Trump: The need for African development rethink
Donald Trump does not need an introduction, even to the dump. His actions have been impacting both political and economic orthodoxy. These are for good or bad causes. In both political and economic parlance, the American President believes his country has the monopoly of power and authority to command the Red Sea to change its course or the rest of the world to listen to its vibes. America never had that power, although the citizens and the leadership believed so.
There was never a time when God put the world in the hands of one country. Power is often shared. During the Cold War era, the USA and the USSR were in control and disagreement. By the time the Cold War ended, China’s economic and technological advancement had reached an important level that the world could not ignore. In fighting the inglorious Iraq war on “weapon of mass destruction”, America had to carry along its allies, in recognition of the fact that it needed some supporters to carry out the heinous crime. However, President Trump thought the rest of the world was under his feet and he could trample on all. He has seen the futility of such an opinion.
How could a president think he can go to Gaza and establish, literally or forcefully, an outpost? Or, how would a president feel he has the power to command the end of a war between two countries (Russia and Ukraine) without negotiation? President Donald Trump tried and failed, though his utterances elicited positive reactions. Still throwing his weight around, Trump decided to poke his fingers at the free trade doctrine that America had tried to protect for decades. We have heard oftentimes that there is no free lunch anywhere; someone somewhere is paying for it.
As it were, America has been paying heavily for keeping the doctrine. The toga of deceit has to be removed to have a breathing space. President Trump imposed tariffs on some hitherto free commodity exchanges between the United States and some advanced economies. The immediate response was retaliation from the countries concerned, hitting harder on the American economy. The response from China to the imposition of tariffs by the US in the current impasse is reportedly tough and requires a rethink from the US government.
The concept of market forces and free trade are major elements in the neo-classical economic theories and the major doctrine of the World Bank and IMF, the world economic advisers. These same doctrines caused the world economic depression between 1929 and 1936 before John Maynard Keynes explained the inevitability of market forces and the need for government interventions in economic activities. It was the intervention that saved the world economy and resulted in an all-round recovery. In the current century, the World Bank and IMF still sell the same undiluted free market doctrine to the world and Africa in particular.
If America now recognises the burden of free market and free trade and decides to make corrections, it behoves the African policymakers to apologise to African scholars who have warned them, decade after decade, of following, dogmatically, the Bretton Woods institutions, i.e., the World Bank and IMF. When the Structural Adjustment Programme, couched within the doctrine of free market, was introduced to African countries in 1980, the Economic Commission for Africa, under the leadership of Professor Adebayo Adedeji, studied the content for efficacy in tackling Africa’s economic problems.
The commission assembled some African economic scholars in Addis Ababa, the headquarters of the commission, to undertake quantitative and qualitative analysis of the SAP document. The report on the exercise project failure was based on the inappropriate theoretical foundation of the programme. An alternative programme entitled African Alternative Framework to Structural Adjustment Programme was presented and launched in Washington, DC. When African leaders were asked to choose between the two programmes, the majority went for the World Bank/IMF version. Two motives were adduced for that decision. The African leaders believed more in received recommendations than home-grown recommendations. Secondly, they needed and would always get World Bank and IMF support to obtain external loans.
The failure of the SAP in most African countries remains apparent to date. Many countries, including Nigeria, moved from middle-income to low-income group of countries. Though some policies produced good results, the overall results were woeful. In Nigeria, for example, the deregulation of the financial market led to positive changes in the structure of the financial system. Banking consolidation was strengthened by capitalisation and innovations that stemmed from banking deregulation. The exchange rate deregulation did, in many cases, lead to the undervaluation of the local currency with resultant inflation, a high cost of production and economic instability. People lost their jobs from shrinking government participation in the economy and economic managers did not know when and extent of intervention causing commotion in the management of the economy.
Currently, the African heads of government are assembled in Addis Ababa for the 46th ordinary session of the African Union Executive Council. The primary concern of the gathering is the unrest or impending war in central Africa due to the role of Rwanda in the Congo Democratic Republic mineral imbroglio. The ethics of the issues in disputes is not the concern here but the need for African countries to be more concerned about the nature of their trade relationship with advanced and emerging economies, as well as, sticking to received theories and advice from outside.
Given the current precarious economic conditions in Africa, how many African countries can respond positively to an economic ban by the US or any of the advanced economies? Already, some African countries have pressed the panic button even when Trump has not turned to check on the continent. They are already seeking an audience to cast their allegiance to the new Washington administration and even the old administration of the other OECD countries.
It is high time the African leaders looked inward within the continent to seek economic advice. Several beneficial studies are on the library shelves in the Economic Commission for Africa in Addis Ababa, the African Development Bank, Abidjan and the African Union, Addis Ababa. There is Agenda 2063, the continental economic plan blueprint for African countries and subsidiary documents on financial development, sectoral growth, infrastructural funding and growth, commercial agriculture and food security, industrialisation and provisions for social amenities. Other subsidiary institutions of these main bodies can provide information on education, health, security, technological innovation and advancement, et cetera.
There should be cooperation, including the exchange of manpower coordinated by the AU, ECA and AfDB among African countries to help each other grow and develop with less dependence on donor funding or external loans. While poor countries on other continents are exiting the toga of poverty, available statistics have shown that many African countries are getting into the poverty trap because of unbridled dependence on loans, mismanagement of resources, including funds, cooperation to exploit African resources at no cost to the exploiters, illicit capital outflow, multidimensional corruption and corrupt practices; neglect of social infrastructure like education and health and may other vices.
The current meeting should set up a high-powered committee from the aforementioned institutions to produce the identified economics, political, social and technological documents that would assist African countries in charting new courses of action for a competitive continent in all spheres of endeavour, particularly in technological advancement, which rules the world today. A threat by President Trump today or any other leaders in the future should not send shock waves down the spines of African leaders.
Africa cannot continue to be the supplier of raw materials to the rest of the world and remain the baby factory of the world, supplying labour to be displaced by robots and artificial intelligence elements in the future. A target or timeline must be set for advancement into the highest level of human achievement. Only Africa can help Africa grow. Partnerships with other continents should be based on mutual understanding, not a master-servant relationship
