Vol.2 No.17, 25 July 2002

NEPAD: How New is this Partnership?

In the most recent SANE Views (2#16) multiple perspectives on NEPAD were offered. One perspective, and a major one, that was not offered was that of Margaret Legum, our vitally active SANE board member. Amongst her many activities, she writes a regular column for the Mail & Guardian. One of these articles from a month or two back concerned NEPAD. It is presented here somewhat belatedly. The perspective it offers is that of how aid and loans from the World Bank and the IMF have been responsible for Africa's marginalisation and impoverishment

Aart Roukens de Lange
SANE Views Editor

By Margaret Legum

Preparations for the June G8 Summit this year include some high-level visits to South Africa, including Canada's PM Jean Chretien. This is because President Mbeki is seen as African author and holder of the vision of the New Economic Partnership for Africa (NEPAD), of which the G8 is the other partner.

Very, very cool heads, and a lot more consultation, will be needed if NEPAD is not to overwhelm Africa by making it more, and not less, dependent on world economic forces over which it has no control, and within which it is inevitably the weaker partner.

The current ideology is that Africa is poor because it is not integrated in the global economic system, and NEPAD will bring it in. The sub-text is that this marginalisation is due to 'poor governance' - authoritarian and corrupt leaders, tribal wars and inefficient centralised economies. All of these discourage foreign direct investment, assumed to be the engine of economic growth. How true is all this?

First, a quote from Tanzania's former President, Julius Nyerere in 1998. 'At the World Bank they asked me Why did you fail? I replied. The British Empire left us with 85% illiterates, 2 engineers and 12 doctors. I retired thirteen years ago. Then our per capita income was $280, twice what it is today. Now we have a third less children in our schools, and public health and social services are in ruins. During those years Tanzania has done everything the World Bank and the IMF have demanded. So I ask Why did they fail?'

It is generally forgotten that the decade or so that followed Africa's independence. saw steady economic, social and infrastructural growth in most countries. Then three things happened. Africa was given huge loans at low interest, partly as a solution to Europe's problems with bank liquidity, and these rates escalated over time. World prices for commodities, on which Africa's colonial economies were based, dropped like a stone. And the deregulation of world markets in capital and trade - globalisation - required Africa to compete on an equal footing with the developed world.

All of this resulted in foreign exchange crises. That brought in the IMF/World Bank with 'rescue' packages on the condition of 'structural adjustment'. It is those policies that impoverished Africa, whose share of world trade fell by over half to 0.3% in those twenty years. It is said that 'by their fruits shall ye know them' Nyerere was quite right.

Of course, good government did not spring immaculate from the colonial experience; and of course some African leaders became corrupt and authoritarian. But good or bad their economies all suffered the same fate when the IMF got hold of them.

There is also a deep connection between economic growth and political stability. When resources are shrinking - even in rich places - societies degenerate. The story of Eastern Europe since the fall of communism is one of barbarism, tragedy and horror - giving the lie to the idea that there is something about skin pigment that fails when it comes to governance, peace and stability.

Back to NEPAD. Here, it seems, is the deal. Africa will create 'good governance' via a 'peer review mechanism'. All African states will be induced to stop corruption, wars, inefficient economies etc by peer pressure from the others. In exchange the rich nations' private sectors will invest in Africa, and governments will begin to allow more African trade into their countries.

Note the wishful thinking in all this. First, how are African states to police each other? The current political joke is that 'Mbeki shot himself in the kneepad' (NEPAD. geddit?) over Zimbabwe. So goodbye NEPAD if South Africa can't even control its neighbour - let alone Rwanda or Somalia or Sierra Leone.

Second, governments cannot tell private investors where to put their money. Investors are interested in expanding markets - not in theoretical partnerships. South Africa's failure to attract investment is about its poor growth rate, not about what rich governments think of it.

As for trade, rich countries can open their markets to African trade regardless of NEPAD. But they do not, because they have their own fish to fry politically at home. Mike Moore, World Trade Organisation's DG, calls the present system 'an obscenity'. He said, before the Doha round of talks: 'There is no moral consistency to talk of free trade, and then to block trade in some areas - African exporters.'

Finally, what exactly is in it for the G8? Is it really about their consciences? Or is about seeing Africa as a wasted resource as far as investment and trade is concerned? If the latter, we need to be careful. Nobel Laureate, Joseph Stiglitz, warned us in Capetown last week that our own development needs are not best served by foreign investment or opening our trade, but by developing our own savings through local market activity.

In other words we need to become less dependent on outsiders. If NEPAD became GEAR writ large we would be ignoring the Stiglitz view, as well as Africa's history over the past twenty years.

If the G8 really wants to help, it will focus on massive Marshall Aid type programmes of grants (not loans) for public health, education and transport throughout the continent. They can do that by simply fulfilling their own previous commitments to aid levels. And no conditions please, except normal accounting. And then let us get on with developing our own local economies. Good governance should follow, and so also market opportunities for the G8 countries.

Back to previous

© South African New Economics Network 2006. Page generated at 17:10; 24 September 2006