The New Partnership for Africa’s Development (Nepad) can be redeemed as a way of restoring Africa’s capacity to fashion its own path to economic prosperity. But it needs a new self-confidence based on a recognition of the illusions that now prevail.
The G8 summit illuminated the political power dynamics that override rational international economic policies to overcome poverty. It revealed the nonsense of the idea of “partnership” between the powerful and the dependent.
South Africa must recognise that a number of illusions have hamstrung our national policies. They are described as “challenges”; in practice they are insuperable. They perpetuate our mendicant relationship with the rich North that makes the rules for others but has the power to defy those same rules for itself.
Those illusions are:
l Rich democratic governments will voluntarily disadvantage their own electorates by providing access to their markets to the products of countries with a comparative advantage.
l If rich countries’ markets were opened to us, we could immediately compete there.
l Promises by rich countries of aid and/or trade privileges can be enforced or relied on when their economies get into trouble.
l Small or poor nations have a meaningful influence over inter- national financial markets and world economic trends.
l The “coalition of liberalisers” set up by the United States is designed to help developing countries. Trade concessions, like the African Growth and Opportunity Act, will help both sides.
l Attracting foreign direct investment is necessary for us, even if it means national policies that create unemployment and diminish national governments’ freedom of action.
l Trade is the engine of growth for everyone, whatever the terms of that trade.
l We have the same influence in setting those rules as rich countries, and the same capacity to enforce them against others.
l Export-led growth will strengthen us by expanding our prosperity, making our economy lean and mean and thus competitive globally. The fact that competitive export capacity is capital-intensive and sheds employment is a transitional phenomenon.
l International investors will find small economies attractive provided they have “good governance”.
l South Africa can take advantage of its relative development to find markets in Africa without limiting their economies — just as ours has been limited by the global market.
Accepting these illusions limits our capacity to design policies that will expand prosperity to all of Africa’s people. We need to replace them with liberating assumptions that we can act on.
Foremost among those is the conviction that Africa has more political clout, because of greater market potential, than we believe. The focus and resources the rich countries are putting into trade negotiations shows that we can drive harder bargains. They are not doing it for us.
We have capital and capacity to create more, which could be invested here if we did not allow it to flow abroad, and which would make our pleas for foreign investment unnecessary.
Activating half of our population that, being unemployed, is a burden to the economy, is essential for growing an internal market.
We must accept that localised economic development is more labour-intensive, more local resource-based and more efficient than export-led growth.
Food security for individuals must be a top priority. We can protect our food-producing agriculture by subsidising and protecting it, as other countries do, and by pricing it in rands.
When food is scarce for climatic reasons we can ask for food aid as cash so that we can buy it ourselves, instead of having other countries dump surpluses on us to the detriment of regional farmers.
We can also follow successful South American economies that tax speculative currency transactions to reduce destructive fluctuations in the rand and raise revenue.
We can shift the focus of budget allocations from subsidising the modern sector to supporting appropriate technology, skills development, social entrepreneurship and cash flows in poor and marginalised communities.
This means accepting the advantages of the global market for sectors that are already globally competitive, while supporting and protecting developing sectors until they are ready.
All this requires a shift in mindset. It may already be happening. The Economist magazine, embedded in the global market ideology, has admitted that free flows of capital have severely damaged developing countries.
Minister of Finance Trevor Manuel said in Addis Ababa last week: “We didn’t think for ourselves. We were happy for others to tell us what to do.” The “others” included US Federal Reserve Governor Alan Greenspan, who warns of an “unwelcome substantial fall in inflation” — a euphemism for recession — while his counterpart in the Bank of Japan says “a financial crisis could be triggered at any time”.
The more dependent we remain on global “opportunity”, the less chance we have to withstand that crisis.
South Africa’s plight is dire. Unemployment is growing, with accelerating lay-offs and liquidations. Minister of Environmental Affairs and Tourism Mohammed Valli Moosa tries to cheer us up with the news that 10 000 jobs have been created over three years — the result of a R585-million investment.
We need radical solutions. In the immediate future we must use our power flatly to refuse to negotiate any more “liberalisation” until the pro-mises others have made to us have been fulfilled. We must refuse to agree to rules that do not suit us.
We must restore to the Reserve Bank the right to regulate the flow of capital in and out of South Africa. And we must give priority to working with the rest of Africa to localise economies across the continent.