D+C Development and Cooperation (No. 3, May/June 2001, p. 13 - 15)

In Germany, a Memorandum of six Africa experts in leading research institutions on the development in Africa and conclusions for Germany’s Africa policy has sparked off a lively debate on where the Continent is heading. Robert Kappel summarised the main theses of the Memorandum in an article entitled ‘The End of the Great Illusion’ (see D+C 2/2001, p.23-24). In a response from the South, the two authors take a contrary position.

Kappel’s article “End of the great illusion” and the Memorandum of German Africa experts (Engel et al. 2000) challenge the different approaches to Africa’s development perspectives in a seemingly radical way. They also call for a response from the South.

Firstly: The intervention is laudable, since it puts Africa back on the agenda of academic discussion in Germany. It also opens an opportunity to take on the discussion with critical reactions.

Secondly: It is not our purpose to counter the “Africa pessimism” of Kappel and his colleagues with an undifferentiated “Africa optimism”. We do not expect that wide parts of Africa will “take off” to high growth in the near future. After all, forecasts are always difficult, all the more for periods of 30 to 50 years.

Nevertheless, it is our opinion that the article and Memo are grotesque simplifications, disappointing in their substance, thin on proposals how to improve the development process and contraproductive for constructive co-operation between Germany and Africa.

We summarise our objections in a few points:

1. A bogy is constructed -
and then shot down

It is valid to criticise the sequence of fashionable prescriptions, how to “develop” Africa. Import substitution, export orientation, state centrism, rural development and many others were emphasised at times in an exaggerated and often unbalanced way. But what is the value of condemning all these approaches, just to declare “a new development paradigm” as the answer? “Realistic Africa policy needs realistic analysis” - who would not agree with this? But can one seriously claim that the Memo is the ultimate answer? Is it not a fact that knowledge has accumulated over the years, that concepts have evolved? For instance, is the World Bank’s new Africa Report (World Bank 2000) not worth a more explicit critique? By the way, this report does not “predict” high growth rates of seven per cent per annum. It rather states that such a rate would be necessary to make a real dent in poverty, further postulating that such a development would require substantial policy changes.

Another bogy is the Memo demand that “development co-operation should have the courage to be more selective in the promotion of countries”. Has this not happened in development cooperation already?

It is our impression that theoretical and programmatic aspects of developments in Africa are only referred to selectively, in order to be able to present the “right” approach. Does this not amount to the same tradition of constantly coming up with new “models” for Africa’s development, which the authors condemned before?

2. Questionable forecasts

Cultural, social and economic changes in Africa are rapid. In fact, much too rapid to conclude that “the ability of African societies to cope with the challenges of the future has declined rather than improved”.

One of the most important dilemmas of social sciences relates to the difficulties to extrapolate from past developments into the future. It can simply not be expected that past trends will merely continue into the future. Probably the most prominent failure of such an approach was the “Limits to Growth” debate (Meadows et al. 1972). Similarly daring is the claim that “many countries will have to be regarded as structurally non-developable”. Is it not that economic and social systems react to changing conditions, albeit with time lags? The Memo contains several tables with conventional macro ratios like “growth of GDP”, “investment rate”, “gini index”, etc. If one, however, takes into account the alleged inability of African states to collect “objective” economic statistics, what do these data then mean? For example, what does it mean that Lesotho and South Africa have the same “total economic index” of 2.17, when seldom in the world are two neighbouring countries more different than these two?

As it happens so often in these “numbers games”, we find special cases (like Singapore, Monaco, the Gambia and Hong Kong) praised as front runners in an “objective” assessment: True to form, Mauritius (2 040 km²) and the Seychelles (454 km²) are found to be the only “emerging economies” in Africa, with South Africa and Ghana the only “potential reform countries” with a significant population and economic size which have any hope for more than bitter poverty within the next 50 years!

Decades ago it was fashionable to write off Latin America and parts of Asia. In both those sub-continents differentiation has been a main characteristic of the development process. In short: The future is open, definitive predictions over 50, even 30 years make little sense. (On the difference policy can make see e.g. Sachs and Warner 1995, Olson 1996 and Gundlach 1999.)

3. Lack of differentiation

The article and Memo admit that a differentiated analysis is necessary. Nevertheless, the documents abound with sweeping statements (“countries with” and “countries without development perspectives”). For example, what does it mean to sum up Nigeria, with its more than 100 million people, by stating: “Although people have hope, there will be no short term success”, and “in the long term [the country is] without development chances”?

Does “Africa” exist as a single entity? A number of serious scholars argue that it does not make sense to use “Africa” as an object of analysis (e.g. Sachs and Warner 1997). Looking at Nigeria, DR Congo, Tanzania or South Africa, one can show how strong internal levels of development and processes of structural change differ. Who can seriously claim, for instance, that South Africa’s Western Cape Province (4,5 million inhabitants, 122 000 km²) does not meet the criteria of an “emerging economic region”?

4. Africa as laboratory
for new development theories

During the decades after independence, Africa often served as a laboratory for new or popular development models. This has, in fact, been one cause for the failure to take off, as admitted by the authors. Nevertheless, they present two new panaceas: structural stability and democracy. Democracy has become an increasingly important element of donor conditionality. This can also be viewed as part of a guilty conscience, after decades of propping up the regimes of Mobutu and the like. At last one looks more closely at governance. Unfortunately, the belief that a democratic constitution (and practice) is a sufficient pre-condition for development and growth is an illusion. The contrary is, in fact, true, as Western history shows. More democracy is not a precondition, but rather a product of development. Political freedom grows with economic welfare. Experience has shown that political freedom erodes if it is not accompanied by economic growth. Thus, industrial countries should not export their political systems, but rather their economic systems, including institutions like property rights and functioning markets (see Barro 1998). The uncritical “export of democracy” is at best questionable, and at worst merely adding to the problems of adapting social institutions to the fast pace of change.

No less important is the fact that new concepts, be they “democracy”, “structural stability” or others, divert the attention from other, often more simple and less fashionable issues. These include, in particular, improvements in the quality of institutions (Rodrik 2000). Most important, from a donor perspective, are the shortcomings of the structure of development aid: They often place high demands on scarce administrative resources, while new incentive structures often undermine the development of the private sector.

5. Contradictory role of development aid

Correctly, the Memo warns that we should not expect too much from development co-operation or aid: “Development co-operation alone cannot solve Africa’s problems.” But who ever seriously had such an illusion? It is similar to the mistaken belief that political pressures and sanctions alone made apartheid crumble. After all, development co-operation can only - and should only - support internal processes of change and reform. Or does Africa have to be re-colonised?

In that context it is amazing what value is still given to the power of “conditionality”. Does it simply serve as a pretext to reduce the resource transfer from donor countries? In fact, in recent decades it has been shown that conditionality undermines ownership of the reform process (Collier 1995), and without such ownership meaningful policy changes will simply not happen.

6. Dream of a (not so original)
European development policy

The Memo complains about the fragmented structure of German development co-operation. A “European Africa policy” is suggested - if not even on UN level. Is this not wishful thinking? Do different states not (quite justifiably) have different interests? More fundamentally: Is “larger” really “better”? Do small organisations and initiatives not often function more efficiently?

From the receivers of development aid point of view, the problem is not one of lack of co-ordination among aid providers, but rather the receivers’ own limited capacity to co-ordinate. A lot would be gained by receivers of aid, if a higher capacity to co-ordinate and manage donor aid could be achieved.

7. Is there no African expertise?

One of today’s “fashions” is the condemnation of the World Bank. Yet, this very institution has taken a laudable step in its most recent Africa Report (see article by Ernest Harsch) designing it together with African institutions and African intellectuals. Thereby it takes - at last - cognisance of the fact that in the end only Africans are in a position to determine their development path. Or do Europeans still know everything better?

In general, article and Memo show little insight into the critical discussions of development strategies and their implementations presently taking place within African countries (e.g. Onafowora and Owoye 1998, Oyejide et al. 1997, Himmelstrand et al. 1994). Obviously, we do not suggest that “only Africans can and should discuss African matters”. Enrichment with foreign ideas is a critical element of development success (Landes 1998). However, with an exclusively external view, can we really expect more than embarrassment, protest or rebuttal on the part of those who are the objects of such analysis?

8. Improving German foreign
and development policy?

Most disturbing, from an African perspective, is the close interlink of the comments on German Africa policy and on the authors’ Africa perspectives. While the former includes interesting elements, the latter aims at shock-effects. In the final analysis, the projections are only meaningful if they help improve co-operation between ministries, closer co-ordination at an international level, more objective analyses of projects, a reduction of isolated, stand-alone projects, etc. To conclude: How do we get out of this dilemma? In the end there is only one way - to challenge German Africa-focussed development research. Let us mobilise the intellectual capacity needed to provide a better empirical base, so that we can reach sound judgements. Let there be detailed studies to verify the thesis that, for instance, South Africa cannot become an “emerging economy” in the near future. It is just too simplistic to quote popular macro data, most of which hardly stand up to objective scrutiny.

Africa needs more aid, not ‘hot money’

After two decades of structural adjustment, Africa is still caught in a vicious circle. It needs higher savings and investment levels to generate growth, but it does not have the income to raise those levels, according to Mr. Carlos Fortin, deputy secretary-general of the UN Conference on Trade and Development (UNCTAD). So far, the international community has looked toward a combination of aid and private investment flows to Africa to fill the gap, “but this approach is not working,” said Mr. Fortin in July, upon releasing a new UNCTAD report, Capital Flows and Growth in Africa. Since private capital tends to follow growth, not lead it, he said, official development assistance to Africa must be significantly increased if the continent is to achieve the kind of growth that eventually will attract foreign investment and make aid less necessary.

UNCTAD estimates that an increase in official flows to Africa to about $20 bn annually, about twice current levels, could boost domestic investment rates to about 22 per cent of gross domestic product. This in turn should help support sustained GDP growth rates of about 6 per cent a year.

While aid will be important, African countries also must overcome the policy errors of recent years, says UNCTAD. Essentially, it notes, “structural adjustment programmes have sought to leave accumulation and growth to market forces without adequate attention to shortcomings in markets, institutions and infrastructure.” It proposes “a more active government role than permitted under adjustment programmes.”

Governments should guard against unstable short-term capital flows, the report says. Like private capital flows in general, such “hot money” remains relatively minimal in Africa. Yet because financial markets in most African countries are “rather thin,” UNCTAD observes, fluctuations in short-term flows still can have a disproportionate impact on currency markets. Africa has not yet experienced the kind of boom-bust cycles that have hit Latin America and East Asia over the past decade, but UNCTAD’s analysis nevertheless shows “a significant increase in the instability of both net short-term inflows and outflows during the 1990s compared to the 1980s.”

Dirk Hansohm is director of the Namibian Economic Policy Research Unit in Windhoek, Namibia (dirkh@nepru.org.na).