Following the rise of political populism characterised by the desire to assert domestic democratic sovereignty and rejection of the “cult of the expert,” policy makers in Nigeria and other developing nations, especially Africa, have been advised to pursue “smart protectionism”
A former Deputy Governor of the Central Bank of Nigeria (CBN), Prof, Kingsley Moghalu stated this in an article titled: “Populism’s Rise Reshapes Global Political Risk,” published inYale Global Online.
Moghalu, who is a professor of international business and public policy at The Fletcher School at Tufts University, noted that for developing nations, especially those in Africa, populism’s rise in the Western world may ultimately be beneficial, despite negative short-term impacts. These countries, according to him, would be forced to confront mistaken assumptions about development that relies on the “benevolence” of foreign aid.
“They must reconsider unquestioning acceptance of the inevitability of globalisation and their status as markets, not factory. And they have already seen that efforts to model the African Union on the basis of the European Union, complete with common currency, may not be wise in light of challenges facing the EU over the past decade. African nations must embrace an inside-out perspective on economic transformation rather than the exclusively outside-in model that, in reality, robbed them of opportunity to control their destiny.
“Industrialised countries, aided by technological superiority which produced value-added goods at competitive prices and the WTO treaty regime, flooded the markets of developing countries, leaving them import-dependent. Considering that more than 50 percent of world trade is based on manufactured goods and the rude awakening offered by populism’s rise in the West, these nations should pursue the idea of “smart protectionism” – by deploying the “special and differentiated” provisions of the WTO treaty that can apply to less developed nations to prevent the dumping of Chinese goods in their markets and create enabling environments for modest industrial growth and intra-African trade,” he opined.
According to Moghalu, at 13 per cent of its total global trade, Africa’s intra-regional trade remains the lowest in the world compared to North America, Europe and other regions.
While noting that for decades, political risk had been synonymous with developing countries and emerging markets in Africa, Asia and Latin America, he pointed out that the rise of populism in the Western world has redefined the notion of political risk and teaches that risk has no permanent address.
He further stated that mitigating such risk requires avoiding arrogance toward those embracing populism.
“Those who oppose populism must engage with it rationally in the political space with the force of their own ideas. Political populism, characterised by a desire to assert domestic democratic sovereignty and rejection of the “cult of the expert,” owes its rise to increasing rejection of the conventional wisdom by citizens who feel left behind by globalisation trends favoring the elite that gained ascendance over the past 30 years.
“Populism seeks to reverse the power of the international community by utilising the democratic legitimacy of the majority to re-assert primacy of the national interest – seen by liberals as isolationism or “nativism” – in public policy. Home-country multinationals that ship production – and jobs – abroad can anticipate a backlash. Multinationals will no longer receive benign preferences and protections in populist countries if they cannot prove their value to local economies, especially by creating jobs,” the founder of Sogato Strategies, a global risk and strategy advisory firm stated.