Africa Rising? Neoliberal Myths and Realities

‘Africa’ has long occupied a unique place in the Western imagination. It has been a career for some, a cause for others, and a source of confusion, frustration, disinterest, and ignorance for even the most reputable observers of foreign affairs. Much of what constitutes ‘Africa’ in the popular imagination is an uncomfortable mix of fact and fantasy, allure and repulsion, and opportunity and danger, as if the 49 countries south of the Sahara—and the over 800 million people who inhabit them—exist as a singular static entity that can be captured by vague generalisations and appeals to common stereotypes. Few narratives of ‘Africa’ take into account the continent’s complex and diverse histories, politics, and socio-economic realities. The results of such negligence can be disastrous.

Image courtesy of dalangalma, © 2012, some rights reserved.

Image courtesy of dalangalma, © 2012, some rights reserved.

The ambivalent gaze of the West has recently taken an interesting turn, transforming perceptions of Africa from a site of perpetual malaise, conflict, and economic stagnation to one of untapped wealth and potentially limitless economic growth. Gone is the image of the anonymous apolitical rebel, the subsistence farmer struggling to make ends meet, and the starving child who will live a difficult life full of the same hardships experienced by his or her parents; in its place is homo economicus, the self-reliant entrepreneur who rises out of poverty through hard work and ingenuity, the indefatigable community worker whose efforts drive local development, and the youthful middle class consumer who lives a life that was unimaginable only a few decades ago. The continent no longer needs aid, it is claimed, but access to capital, markets, modern financial instruments, and the economic infrastructure necessary for sustainable growth. And who better to provide these than foreign firms and wealthy investors who prefer the dynamism of ‘emerging’ and ‘frontier’ markets to the economic sluggishness of the developed world? Such a relationship, so the story goes, would be mutually beneficial: African states would be able to unlock their economic potential and reap the benefits of unprecedented levels of development, while foreign firms and investors would secure high returns in line with the risks that they undertook in financing development. This story even has an appropriate villain: the African state, which, with its traditional economically interventionist and distortionary practices, high levels of corruption and patronage, bloated bureaucracy, and inefficient overregulation, presents a primary obstacle for development. Fiscal discipline, moderate interest and foreign exchange rates, the removal of trade and investment barriers, the privatisation of state assets, and market deregulation are the prescribed treatments for these ills by virtually all powerful Western observers, who fervently believe that the sooner state governments are willing to reform themselves and surrender their economic authority to the wonders of the market, the better for everyone involved.

So what is wrong with this picture? Well, quite a bit, and unfortunately far too much to be detailed here. But peeling away the myths, assumptions, and ideologies that inform common generalisations about the continent and its people, it is possible to identify a number of broader economic trends that undermine the validity of neoliberal orthodoxy. Primarily, the objective of reducing the size of the state not only goes against widespread popular opinion, but also makes little social and economic sense. African states are already small by international standards, as only seven of the top 50 states by total government expenditures as a percentage of GDP are in Sub-Saharan Africa, while 15 Sub-Saharan states are in the bottom 50. This first group out-performs the second on average across common development indicators, including HDI (0.484 to 0.420), per capita GDP (4295.86 USD to 1034.53 USD), and annual GDP growth rates (4.35% to 3.95%, respectively). In fact, in only three Sub-Saharan African countries does the state’s total tax revenue top the OECD average of 34.8% of GDP, and in only eight more is this figure above 20%. This latter group is particularly impressive, averaging an HDI of 0.574, with four of the top five HDI scores in Sub-Saharan Africa, and a per capita GDP of 5217 USD. This is not to suggest, of course, that the state has played a universally benevolent role in modern African history, with neopatrimonialism, clientalism, rent-seeking, corruption, oppression, and state violence uncomfortably commonplace. Significant reforms are necessary, but reducing the size of the state can only do more harm than good.

There is also something rather perverse about the idea that the key to economic growth in Africa is to integrate the continent into the global economic system through further liberalisation. Global market exposure is a primary cause of, rather than appropriate solution to, Africa’s subordinate and marginalised position in the global economy; indeed, this is what makes it an attractive place for foreign investment in the first place, as international firms and investors are able to take advantage of low labour costs and standards, domestic industries that lack competitiveness, low state capacity to benefit from national resources, and market instability that keeps bond yields high. More liberalisation would only exacerbate these issues, further eroding economic autonomy, harming domestic industries that are unable to compete with their foreign counterparts, and increasing poverty while, because of reduced tax rates and the mass privatisation of state assets, simultaneously hindering the ability of the state to meet the needs of its most vulnerable citizens. Neoliberalism has failed in Africa before, and there is no reason to believe that it will not fail again.

There is one grain of truth in all of this, however: much of Africa is currently experiencing unprecedented levels of development and economic growth, and there are many reasons to believe that optimism about the future is not misplaced. But it is the people of Africa who should benefit from this good fortune, not foreign firms and investors. As long as past mistakes are not repeated, and economic decisions are made based on facts and evidence rather than ideology, misperceptions, or self-interest, the future, for many, may look brighter than ever.