Global recession could teach Africa a valuable lesson

‘Credit crunch…global financial crisis…economic downturn… recession…correction.’ These are just some of the phrases that have become part of our daily vocabulary in recent months. For the poorest segment of the world’s population however, the daily dramas of Wall Street, Washington and Brussels mean very little. The reality is that few Africans understand how their economic fate is linked to a crisis instituted by a few overzealous stock traders and war lords. In the meantime African leaders are conveniently using the global scapegoat to mask their own blunders.

The projections from the world’s leading economic experts continue to spread gloom about how Africa will be hardest hit as a result of what is happening in world markets. What few can explain however - is how China remains seemingly immune to the global crisis and continues to prosper.

Despite conventional wisdom, this is no time to be looking to history for the answers. While analysts hark back to the Great Depression or other cataclysmic dips in the economy as a benchmark for what we are currently experiencing, there are no common denominators that can help us draw on the past for a possible solution.

Consider for instance, that the total world population in 1929 was just 1.8 billion. Today there are 2 billion people alone living below the poverty line out of a total population of 6.2 billion. The pressure on the earth’s resources is unprecedented, unevenly distributed and unevenly consumed. In the meantime, since the Great Depression the world has endured two world wars – three if you’re honest enough to include the collective conflicts taking place in Afghanistan, Iraq and Gaza right now - developing nations have broken free from colonisation, and the world’s trade markets have become inextricably linked to eachother as a result of globalisation.

Diseases that are treatable claim the lives of 25 000 children every day and yet, after military spending, the pharmaceutical industry is the second biggest sector in which the wealthiest countries choose to spend their money. Despite the 3 trillion dollar war and a more modest 780 billion dollars spent on narcotics, there are more conflicts around the world right now and more people dying of mostly curable diseases than at any other time in history.

If anything, what the current global economic crisis could teach us is that the path in which the wealthiest nations of the world have lead us down in the last fifty years shows little insight or foresight. If we are to challenge the doomsayers over the impending fate of Africa’s economy, we need to develop solutions of our own, which bring me back to my initial question of how did China overtake us.

Since Africa’s emergence from colonialism in the last fifty years, foreign aid intended to rebuild our African economies has plunged us from 10% of the continent living in poverty to 66%. I am not entirely naïve to the added burden that foreign debt, trade barriers and subsidies that protect first world markets have had on our own progress, but if Africa has the largest deposits of mineral wealth in the world – including oil – how did China surpass us in productivity and growth in just two decades??

It seems fair to start then by assessing the Neoliberal economic policy that the wealthy developed nations have followed in recent decades and inadvertently imposed on the rest of us. Neoliberalism when applied to economics, is supposed to spawn prosperity and free trade for all by creating self regulating markets, privatisation of public enterprises, greater assumed individual responsibility because of reduced spending on social services and broad scale economic prosperity as it trickles down to every level of society – using the principles of capitalism as the key driver.

Neoliberalism on paper - sounds like a great idea, but just about every one of its pillars has collapsed in recent years to now reveal markets that require regulating, bail outs and urgent spending on healthcare in even the wealthiest of countries.

Where China first took a foothold as major world exporter was through labour-intensive industries such as textiles and the manufacture of cheap goods, this is no longer the case. China is now the world’s third largest exporter of electronics and technology based equipment. In just a few decades it has transformed itself from a predominantly rural based, labour intensive economy to on that is increasingly boasting new technology skills and degrees of sophistication. While South Africa with a population of just 44 million continues to blame the legacy of Apartheid for the backlog of service delivery and education, in the same period of time, China - a country with over a billion people - has transformed seamstresses into engineers.

A recent report from the University of Nottingham’s Globalization and Economic Policy Centre (GEP) is accusing China of unfair trade practices since its study revealed that the secret to China’s economic success lies in production subsidies. How these subsidies can be viewed any differently to the EU subsidizing their farmers to keep their prices artificially low or the imposition of trade barriers on finished goods out of Africa I fail to see – but then I’m not the World Trade Organization.

What is important though is that these production subsidies have served to incentivize a nation, boosting exports and GDP. While China’s exports continue to surge, Africa continues to shoot itself in the foot by importing redundant commodities like maize and chicken from Brazil, which it is quite capable of producing itself.

Similarly, Africa sells off it gold, platinum and steel to the rest of the world as raw materials, while other countries profit by adding value to our mineral wealth. China too has joined the scramble by buying our hardwoods and coal without any need for sustainable accountability since our lack of environmental legislation doesn’t require it.

Our people starve, while we allow our landmass that can engulf China, the Unites States and Europe collectively to turn barren. Our continent enjoys enough rainfall to irrigate the entire continent three times over and yet 500 million people do not have access to drinking water and entire countries report crop failure due to annual droughts.

In South Africa we enjoy an average of 2500 sunshine hours per year yet 96% of our energy needs are coal powered. While we labour over building a new power station (coal of course) for six years, the Chinese have built four!

South Africa in the last year has shed 400 000 jobs as a result of the recession, but the new incoming President, Jacob Zuma has promised to create 500 000 jobs in just six months. Nobody has asked how many of these newly created jobs will remain after the feverish construction taking place to ready us for the 2010 Fifa World Cup - since this might imply that we live in a forward thinking world.

What all these ironies suggest for me is that the doomsayers may be right about Africa after all, but not because of the domino impact of a credit crisis that began in the north, but rather as a result of self inflicted victimisaton.

Talking deforestation in Malawi

Eyewitness account

A friend of mine recently returned from a month-long trip around Southern Africa and in our catch up conversation, I learned about how Malawi - in the ten year interval since we last travelled there - is almost unrecognisable in the face of rampant deforestation.

Malawi - affectionately known as the warm heart of Africa - has dropped off the donor aid and media radar in recent years, but it remains one of the poorest countries in Africa with 60% of its 12 million population living below the poverty line.

The result is a desperate attempt by the people of Malawi to eek out an existence from the country's remaining natural resources.

The economy has never been a sophisticated one, with people subsisting from fishing in Lake Malawi and to some extent craft where 'Malawi Chairs' became an iconic feature of African carving, but agriculture has never been the country's strong suit.

In the south of the country where the population is densest - the people have begun chopping down the forests at a rate of one football pitch every ten minutes. The wood is used for firewood or to make charcoal and yields little more than $15 for each tree felled. In return, the country is now battling the devastating effects of soil erosion, silting up of its dams and impoverished soils - so that growing the traditional cassava is futile without added fertilisers..

Malawi's accelerated descent into poverty

When did it all start going pear-shaped? It seems fair to suggest that in 1994, when the new constitution decentralised the government and returned autonomy to the local chiefs that resources begun being consumed without any regard for an overarching conservation strategy and certainly without any thought for sustainability.

Corruption and a lack of national law has allowed illegal logging to extract vast quantities of hardwoods without any responsibility to the people or the environment.

Since virtually no new infrastructure has been added to the country in twenty years, only 2% of the population have access to electricity. The bulk of the population therefore rely on biomass for their energy needs. The poorest people - largely illiterate - have little understanding of the consequences of their actions from famine to flood as the daily challenge of feeding themselves is prioritised.

Grassroots development agency making ripples...

But there is light at the end of the tunnel. A local development agency called Ripple Africa is working on establishing 400 nurseries that will be capable of planting 12 000 trees a year each and produce 4 million tree saplings in total. Sustainable forestry is a policy that should have been applied thirty years ago in Malawi - through ongoing consultation with the regional chiefs, this is exactly what Ripple Africa is trying to achieve.

In addition to planting tree saplings, Ripple Africa are also encouraging the locals to plant ground nuts which return nitrogen to the soil and can be cross-planted with other cash crops.

I'm always amazed at how casual conversations with like minded people can produce incredible ideas. My friends are people who are as passionate as I am about a prosperous Africa. Take a look at this video clip to hear about some of the other ideas we came across to strengthen Malawi's food security and lift her people out of poverty:

The Big Promise | Oxfam International

The Big Promise | Oxfam International

The Big Promise

Do you think a promise should be kept? We do…especially when the lives of millions are depending on it.

Four years ago leaders of the eight richest nations promised to give an additional $50 billion a year in aid to the world’s poorest countries by 2010. Now they threaten to break that promise in the wake of the global economic crisis.

Join Oxfam’s Big Promise today – make a promise and keep it! We'll add your promise to thousands of others from around the globe, and deliver them to the G8 next month. Together, we’ll show them that the world demands they keep their promises to deliver health and education for all.

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Participate | A Global Call to Action | Mandela Day 2009

Participate | A Global Call to Action | Mandela Day 2009

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