By Roberto Azevêdo
GENEVA, Jul 29 2014 (IPS)

In the 1960s, there were high hopes for the development of the newly-independent sub-Saharan African countries but these hopes were quickly dashed following a series of shocks which began in the mid-70s, with the first oil price spikes, followed by a severe decline in growth and increase in poverty in the 80s and early 90s. However, by the mid-1990s, economic growth had resumed in certain African countries. Economic reform, better macroeconomic management, donor resources and a sharp rise in commodity prices were having a positive effect.

WTO Director General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

In the 2000s, many African countries witnessed high economic growth performance and during that period some of the world’s fastest growing economies were in sub-Saharan Africa. Angola, Nigeria, Chad, Mozambique and Rwanda all recorded annual growth of over 7 percent.

In 2012 Africa’s exports and imports totalled 630 billion dollars and 610 billion dollars respectively, ­ a fourfold increase since the turn of the millennium. And the long term prospects for growth are good. The Economist Intelligence Unit has forecast average growth for the regional economy of around 5 percent yearly from 2013-16.

Despite all this, the continent still plays a marginal role in the global market, accounting for barely 3 percent of world trade. One significant reason – although, of course there are others – is that African economies are still narrowly based on the production and export of unprocessed agricultural products, minerals and crude oil.“There is little doubt that the regional [African] market offers good scope for African firms to diversify their production and achieve greater value addition”

Now, due to relatively low productivity and technology, these economies have low competitiveness in global markets – apart from crude extractive products. The low productivity of traditional agriculture and the informal activities continue to absorb more than 80 percent of the labour force. And growth remains highly vulnerable to external shocks.

This story of half a century of struggle, set-backs and progress shows two things:

One, the road to meaningful and inclusive development still seems long.

Two, we are in a better position than ever to make real, sustainable progress.

Many countries are striving to do more in turning their strength in commodities into strengths in other areas,­ using commodities as a means of spurring growth across various sectors. The United Nations Economic Commission for Africa’s 2013 Economic Report echoes this ­ calling for the continent’s commodities to be used to support industrialisation, jobs, growth and economic transformation.

In line with this, I think there are a number of essential steps to take:

– diversification of economic structure, namely of production and exports;

– enhancement of export competitiveness;

– technological upgrading;

– improvement of the productivity of all resources, including labour; and

– reduction of infrastructure gaps.

Only by delivering in these and other areas can policymakers ensure that growth enhances human well-being and contributes to inclusive development. But how can we take these steps?

Of course I should say that although African countries share some common features, no unique set of policies, including those on trade and industrial policy, could ever fit for all in a uniform way. Even among the least-developed countries (LDCs), some are already exporters of manufactured products, although often they rely on a single product  while others are more dependent on commodities. Nevertheless, I think it is clear that some preconditions of success are universal.

African regional integration is of course very high on the policy agenda. There is little doubt that the regional market offers good scope for African firms to diversify their production and achieve greater value addition. Already now, manufactures constitute as much as 40 percent of intra-African exports, compared with 13 percent of Africa’s exports to the rest of the world.

The Bali Package, which World Trade Organisation members agreed in December last year, will help to resolve some problems. Inclusive, sustainable development was at the heart of the whole Bali project ­ and our African members played a crucial role in making it a success. It brought some progress on agriculture. It delivered a package to support LDCs. It provided for a Monitoring Mechanism on special and differential treatment.

And, in addition, Bali delivered the Trade Facilitation Agreement and this is a direct answer to some of the problems of fragmentation. Costly and cumbersome border procedures, inadequate infrastructure and administrative burdens often raise trade-related transaction costs within Africa to unsustainable levels, creating a further barrier to intra-African trade.

This Agreement will help to address some of these bottlenecks. It will support regional integration, and therefore complement the African Union’s efforts to create a continental free trade area. And it will begin to remove some of the barriers which prevent full integration into global value chains. As such it will create an added impetus for industrialisation and inclusive sustainable development.

And it is worth noting here that the Trade Facilitation Agreement broke new ground for developing and least-developed countries in the way it will be implemented.

Another vital issue here is the importance of agricultural development in industrialisation, and the role of industrial collaboration through regional cooperation. The contribution of the agriculture sector is of utmost importance for the establishment of a sound industrial base. It can provide a surplus to invest in industrial capacity building, and supply agricultural raw materials as inputs to the production process, especially for today’s highly specialised food processing industry.

Moreover, it can also significantly contribute to industrialisation by providing an ample supply of food products. This is because food constitutes a large share of what wage earners in African countries spend their money on. Its availability at low prices contributes to increase the purchasing power of wages, and therefore raise the competitiveness of a country in international markets. (END/IPS COLUMNIST SERVICE)

Excerpt:

Hlumelo Biko, the son of late Black Consciousness leader Steve Biko, wants to create a more equitable economy. Credit: Kristin Palitza/IPS

By Kristin Palitza
CAPE TOWN, South Africa, Feb 23 2013 (IPS)

In his new book, “The Great African Society – A Plan for a Nation Gone Astray”, Hlumelo Biko, the son of late Black Consciousness leader Steve Biko, says that if nothing changes in South Africa, the country will become engulfed by corruption, crime, social decay, hopelessness and anger.

Almost two decades after the end of apartheid, South Africa continues to struggle with massive poverty, high unemployment and crumbling education and health systems.

Biko told IPS that, from an economic point of view, South Africa’s society remains untransformed – and where there has been transformation, it has been politicised.

“Those who are in close relationship with the (ruling) party have been allowed to prosper. Those who aren’t, have not prospered,” he said. “We have to create a society that rewards hard work as opposed to who you know.”

Although Biko works as executive chair of private investment firm Spinnaker Growth Partners, politics has been a central part of his life since his childhood. His mother, Dr. Mamphela Ramphele, is another well-known South African anti-apartheid activist and a former World Bank managing director.

Excerpts of the interview follow:

Q: In your book, you analyse how South Africa got to where it is today – a nation ravaged by economic inequity. Would your father turn in his grave?

A: I don’t think he’d be happy. And I don’t think that people like my mother can sit by idly and watch. We ceded the space to a few politicians and allowed them to operate. And then we look back 10 years later and think, “Oh no, what happened?” South Africans need to go back to being very vocal about what their future should look like, so that we can all participate in effecting the future of this country.

Q: Your mother recently launched a new political party, Agang, in opposition to the ruling African National Congress (ANC). Are you a member?

A: No, I’m not. I will not join the party, but I am a supporter of my mother as her son. We share similar political views. I wrote this book to suggest policy in a way that both the current government and other political parties can use pieces of it to adapt to the policies they support. I hope that my mother is keen on using some of these mechanisms as part of her platform.

Q: One of your book’s main premises is that South Africa needs better governance. 

A: Effective regulation means you have to have competent people. It shouldn’t matter what you did before 1994 (the end of apartheid). Yet those records still give people a leg up over others. We need to go beyond that and focus on technical capability. If you look at economies like China, they are where they are because their government operatives are, like it or not, extremely qualified. They are able to put forward effective policies. That’s where we need to take it.

Q: You suggest a silent truth and reconciliation commission for corruption. Why silent?

A: Shaming and naming people discourages them to come out. You want to flush out bad civil servants who have stolen money. That is fairly easy if you give them amnesty. My proposal is that they don’t have to give the money back if they leave within a certain space of time. Trying to recover the money (they stole) through the criminal justice system is going to take so long, it’s better to give them an incentive to leave. After that, I propose we move into an environment that is very ruthless with how we prosecute corruption.

Q: You suggest the private sector should help solve some of the country’s biggest challenges. Do you think businesses are willing to take on that much social responsibility?

A: Maybe not in other countries, but in South Africa, because of the BEE (Black Economic Empowerment) legislation that businesses already had to function within for the last 20 years, they are used to it. They are keen to have a say over where their money goes. I estimate that there is another 500 billion Rand (56 billion dollars) worth of empowerment still to happen over the next few years. Instead of investing that money into BEE companies, I’m proposing that business be allowed to invest directly into communities, through initiatives like health, education, skills development. It’s also in the long-term interest of their shareholders, because with better quality of education and skills, the economy will improve and therefore stocks will go up.

Q: You criticise South African’s “complacent optimism” about their future. What do you mean?

A: For maybe five million people (out of a population of 50 million), South Africa is a great country to live. You have wonderful facilities and wonderful infrastructure. But if you ignore the other 45 million, at some point in time, life will become inconvenient. I give the examples of Venezuela or Zimbabwe, where the middleclass ignored the plight of the poor and thus provided the basis for dictators to take over those countries. If in South Africa, we do not deal with the reality today, at some point, it will become fertile ground for an opportunistic politician.

Q: In recent months, people have protested about a lack of basic services in many parts of the country. Have South Africans started to wake up?

A: I am surprised it’s not more. It’s a lot less than what I think it should be and will be. We are fortunate that poor people have been so patient. But I do not think that they will be patient for much longer. We have to start making changes now.

Rafael Correa celebrates his re-election at the Palacio de Carondelet, in Quito, cheered by a crowd of supporters. Credit: Martín Sánchez/IPS

By Leisa Sánchez and Ángela Meléndez
QUITO, Feb 18 2013 (IPS)

Ecuador’s President Rafael Correa secured yesterday his third term in office by a landslide, after vowing to radically deepen his project of citizens’ revolution by making the changes achieved thus far “irreversible”, fully achieving the goals of eradicating poverty, transforming the model of production and consolidating the “rule of the people”.

Initial data from the National Electoral Council give the centre-left candidate 56.7 percent of the votes in the national elections held this Sunday, Feb. 17, putting him well ahead of his greatest challenger, right-wing candidate Guillermo Lasso, with 23.3 percent.

This ample margin means Correa can begin his third consecutive term since 2007 without the need for the runoff required under the constitution unless the leading candidate obtains either 50 percent of the valid vote or 40 percent with a 10-point advantage over the nearest contender.

While Correa maintains that his government will continue to focus on social transformation, he noted that a change in the model of production and job creation would be the priorities this term.

This strategy is reflected in his choice of running mate, as the profile of vice president-elect Jorge Glas is more technical than political, and in Correa’s agenda, which involves promoting change through projects in the fields of oil production, energy resources, water, electricity and information and telecommunication technologies.

This transformation, which had already begun with restrictions on imports of consumer goods and higher tariffs for luxury items, will demand more value added on national products and strengthening popular and solidarity economy schemes, but without excluding private capital involvement.

Oil, Ecuador’s largest source of foreign revenue, with a record 98 dollars per 159-litre barrel in 2012, will continue to underpin the government’s investment in social programmes, which last year absorbed 15.3 percent of the country’s gross domestic product (GDP) and are projected to require 16.6 percent in 2013.

According to the National Planning and Development Secretariat, public investment grew six-fold in the last six years, standing at 6.29 billion dollars in 2012.

Speaking to the press following his second re-election, the leader of the governing Alianza País (AP) party said that the chief goal for the next four years would be to make “irreversible the shift in power relations in favour of the people and the great majorities” through the implementation of “solid economic policies, prioritising the ‘social debt’ (over debt to foreign creditors), but without neglecting efficiency”.

Correa stressed that “the challenge is to move more quickly but in the same direction”, adding that the people have confirmed at the polls their desire to “bury once and for all the ‘partocracy’ that has inflicted so much damage” on the country, in reference to the monopoly of power held by political parties.

Correa is confident that the massive support he received from voters will give him a large majority in parliament, which will thus be able to pass key bills on issues such as communications, water, land and criminal code reform, which had been stalled until now.

On Feb. 17, Ecuadorians also elected 137 members of the National Legislative Assembly and five Andean Parliament representatives.

Legislator Virgilio Hernández, re-elected under the AP ticket, told IPS that one of the great tasks ahead is to “build a post-oil Ecuador, going beyond a commodity-based economy”, while “making major changes to achieve energy sovereignty, continue developing the country’s road system and implementing large infrastructure works”.

He also spoke of the need to advance towards “a true and radical agrarian revolution” and implement credit and technology policies that will guarantee food sovereignty and security.

Hernández noted that significant progress has already been made, but social welfare, health and education are permanent issues on the government’s agenda. Work is needed to “ensure the full enjoyment of rights and social welfare” by all Ecuadorians, and achieve greater wealth distribution, with “more equality and social justice”.

Nonetheless, economic performance will be decisive in determining whether the Correa administration will retain its level of popularity, Hernán Ramos, a political and economic analyst, told IPS.

Ramos believes that one of the key factors of the president’s stability is the steady growth of GDP, fuelled by favourable oil prices, increasing government revenue and a high level of domestic consumption.

The government’s “project would suffer if the economy’s stability were to waver” for any reason, even an international crisis, Ramos cautioned.

In terms of politics, the analyst observed that Correa’s three victories at the polls had succeeded in dealing a mortal blow to a political leadership that was “historically responsible for the crises that dragged the country down”, as with this new win “the opposition has been broken”.

Unlike in 2007, when he took office for the first time, Correa now has several advantages. Firstly, the political experience gained after six years at the country’s helm; secondly, the strength gathered by his movement; and thirdly, ironclad media protection (in the form of a media regulatory body created in a 2011 referendum to stop media excesses), Ramos explained.

The president had promised that this would be the last time he ran, as he considered it in the country’s “best interest”. However, his movement lacks a figure strong enough to replace him after this term, a political weakness that could be overcome by AP if “it succeeds in grooming new leaders that can at least consolidate its political leadership in the country”, Ramos said.

Counting elections and referendums, Correa achieved his ninth victory at the polls on Sunday and holds an indisputable leadership after six years in which, in his own words, he “re-founded the nation” with a new constitution in 2008 that launched an era of good living and turned the state into the leading economic and political agent.

When his third term is up in 2017, Correa will have completed a decade in power.