Africans must share in globalization’s benefits

  • 7 February 2003

Johannesburg By Maria Livanos Cattaui Globalization is good for most of the world's citizens. The snag is that its benefits are unevenly felt and have yet to reach millions of ordinary people in Africa and other developing regions.

Globalization is good for most of the world’s citizens. The snag is that its benefits are unevenly felt and have yet to reach millions of ordinary people in Africa and other developing regions.

Until that can be put right, global economic integration threatens to be more of a curse than a boon in those countries that circumstances or folly have banished to the sidelines. Too many of them are in Africa.

These countries are outsiders, because they are dysfunctional, falling behind in education, health care, and infrastructure development. Sometimes they are mired in civil war and lawlessness as well. Strangled by restrictive practices and corruption, they cannot lift their people out of poverty.

Righting the imbalance by curing those ills is a challenge that the New Partnership for Africa’s Development (NEPAD) has accepted. South African President Thabo Mbeki and other African leaders who joined NEPAD are determined to advance economic, social and political reforms based on democracy, respect for human rights and the rule of law. May they have swift success.

That they have made a beginning is to be applauded. But business outside Africa will start seizing new investment opportunities only when it is convinced that good intentions are being turned into results.

Exactly what remedies are available to African countries that are unable to cope with the fiercer competition that engagement in the global economy invariably brings? International business is providing some of the answers.

Through a partnership between the International Chamber of Commerce (ICC) and the United Nations Conference on Trade and Development (UNCTAD), business is giving practical support to NEPAD. It has created an Investment Advisory Council mobilizing private sector know-how to stimulate investment flows to the least developed countries, most of which are in Africa.

The IAC programme is based on acceptance that business is not going to invest in any substantial way in these countries unless doing so makes good business sense. It covers subjects that are essential to a thriving business environment, from helping African domestic businesses to become more attractive as suppliers to foreign investors to making commercial risk insurance more widely available.

The overall benefits of the gradual intermeshing of national economies through trade and investment are borne out by many business and government reports on globalization, poverty and income distribution, including one ICC has just issued.

This research reveals that it is precisely during the past few years of increased globalization of the world economy that poverty rates and global inequality have most diminished. The obvious conclusion is that integration of economies, the opening up of markets, and foreign investment are essential to the world’s poor countries if they are to give their populations a better life.

All is not gloom and doom in Africa. Despite its image of a continent wracked by poverty, war and disease, there are economic success stories that deserve to be more widely publicized – many of them in South Africa whose companies are rapidly consolidating their strong position on African consumer markets.

As United Nations Secretary General Kofi Annan recently stated: “Even in Africa, where nearly 50% of the population still lives in dire poverty, a number of countries have sustained growth rates of 7-8% – enough for them to meet the goal of halving extreme poverty by 2015.”

And Africa’s prospects for improving the lot of its peoples will certainly be brighter if the World Trade Organization’s Doha Round trade negotiations succeed. Progress in cutting rich-world subsidies and tariffs on food products will be of enormous benefit to African farmers.

The record shows that those developing countries that have most successfully integrated into the global economy have made the most rapid progress. Those that have been marginalized as a result of war or bad government are invariably the ones that are left behind.

That is the lesson that globalization teaches – a lesson that Africa’s leaders are beginning to take on board.

As published in Business Day, 5 February 2003