete.



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Aid Africa China Entrepreneurship Governance Wealth creation



Title: Building Momemtum in a Multi-Speed World: African Economic Transformation beyond Aid