African finance chiefs lash out at market system
The African state must play a larger role in the economy and seek to protect fledgling industries – or globalization will torpedo the continent’s huge development challenges, leading experts warned in Abidjan on Wednesday
The African state must play a larger role in the economy and seek to protect fledgling industries or globalization will torpedo the continents huge development challenges, leading experts warned in Abidjan on Wednesday.
Nigeria central bank governor Lamido Sanusi said: The state needs to be a powerful last line of defence against the capitalist system.
We need a new paradigm to defend our interests, and challenge the paradigm that has been imposed upon the third world by the West.
African policy-makers are taking stock of the regions development model after the financial crisis turned economic orthodoxy on its head.
Sanusi said the West has lost moral authority, after decades of preaching to the developing world the virtues of conservative economic policies and then ripping apart their free market bibles in the crisis.
He blasted the neoliberal policies advocated by the so-called Washington consensus, which touts free markets, fiscal prudence and financial liberalization.
The comments, at an AfDB seminar on Rebalancing the Role of the State and Markets, were a shot across the bows of politicians and businessmen who have pointed to Africas economic outperformance in the past year as evidence of its rise in the global pecking order.
Sanusi said: World trade has grown and Africa has benefited. But this growth has been disproportionately skewed to the rich, creating huge [income] disparities and our whole development strategy needs to be reconsidered.
Alioune Sall, executive director at African Futures Institute in South Africa, said: The crisis has shown that Africa needs to develop its own growth model and neo-liberal model no longer holds sway.
Sanusi said the liberalization of Africas young industries has exposed and destroyed local manufacturing capacity and exacerbated the continents unemployment.
We have exposed our young, immature industries to mature markets, and we get battered. The Chinese will batter our markets; the Indians will batter us. The Americans will batter us. It is time to ask: why are we sending our young forces to battle with these bullies?
But the irrepressible power of globalization will force African policymakers to pay homage to market forces and enforce greater liberalization, said Gudrun Kopp, parliamentary state secretary to Germanys federal minister for economic cooperation and development, told the seminar.
Its not a question of state or private sector. We need to balance the two, she added. The most important challenge is good governance.
Africas lack of fiscal and monetary capacity limits the states ability to be a provider of goods and services, AfDB chief economist Mthuli Ncube said. Rather than ideological debates, he advocated stronger public financial management and beefing up tax revenue collection.
The state in Africa has historically been vilified as either weak, over-dominant, repressive, or too dependent on foreign powers. But in the global bull run, a growing pack of economies embraced conventional macroeconomic policies. Sanusi said post-crisis fallout should trigger a structural shift in Africas economic model.