eBusiness Weekly
Chris Chenga
There have been many seasons in which Africa’s economic moment has been promised. Readings across economic publications show that Africa’s moment has been predicted to be, as far back as soon after the first independent states on the continent, in the 1960s. It was then hoped for in the era of liberalisation, going into the 1990s. Soon afterwards, there was the commodity boom of the last decade.
Well, today we still wait for Africa’s economic moment of ascent.
Granted, there are many metrics that point to the continent’s development — such as improved infant mortality rates, rising literacy and other general improvements in human welfare — there is relatively little development directly attributable to Africa’s own will and determination, with the aforementioned improvements being derived more as positive externalities of global occurrences.
It should be asked why after more than seven decades, Africa has failed to manifest its own moment? Maybe there is some validity in differentiating the returns of economic theory versus having actual power to yield the desired results.
Africa’s moment is illusive because while it may pursue theory, it often lacks actual power to yield desired results. This is best exemplified by the Trump administration; a good case study of how power can deride the offerings of theory.
What president Trump reveals is the disparity between practicing sound economic theorem and power.
On September 15 last year, in an article title “Trump’s Zero Sum Economics and Mercantilism” this column presented a fair prediction of Trump’s actions today.
The article stated that while Trump is merely just a less affable personality, he is materially similar to the recurring dominant Western power that overrides African theoretical conventions.
The article kept this power over theory proposition in a context of emerging economies; for instance, India having to be paranoid of American backlash for simply pursuing what is theoretically good for its own interests, which is to accumulate much needed foreign exchange reserves as it has today.
Trump’s recent power position on a trade war, however, has shaken up advanced economies. Perhaps his actions give advanced economies a moment to relate on how sound economic theory becomes diminished in value when it is deterred by actual power.
Today, it is Germany and automotive producers facing American zero-sum wrath. A few days after Trump announced that he intends to introduce a 25-percent import tariff on steel and 10 percent on aluminium, he further proposed quotas on automobile imports to a very demanding US market.
Now, the point of emphasis here is that while Germany and other automotive producers — typically advanced economies — have pursued sound theory to develop this sector for themselves, an overriding power risks completely diminishing these efforts.
Similarly, all theory indicates for current trade terms of steel and aluminium. Yet, Trump’s intervention creates a barrier to such theory’s benefits. Whether or not Trump’s zero-sum interventions will benefit the USA or not will be seen over time, but, what is clear is that the sound theories practiced by its counterparties have met a more effectual wall.
African countries have had the short end of zero sum conventions all this while. Just like the developed economies affected by the zero sum and mercantile power of the Trump administration this week, African countries trying to find independent footing, not through positive externalities, or aid and concessions, or mere dividends of political conformity, have often been deterred by more impactful power impediments.
It would be desirable, as it is often professionally and scholarly advised, for African countries to pursue development through their own intellect and discipline for customised governance, exploiting local comparative advantages in a modern global economy. That sounds good. But, what often drowns in the African developmental discourse is the continent’s lack of structural power as overtly exuded by the Trump administration. President Trump tweeted: “Trade wars are good, and they can be won easily”. Surely, the evidence to his convictions has to be historically there. The use of structural power, while less overt, is not a new contestant to economic theory, especially as advised for Africa.
The nuance when studying Africa is that the European Commission has enough consensus and weight to offer a response, and perhaps present a powerful case for the USA to reconsider its chosen stance on a trade war. More simply, Europe has the power to protect its theoretically conceived development.
European Commission president Jean-Claude Juncker has threatened to raise tariffs on US products into the Eurozone, and these measures should really be considered by the US. Can Africa act in the same manner?
Consider a few structural power impediments with developmental implications.
African countries lack real control over their currencies in global financial system of fiat currencies. This means that competitiveness is difficult to manage, and so are debt obligations.
In a context of fiscal budgetary discipline, African countries lack legislative power to secure the same net foreign assets than enable the level of governmental spending for developed nations.
There is a lot of structural lobbying and negotiation to be done to protect and improve how our economies function.
In an era where zero-sum and mercantile practices are becoming less shameful, perhaps it is also becoming more evident that power matters.
Africa’s moment from practicing sound economic theory can only be manifested when backed by structural power.
A few years back, renowned economist, Jeffrey Sachs, wrote on Japan’s stunted socio-economic growth over the last three decades.
He correctly pointed to the Plaza Accord of 1985 as the determining moment of Japan’s fate, as the country was forced into terms that hurt its trade competitiveness. It lives with the affects today.
Perhaps in explaining Africa’s fortunes of the last several decades, perhaps we should start to consider structural power within the discourse, as confined in theory, African reality remains dim.
