Donors Attribute Africa's Economic Growth to Aid, But Numbers Tell Different Story
Leonce Ndikumana: While increased aid to Africa is only a small fraction of
resources, donors attempt to take credit for Africa's economic euphoria - August 26, 13
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Leonce Ndikumana is the Andrew Glyn Professor of Economics at the University of Massachusetts, Amherst. He served as Director of Operational Policies and Director of Research at the African Development Bank, Chief of Macroeconomic Analysis at the United Nations Economic Commission for Africa (UNECA), and visiting Professor at the University of Cape Town. He is an Honorary Professor of economics at the University of Stellenbosch. He has contributed to various areas of research and policy analysis on African countries, including the issues of external debt and capital flight, financial markets and growth, macroeconomic policies for growth and employment, and the economics of conflict and civil wars in Africa. He is co-author of Africa's Odious Debt: How Foreign Loans and Capital Flight Bled a Continent, in addition to dozens of academic articles and book chapters on African development and Macroeconomics. He is a graduate of the University of Burundi and received his doctorate from Washington University in St. Louis, Missouri.
JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore. And welcome to this latest edition of The PERI Report.We are now joined by Léonce Ndikumana. He's a professor of economics at the University of Massachusetts Amherst and the director of the African Policy Program at PERI, which is where he joins us from.Thank you so much for joining us.LÉONCE NDIKUMANA, DIRECTOR, AFRICAN POLICY PROGRAM, POLITICAL ECONOMY RESEARCH INSTITUTE: Thank you very much for inviting me.NOOR: So, Léonce, can you tell us about Africa euphoria? What is it?NDIKUMANA: Thank you very much. Yes. Africa euphoria. I think in the media we have for decades been used to negative news about Africa, Africa the lost, the dark continent, Africa the growth tragedies, and all that. But I think now, since the past few years, we have heard about Africa growing fast, even faster than the rest of the world, to the point now that people are even talking about Africa's growth euphoria, in the sense that growth--Africa is growing really fast, and some even claim that poverty is declining fast. They're talking about Africa's middle class emerging. And so that's where the concept of euphoria comes from.But what is clear with it is that the euphoria is more outside of Africa than in Africa. So if you went to any village in the continent, I'm not sure whether you'll find many people talking about growth euphoria. If you went to capital cities in African countries, where you find so many young people who are with degrees who are now struggling to find jobs, I don't think they would agree that there is growth euphoria.So my concern is that this kind of presentation of Africa as the fastest-growing continent, where poverty is declining fast, even though some of it is statistically correct that growth rates are higher than in other regions, my concern is that it may obscure and overshadow the basic development concerns that African countries [incompr.] facing, which is high growth rates, high poverty rate, stubbornly high inequality in most of the countries, and youth unemployment which is growing really fast, poor and ineffective, inefficient infrastructure in many of the parts of the continent, especially the rural area.So, fundamentally Africa needs a lot of progress in so many dimensions that it will be really counterproductive to sit down and start celebrating success, because we still have lots of work to do.NOOR: And can you talk about some of the organizations that are behind this, that are pushing this idea of Africa euphoria? And what do they attribute to this recent success?NDIKUMANA: Yes. This is actually interesting, to think and to sit and reflect about who is claiming credit for this euphoria. I'm drawing from a very interesting presentation done by my friend Thandika Mkandawire at the London School of Economics in a conference in Cape Town, where he was basically going through the history about growth in Africa, and now interrogating this Africa euphoria, who is now coming to claim the credit.Amazingly, you'll find that donors, many donors are willing to--are trying to convince the public that the growth resurgence in Africa, whatever what they call it, is actually due to increased aid to Africa--the volumes of aid have increased in Africa; therefore this is one of the reasons why Africa is growing fast.Now, the reality is that aid is a small, small fraction of the resources that Africa would need. If you have to give credit to where it is, yes, it has helped Africa. But Africa will need much, much more aid for it to sustain the growth rates. And then some people are even trying to say that what we see as high growth rates in African countries, improvement in macroeconomic fundamentals, is actually the result of the painful policies that we implemented in the '80s, which are referred to as represented as structural adjustment programs, which produce basically no positive results. Everybody would agree, including the Bretton Woods institutions from their own evaluation that these policies were poorly designed, poorly implemented, and did not produce any result. But still some people would want to believe that the current results, positive results in Africa are the effects of policies implemented 20 years.Now, if you are going to sell a policy to anybody, telling them that the results would come 20 years, 25 years down the road, you will have a hard time convincing them to adopt the policy.Then there is the view that these growth measures [incompr.] is to some extent a South-South issue, that Africa is trading more and more with its southern partners--China, India--which is fueling the growth in the continent, especially with building infrastructure. Again, this is partly true. We have seen a rise in investment from China, now even more from India and Brazil, Korea, and this has helped to bridge the financing gap, the infrastructure gap. But still, again, it's still not sufficient to meet the development needs of the continent. We need more of that, more expansion of African markets, to really reach higher and sustained growth rates. But one thing that is not stated enough is the credit to African governments themselves, because if you look around, visibly capacity in African governments has increased, capacity to design and implement policies. In fact, during the economic crisis, we saw that African countries were very good at intervening on time with the right policies to support domestic demand and so on. So if the analysis is well done, you must give credit also to African governments for having learned to design better policies and intervene better during crisis.Should we sit down and celebrate success? No. There are still a lot of things to be done in terms of tailoring policies to alleviating poverty, increasing employment.And one of the things that African countries need to do more is adopt and endorse a more flexible approach to economic policies and really move away from the policies of the '80s, which were straitjacketed, one-size-fits-all, which produced bad results. So every country needs to adopt its own strategy that meets its own needs, that's built on its own capacity and endowment, so that you can build more competitive economies, more diversified economies, where the goals of policy are macroeconomic policies, sectoral policies are actually real development goals, not just nominal goals.NOOR: And, of course, Africa's a continent with massive natural resources. So, as you were saying, if just economic policies were put into place, there's no reason why this entire continent should not be prosperous.NDIKUMANA: Exactly. I think you're right in saying that looking at the vast resources that African countries possess, there is no reason why they should not reach higher and sustained growth.But one of the reasons is that they have not utilized these resources effectively. They have in many times signed bad deals in terms of exploitation and commercialization of these resources, where the profits go to the multinational corporations that are exploiting those resources and much less stays in the continent.So one of the focuses of the policy going forward in African countries is to build more capacity to design natural resource exploitation and development programs so that the benefits accrue mostly to African countries.NOOR: Léonce Ndikumana, thank you so much for joining us.NDIKUMANA: Thank you very much for inviting me.NOOR: Thank you for joining us on The Real News Network.
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