Africa Failing Again

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ENGAGEMENTS: With Chidi Amuta
ENGAGEMENTS with Chidi Amuta, e-mail: chidi.amuta@gmail.com

ENGAGEMENT With Chidi Amuta

In the decade leading up to 2010- 2015, global discourse on Africa’s development prospects adopted a new mantra: Africa Rising. Major influential media echoed it and the message went to major investors, increasing the interest and appetite of Africa’s traditional partners while luring new ones to discover what used to be the ‘dark continent’ in every sense. The dominant narrative in Western investment and economic development circles then was a positive prognosis to the effect that the ‘dark continent’ was at last on the march to rapid growth and development. The prospects looked unusually bright. Investors and bankers were ready to bet on new and bolder risks on Africa. In 2010, the Mckinsey Global Institute (MGI) described Africa’s economic outlook as “lions on the move”. Airline passenger traffic to African hubs increased as investors, businessmen and leisure seekers trooped to African destinations.

Commodity prices were on the rise as the new economies in China, Vietnam and India were aggressively demanding raw materials to feed industries that would later ship finished goods back to Africa. Oil and other mineral prices were on the increase. With oil topping the $100 mark, countries like Angola, Gabon, Sudan and Nigeria were on an earning and spending blitz.

Both statistics and major economic indices were all in favour of renascent Africa. The note of optimism defied the pessimism of centuries of muted racist undertones. By 2008, most African economies were projected to grow at an average of 7% in the subsequent decade. Some economies like Uganda, Ethiopia and Ghana achieved even above those projections. In some cases, economic growth defied political miscarriages especially the bad state of democracy in some countries. Average GDP was 5.4% from 2000-2010. This added $78bn annually to Africa’s GDP.

There was an argument then that one way to accelerate and maximize Africa’s rise and development was to help in the creation, empowerment and sustenance of an African middle class. Increasing urbanization, large scale infrastructure projects and the increasing digitization through widespread mobile telephony and internet access would increase the tempo of this process.

Part of the optimistic note was the result of diversification in Africa’s economic profile. Between 2010 and 2015, the service sector contributed an average of 49% of Africa’s GDP, up from 43% in the preceding decade. The manufacturing sector has however remained low at an average of 4.0% while utilities and construction generated 23% of Africa’s growth.

The emergence of infrastructure development as a major sector of economic development in Africa has contributed to the optimism about Africa’s economic prospects. Massive infrastructure projects have been embarked upon by many African countries. Growth in this sector bhas been fired mostly by the arrival of credits from China to finance major infrastructure projects such as railroads and rolling stock, roads, ridges, dams, power plants and housing projects. Countries like Angola, Ethiopia, Nigeria, Kenya, Sudan and Zambia have witnessed an upsurge of this China powered infrastructure blitz with the attendant controversies around the transparency of Chinese credit in relation to a new debt surge among African countries. But construction as a sector of the economies of these countries has witnessed an upsurge with the collateral benefit of youth employment and growth in wage based employment and living standards.

The prevalence of a young population helped to propel optimism about Africa’s future. A young population correlates with a growing active labour force in a world where most national populations are ageing. Africa has the world’s largest working age population of 1.1 billion. Getting this youth population to convert from demographic statistics to an economic force is of course a function of level of investment and the momentum of development initiatives that can translate into jobs for the youth. Despite some modest success in job creation initiatives in some countries, youth unemployment has recently emerged as a major challenge of most African countries.

The emergence of new technologies increased the optimism about Africa’s prospects. Cell phone use and internet penetration helped in the empowerment of hitherto powerless and excluded segments of most African populations. It has hastened the democratization pace and in some cases facilitated financial inclusion and empowerment of hitherto excluded urban poor and rural farming communities.

Most importantly, there was significant progress in the political sphere in the number of African countries that were holding relatively free and fair elections. Similarly, an increasing number of countries were witnessing smooth transitions from one elected government to another. Ghana, Nigeria, Ethiopia, Rwanda, Kenya and South Africa had fairly credible working democracies. The degree of accountability of these governments remained doubtful but by and large, Africa could hold up some of these democracies as its contributions to a world that had largely embraced elective democracy.

Suddenly, however, the last five years have witnessed a deceleration of Africa’s economic growth. Growth has generally slowed down to an average of 3.3% in the decade of 2010-2015. The deceleration is the result of some major recent factors in two sets of countries. First, there has been a slowdown in oil producing economies as a result of the downturn in the global fortunes of oil as new energy sources replace hydrocarbons as a source of energy. This has been aggravated by increased energy independence by the United States whose shale technology has propelled into a net producer, thereby reducing its dependence on imported oil.

Secondly, the difficulties in North African countries still struggling with the aftermath of the Arab Spring and its attendant dislocations. For instance, Egypt, Libya and Tunisia did not grow at all between 2010 and 2015, a drastic reversal and debilitating slump from the record of 4.8% growth in the preceding decade. The growth rate in the oil economies of Angola, Algeria, Nigeria and Sudan fell to 4% from 7.1%. Productivity in both sets of economies declined from 1.7% to 0.6% in the Arab Spring economies and from 2.6% to 0.4% in the oil economies. Apart from these two sets of economies, the rest of Africa maintained a modest rate of growth at 4.4% annually thereby generally dousing the wild optimism of the previous one and half decades.

In the very recent period, the Covid-19 pandemic has inflicted a new wave of economic difficulty in the path of major African economies. Earlier projections on the impact of the pandemic on Africa was more dire than the outcome we currently face. It was estimated that African countries would be decimated by the pandemic owing to their deplorable healthcare facilities, general poverty and the environmental challenges in the overcrowded urban slums of Lagos, Nairobi, Johannesburg and Cairo.

Although Covid-19 has not quite decimated African populations to the degree of the United States, Latin America and even Europe to the extent anticipated by the WHO and other models, the initial lockdown of African economies negatively impacted these economies on a massive scale. Small and medium businesses either ceased to exist or were so stressed that they literally have to restart with maximum difficulty. Family incomes disappeared in most places while job losses assumed an epidemic dimension. The resulting shrinkage in GDP growth has further reversed the slight optimism of the pre-pandemic period. The two leading economies of Nigeria and South Africa are projected to grow at no more than 2.5% apiece for the next two years. At best, South Africa could regain traction to a maximum of 4.0% by 2021-2022.

In a bid to bridge the revenue gaps created by the covid-19 crisis, the more vulnerable African economies have resorted to draconian taxes and increased borrowing, thereby plunging back into the era of the debt burden. Increased debt service as a percentage of most African budgets has once again reopened the debate on foreign loans and their negative impact on whatever positive growth prospects Africa held two decades ago.

Over and above the purely unavoidable economic emergencies of recent times, there is an increasing and frightening plunge back into the political uncertainty and mismanagement that once drowned Africa’s growth and development prospects in negative deluge. Political instability, resurgent military coups, avoidable civil wars, extreme internal insecurity, corruption, terrorism and the return of politics of bad manners have begun to threaten the economic potentials of Africa once again. We can showcase the emerging threats to Africa’s growth and development with the recent developments in Ethiopia, Zambia, Nigeria, Mali and Cote d’Ivoire.

Up to a few months back, Ethiopia was touted as one of the bright spots on the continent. From a famine ravaged country in the 1980s and an impoverished ill- fated socialist laboratory, Ethiopia emerged in the last two decades as an example of enlightened liberal democracy with sound economic policies. The country’s GDP grew at an average of 5.87% from 1981 to 2019. By 1986, it reached an all time high of 13.9% from a record low of -11.10% in 1984. Just prior to the covid-19 pandemic, Ethiopia had slowed down to a modest 6.1% in 2019/2020.

At the time of this writing, Ethiopia is embroiled in an avoidable insurrectional fight in its Tigray region. Allegations of ethnic cleansing in the region has pushed the country to the brinks of an avoidable civil war that is likely to wipe off the gains of the past decades. Suddenly, Prime Minister, Abiy Ahmed, who just earned a Nobel Prize for Peace is about to squander his reputation and drag his country into a bloody war that is likely to frighten away investors and the goodwill of the last few decades.

By 2008 when the developed world was reeling under the burden of the global economic meltdown, Zambia was in the forefront of African economies that fueled the optimism about the continent. Today, a combination of corruption, mismanagement and the specter of autocracy have joined forces to cast doubts on Zambia’s future. Zambia ditched one party rule and experimentation with African socialism in the 1990s. By 2012, it had witnessed a decade of spectacular economic growth which placed it in the front row of African countries on which the world predicated its optimism about Africa’s development and growth prospects. International lenders scrambled to buy Zambia’s debts or lend to the country, leading to a huge debt stack which could only be sustained on a continuation of responsible and accountable governance. Today, Zambia has hit the record of being one of the first African countries to default on its debts.

A good deal of Zambia’s problem is the result of the political rascality of its current president, Edgar Lungu. For this president, the enthronement of a virtual autocracy has taken precedence over matters of economic management and public accountability. He has casually clamped his opponents into jail after shabby trials. This rough politics has scared off prospective investors because Lungu has been known to take over mines belonging to foreign investors. Zambia’s debt has shot up to 120% while growth is a humble 1.4% in 2019. The president has fired a Central Bank governor who challenged his arbitrary decision to print more money to meet the needs of a tanking economy.

Nigeria which is Africa’s largest economy and easily one of its most resilient has in recent times come under intense economic pressure. Nigeria’s ailment is a concoction of crass incompetence, economic mismanagement, endemic corruption and a form of democracy that is too costly to run, leaving little resources for development. Worse still, the covid-19 pandemic and the accompanying slump in international oil prices has put immense pressure on an economy that many Nigerians fear is over burdened by external debts.

A recent youth spring of protests has stressed an already stretched system to the limit. Nigeria has also had the unenviable lot of hosting the Boko Haram insurgency, a vicious Islamist jihadist terrorist revolt that has levied war on the North Eastern region of the country for the better part of a decade. This virtual war situation has been worsened by a spate of internal security challenges that has adversely affected economic activities especially farming in the agriculture dependent Northern half of the country.

Anger against a rogue police outfit (SARS) recently sparked a spontaneous nationwide youth spring with unfamiliar unanimity and a clear message. Pent up anger and desperation has in turn overwhelmed the apparatus of law and order with waves of arson, looting and vandalism that swept through major urban centres. The wrong of police brutality felt by the youth has reignited a dying sense of community and common outrage across the nation.

On its part, President Buhari’s government has been caught somewhat shocked and nearly clueless. Saddled with low oil prices and an economy that is suffocating under massive corruption and miserable economic management, Mr. Buhari has resorted to a slew of taxes and tariff increases on petroleum, value added tax and power. Inflation has climbed to 14.2%. Latest figures indicate that the Nigerian economy shrank by -3.62% in the third quarter of 2020, thus entering recession territory for the second time in the last five years.

The unease that followed the recent youth protests remain as increased poverty and hardship has injected tension into the psychology of a population that now boasts an estimated 100 million plus abhectly poor people, easily the largest single national concentration of poor people in the world.

In the partial desert country of Mali, on the 18th of August, 2020. widespread protests and civil unrest over worsening economic conditions and bad governance produced widespread discontent. The spectre of growing insecurity from continuing threats from the Tuareg Islamists in the north in the country worsened a bad political situation.

Another set of mutineers from a wing of the Malian army from a base in the small town of Kati invaded the capital city of Bamako and stormed the presidential palace. They arrested and detained the President Ibrahim Boubacar Keita and the Prime Minister Boubou Cisse with key government officials. The government was forced to resign. The protesting mobs jubilated in the streets. A coup was completed with Col. Assimi Goita emerging as head of the new junta. Both the political opposition and the leaders of the civil unrest have welcomed the coup.

International condemnation and sanctions followed. Mali was suspended from the African Union while ECOWAS imposed a land and air blockade of the country. The United States suspended military training and assistance. ECOWAS sent in a negotiating team headed by former Nigerian President, Goodluck Jonathan.

The new coup in Mali is a replay of a familiar African script. Insecurity has bred bad politics. Political instability has in turn opened the door for ambitious soldiers to topple democracy at a bad time and in a dangerous place. The sad truth is that fragile democracies cannot in and of themselves protect themselves from the forces that bad politics and atrocious governance unleash.

Not far from Mali, recent contentious elections in Cote d’Ivoire have generated violence and unease in that hitherto stable country. In typical African political tradition, incumbent president Quatarra extended his tenure to an illegal third terms and pushed in an election that only he could win. Oppostion anger and mass unrest have followed.

Bad habits die hard. As economic distress increases in the world, the likelihood that Africa’s descent into age old dysfunctions will increase. It will be a tragedy if the upsurge in bad news around Africa spreads around the continent. That possibility can only turn the hope of economic growth and development into a nightmare for millions of Africans most of them young people.