THE ECONOMIES IN AFRICA ARE SO DISJOINTED

In Africa, the economies are so disjointed that the abundance of natural resources cannot print a virtuous cycle towards development. For nationals, entrepreneurship is stifled by prohibitive taxation and the loss of public savings in white elephants and political spending. Hence the ousting of national entrepreneurs and the absence of the link between the growth rate and poverty reduction.

Globalization of the economy

Over the past twenty years, there has been a worldwide movement towards the integration of national markets for goods, services and capital. This development of trade and financial exchanges between operators based in different countries is known by the neologism “globalization”. Since the end of the Cold War, the movement to integrate developing countries into world trade, long confined to a handful of countries, has become more global. With the exception of sub-Saharan Africa, regions of the world such as Latin America, Southeast Asia and Central Asia are becoming increasingly important in the world economy due to the intensification of their trade with the countries. industrialised and the contribution of foreign private capital.

In fact, the opening up of Third World economies has enabled multinational companies, in the midst of a productivity crisis since the 1970s, to outsource production and internationalize their distribution strategies for goods and services. In the meantime, the partnership between entrepreneurs from developing countries and transnational corporations has been strengthened through foreign direct investment (FDI), on the one hand, the inflow of foreign private capital in the form of portfolio investment , on the other hand.

Benefits of globalization

Globalization is not a new form of imperialism in that it corrects the abuses of traditional economic relations, as well as the division of labor between industrial and commodity-producing countries which, for Karl Marx, was an opportunity increase in surplus value and therefore a source of exclusive enrichment for capitalist countries. On the contrary, the current of globalization has contributed to the growth of the international role of the Third World countries and their influence on the industrialized countries. It has prompted the rapid industrialisation of certain Third World countries such as Mexico, Brazil, South Korea, Taiwan, China, Indonesia, Malaysia …

In sum, the advantages of globalisation clearly demonstrate that today, the question is no longer for developing countries whether or not they can join this trend, but rather to define the conditions for beneficial integration.

Economic constraints of sub-Saharan Africa

Basically, African economies are based on a dualist system juxtaposing two sectors, the modern and the traditional, the formal and the informal: extroverted industry cannot give beneficial impulses to other sectors such as agriculture, the tertiary sector , informal, rural… The essential aim of economic activity consists in producing raw materials for the needs of the metropolis and not the improvement of the general well-being of the population.

While traditional society, confined to the informal sector, does not manage to carry out a profound change in its self-consumption structures in order to switch to the modern exchange economy.

KUZNETS attributes the underdevelopment to this inadequacy in exploiting the available growth potential. This constraint is exacerbated by the fact that the African continent is too fragmented with multiple landlocked countries.

In Africa, the economies are so disjointed that the abundance of natural resources cannot print a virtuous cycle towards development. For nationals, entrepreneurship is stifled by prohibitive taxation and the loss of public savings in white elephants and political spending. Hence the ousting of national entrepreneurs and the absence of the link between the growth rate and poverty reduction.

Situation of foreign direct investments (FDI) from 1990 to date:
While increasing by more than 20% in the 1990s, average annual FDI growth has been only 1% since the 2008 financial crisis.

However, the trend growth in FDI is spread up in 2018: the value of capacity building investment projects increased by 41% to reach $ 961 billion, mainly due to the doubling of projects announced in Asia.

Asia remained the top recipient of FDI, with 39% of global inflows in 2018, or $ 512 billion, thanks to the considerable investments of Asian countries taking advantage of the outsourcing of manufacturing activity from China and colossal investment programs carried out within the ASEAN regional block.

For the African continent, FDI flows increased in 2018 to reach $ 46 billion, or 3.5% of the world total, thanks to the rise in prices and demand for certain basic products, causing sustained investments in the natural resources sector. Segregated in the mining and petroleum sectors, the influx of investments is more diversified in a minority of countries like Kenya, Morocco and Tunisia, resulting from measures to facilitate trade and special economic zones (SEZs) intended to attract investments. (World Investment Report, UNCTAD 2019).

Africa globally presents many business opportunities for the exploitation of mineral resources and as an emerging market for exports from developed countries.

According to the Africa-Pulse report published by the World Bank in September 2016, progress in agriculture will allow the African continent to capitalize on the rapid development of its markets, which are expected to represent nearly 3 trillion dollars by 2030.

Several international initiatives will contribute to increased investment in Africa, in particular: the AGOA (African Growth and Opportunity Act), a preferential system implemented in 2000, extended in 2015 until 2025, to increase and diversify exports to the USA; the 3rd Africa-China Cooperation Forum (Beijing September 2018) with pledges of investments of $ 60 billion over 3 years; the 1st Russia-Africa summit in Sochi in October 2019 which designed a new geopolitical deal outside the West and which proposes to double economic transactions to 40 billion dollars in 5 years; the Tokyo International Conference on African Development (TICAD) co-organized with the UN, the World Bank and the African Union.

On the other hand, the economic partnership agreements between the European Union and the ACP countries which, since 2014, aim to remove trade tariff barriers (customs duties) for exports from ACP countries, while forcing them to open their markets European goods and services, which would cause the loss of tax revenue. In 2015, for example, only 7 ACP States and only 16 of the 28 Member States of the European Union ratified these agreements.

These fine initiatives reflect an international environment favorable to African countries, even if it is up to their governments to adopt socio-economic and political reforms in order to take this historic turning point towards the emergence of the continent. Failing to take advantage of this windfall, Africa risks being invaded by the imperialist powers to take control of its resources as in 1885. Indeed, they should not make us forget that the world has entered a trade war and in a cycle of intense crime.

According to a report published in 2017 by the organization Global Financial Integrity (Washington), the annual turnover of eleven of the main illicit markets is between 1.6 trillion and 2.2 trillion dollars. These include the sale of drugs, illegal mining, theft of minerals and cultural property, illegal logging …

Some organizations also argue that full openness to international trade would be detrimental to countries whose economies depend heavily on agriculture, such as those in West Africa. Examples from countries that have had free trade agreements for several years (Jamaica) show the complete destruction of once profitable agricultural chains, and the consequent impoverishment of producers and rural populations.

Conditions for attracting investors
Public policies should contribute overall to the improvement of the business climate, not only to attract foreign investors, but also national entrepreneurs and SMEs.

Instead of setting up a system of tax exemptions and tariff concessions reserved for transnational companies, the reform of good quality would be the overhaul of the tax system (elimination of 80% of unprofitable taxes) to reduce the operating costs of national SMEs, in order to invigorate the entrepreneurial spirit and the empowerment of populations.

In addition, state-owned enterprises should be subject to drastic consolidation in order to rebalance their operating accounts. While the finances of the government and local communities would be strictly managed, with a real-time financial dashboard, the digitization of the accounts, the award of contracts and public contracts, the independence of the central bank sheltered politicians, publishing accounts on the website, building an inclusive national financial system…

In the politico-social register, the salutary reforms would touch the education system, scientific research and culture, freedom of the press, civil security and justice, health and food, the fight against banditry and drug addiction…

Ultimately, reinvigorated national entrepreneurs, cooperative societies, rehabilitated state-owned enterprises, and the state economy, will be able to act as partners for foreign investors and the foundation that will attract FDI.

However, improving governance remains the sine qua non for access to the financial market and FDI. This can only be achieved by fighting corruption through new platforms for dialogue involving citizens and businesses.

Political reform has always been the best path to economic success. The interventionist political system based on grand corruption and the seizure of the state by the men of the seraglio should be abolished. Meritocracy and the rigorous selection of policies, the raising of public morals, the reform of the electoral system with a view to proscribing the commodification of votes…

It goes without saying that the failure to provide a solid foundation for development has exacerbated social conflicts, the appetite of foreign powers and political instability (Leipziger D. et ali 2006). Without fundamental reform of extroverted and quasi-subsistence economic structures, democracy and the rule of law will remain an asymptote.

African governments should rationalize the management of natural and mineral resources using modern techniques and satellite tracking, while prohibiting artisanal mining, closing borders, except crossing points reserved for international traffic and, finally, providing the customs brigade and defense weapons migration agents.

For the DRC, the large-scale electrification program from renewable energies, would confer economic and ecological attractiveness on a gigantic special economic zone, developing a “low-carbon” industry, preventing the surcharge on products through carbon taxation by rise. (January 2020 Growth Magazine).

Several sectors constitute niches likely to attract investors on condition of being supported by a sovereign fund: the substitution of food imports, the development of textiles and African models, the participation of local shareholders in large industries, the under -treatment in mining production, environment and tourism, promotion and professionalisation of sports, music and culture, protection of intellectual property, promotion of digital technology and professions of the future…

Beyond economic policies, African countries which will contribute to efforts to reduce global greenhouse gases, will be able to benefit from the Green Fund mobilized in favor of LDCs since the Copenhagen agreement in 2009 (100 billion dollars from 2020).

RECOMMENDATIONS
In this perspective, the government of each country should no longer disperse in programs pursuing diffuse objectives, but rather conduct a diagnosis in order to determine the sectors which have a major impact on the development of other sectors.

Given that investments follow “where the business is”, it would first be necessary to attract capital from nationals before being attractive to foreign investors.

In any case, progress is an introspective approach that should start from the knowledge of the African and his environment (scientific research), in order to develop value chains in the informal sector and in the rural world. As a priority, reform the economic structures inherited from the colonial era, by professionalizing the informal sector trades and empowering rural populations, for the purpose of the active participation of all citizens in economic activity.

There is an urgent need to diagnose the internal distortions that hinder factor growth and productivity as well as the competitiveness of the national economy. In short, everything that prevents the optimal exploitation of socio-economic potential should be noted in order to improve general well-being.

As a new paradigm, the African cooperative system is the royal road to the combined achievement of the Sustainable Development Goals (SDGs). Indeed, cooperatism can contribute to the resolution of structural and institutional problems, as well as to the removal of endogenous and exogenous barriers that hamper the economic growth of many African countries, and this, by banishing all ethnic, tribal, political discrimination. or religious.

All in all, the reforms under the banner of the cooperative movement would invigorate the dynamics of production in the informal and rural sectors, so as to encourage village communities to operate rapidly and profoundly their transformation towards economic modernity.

It is precisely by succeeding in triggering growth in agriculture, in a continent which has an agricultural vocation, that the cooperative movement will provide the immense majority of Africans with the means essential for the creation and maintenance of collective equipment, making rural communities, poles of economic development.

Like the countries of Asia, African states must improve the education system in order to acquire scientific capital, allowing them to build an economy favoring national interests. “Unity is strength” is the cooperative motto and creed of the Swiss, Israeli and Danish peoples. The latter drew on the cooperative doctrine of resources to establish a system of self-management of the main branches of their national economy, and to develop scientific know-how and the courage to overcome any difficulty together. Particularly, the Israeli kibbutz were inspired by the life of the apostles of Jesus Christ who led a community existence, related to the Bible, by way of their expression of love for God and neighbor (Acts 4: 32-35).

From this point of view, there should be a moral and spiritual revolution in institutions and throughout the nation. The gospel of Jesus Christ can then constitute a way out of the crisis, by instructing people to seek the moral and spiritual values ​​which constitute the ethical code of socio-economic development, and the key to mastering the economic deal (2 Chronicles 7:14 and Malachi 3: 10-18).

Strongly, cooperative reform will bring about the advent, in Africa, of the rule of law, effectively decentralized, raising public morality, cultivating the scientific heritage which will lead Africans to control the national economy, and to attract foreign investors.

Albert LUTETE