Building an African Infrastructure

Paul Collier
Key political decisions are needed to build critical rail networks for
a continent well suited to them
THE coming decade could be Africa’s opportunity for investment. Globally, there is a massive pool of investable private resources. Prospects in the advanced economies look bleak, and in the major emerging economies—the so-called BRICs: Brazil, Russia, India, and China—the future is looking more uncertain. Although Africa is not immune to global risks, its continued growth is likely to rest on the potential for further resource discoveries and for commercial cultivation of its vast, underused agricultural land.
New transportation infrastructure is vital to harness these two potential sources of growth. At the top of the list is the classic form of economic infrastructure: railways.
The continent is a huge landmass, well suited to railroads. Yet during the past half-century Africa’s rail network, never very extensive, has shrunk. Even the United States, a huge landmass with relatively low population density, has one kilometer of track for every 43 square kilometers of land. By contrast, Nigeria, home to one-fifth of the population of sub-Saharan Africa and one of its most densely populated countries, has but one kilometer of rail for every 262 square kilometers. Nigeria is not atypical: by radically reducing transportation costs, railways could open up vast tracts of Africa to economic opportunities, especially in agriculture and mining, which many countries are relying on for future growth. The continent needs a decade of massive investment in rail networks.
Politics at play
Railways are hardly technologically challenging. They represent the oldest continuous industrial technology. Africa’s lack of railways compared with other regions is primarily a consequence of politics. Although railways are technologically simple, they are politically complicated—for three fundamental reasons:
• Railways are a primary example of a network industry. The key feature of a network industry is that its operations are so interconnected that it is more efficient to run it as a single entity. This presents an unavoidable role for public policy: how to manage a monopoly provider in the public interest.
• They are a classic example of high fixed costs relative to operating costs. In the parlance of economics, the marginal cost—the cost of producing one more unit—is well below the average cost. For social efficiency, prices should be set around the marginal cost, but for an activity to be commercially viable prices must at least equal the average cost. This tension in pricing calls for a political solution: typically either a subsidy from the government or cross-subsidization from users who are not very price sensitive to those who depend on cheap rail service.
• The mainland continent of Africa is split into so many countries that inevitably rail lines need to be international, especially because many of the countries that would benefit most are landlocked. Yet a transnational network investment is potentially at risk from each national polity. Indeed, each time rolling stock crosses borders a valuable asset moves into a new jurisdiction.
Because African governments have yet to tackle these three political challenges, the African rail network remains inadequate.

Organizing a network industry
Railways are not the only network industry. Telephone service and electricity are other important examples. In Africa phone networks are usually provided by the private sector but subject to regulation; electricity is usually in the public sector and run as a public monopoly. A rail network could be run under either of these models. However, in Africa public ownership and management of the rail network is unlikely to be the best approach. Governments have so many other pressing needs that they cannot afford to finance the huge cost of a rail network—new or rehabilitated. Furthermore, African governments’ resources are already stretched so thin from management of their core functions that peripheral tasks are best organized by the private sector.

The Tanzania Zambia Railway Authority (TAZARA), the rail link between Zambia and Tanzania built by China in the 1970s, offers a salutary lesson. TAZARA today barely functions. Building a line is not enough; it must be well managed and linked to potential commercial users. Currently, many African governments could get financing for more such Chinese-built lines in exchange for mineral concessions, but granting mineral concessions means mortgaging Africa’s limited wealth and should not be done lightly.
Africa’s particular needs suggest that a rail network should be a regulated private monopoly, with both financing and managerial expertise from a private company. But regulation poses difficulties that may be insuperable. It is not possible to anticipate all eventualities: presenting a public rail regulator with a set of agreed rules to be implemented is not enough. To cope with unforeseen circumstances, the regulator must have some discretionary room. But in African governance environments such discretion would likely kill private investment. With the region’s reputation for corruption, even an honest regulator’s decisions would be subject to allegations and expectations of bribery. Once a regulator is given the power to set prices that could bankrupt either the railway company or its customers, neither group would be willing to risk investment.
Fortunately, there is a viable alternative to a domestic regulator with discretionary power—namely, an international dispute settlement board whose members are approved by governments, investors, and customers. This is a standard means of international contract enforcement, and indeed one commonly used both by foreign investors in China and by Chinese investors in Africa. The record of these boards is good. Despite frequent findings against governments, there is a high rate of compliance with decisions. Before investment, a government, an international rail investor, and commercial rail users can negotiate a mutually satisfactory agreement and lock it in by including a contract clause that refers disputes to such a procedure.
Differential pricing
As noted above, because the fixed costs of rail investment are so large, marginal costs are substantially below average. This would generally argue for public ownership, with government using tax revenues to subsidize the fixed costs of the network to keep the price to users around the marginal cost. The importance of such low pricing is not just hypothetical. Although rail networks can open up huge tracts of little-used land to commercially viable agriculture, the amount of usable land is likely to be highly sensitive to transportation costs.

While marginal cost pricing would be very helpful for opening up African agriculture, African governments are in no position to finance such a subsidy. Indeed, even if a government were to provide a subsidy, it might actually deter investors because of the government’s limited long-term credibility. Neither potential rail operators nor potential commercial farms would trust a government commitment to a long-term subsidy.
As with regulation, there are feasible alternatives: price discrimination among users is one. Price-sensitive users can pay only marginal costs, if higher-profit industries less sensitive to transportation costs pay more. In Africa, rail networks have two principal potential users, mining and commercial agriculture.
Many natural resource discoveries will be far from coasts and will require lengthy rail links to move ore to ports. Without these rail links vast tracts of underused land would have no commercial value. The core economic challenge is to organize the rail network in a way that meets the needs both of the extraction industries and of agriculture.
Mining operations require railways and ports. Were there no agricultural users, the mining companies themselves could finance the rail network from some of the high profits generated by extraction. As long as these rail links serve agriculture and resource-extraction users, agriculture need pay only the marginal cost of operation. In effect, the differential profitability of mines and agriculture creates the potential for price discrimination between them.
Mining companies, eager to open up resource-laden lands, have offered to set up such railways, even though these companies are not likely to welcome or desire multifunctional use of the rail network. Mines are accustomed to dedicated services. With the price for agricultural users set close to the marginal cost, the hassle for the mining company of serving other users would far outweigh the benefit from the revenue. For governments, however, a multiuser rail network is very desirable. Especially in light of the uprisings in north Africa, the imperative across the continent is to generate jobs.
Modern mining, which is becoming increasingly capital intensive, generates few jobs and is often damaging to the environment. As a result, the local population may see few direct benefits from mining operations alone. But commercial agriculture can generate both mass wage employment and opportunities for small farmers—a large constituency that will benefit from a rail network made viable by resource extraction.
Who will run the railway?
Such a multiuser rail infrastructure, while attractive, is organizationally demanding. Who will run it? As noted above, it would be beyond the core competence and natural interest of a mining company to run a railway that prices its service for farms at their marginal cost. As a result, even if a mining company were to provide such rail service, farms would likely mistrust it because of its peripheral nature for the mining company. Further, resource endowments are unlikely to be discovered all at once. A single rail company would, in effect, have acquired the exclusive right to any undiscovered minerals. Other resource-extraction companies would not be likely to explore if they had to depend on the single rail company to ship their ore. In that situation, the government would have radically less future bargaining power over mining concessions.

Yet, as already discussed, government control is probably not a good solution either. A third-party commercial operator with core competence in infrastructure but without mining interests appears to be the most credible option. All rail contracts would include an agreement with the government and commercial users—enforced by reference to a dispute settlement board—that builds in price discrimination. The agreement would ensure that the difference between average and marginal costs is covered by the high profits of natural resource extraction, with agriculture charged only the marginal cost.
Such contracts could provide the underlying security needed for a rail company to raise sufficient money to build a rail network, ensuring recovery of the initial investment from income generated by resource companies. Conversely, it would reassure resource-extraction companies of consistent railway service free from political motivation, and commercial farms would be assured low-cost transportation to market.
An international rail line
In many cases the track of African railways must cross national borders. For example, South Sudan, Uganda, Rwanda, Burundi, Zambia, Malawi, and the eastern Democratic Republic of the Congo all need rail links to the coast of east Africa—through Kenya, Tanzania, and Mozambique. Similarly, the most efficient route to the coast from eastern Guinea, which has many valuable minerals, is through Liberia. Yet for the past half-century the governments of these countries have not sustained the necessary political cooperation to make such transnational lines work.

If a rail line is transnational, pricing issues become more complex. For example, the natural resource may be in one country (at the rail head), while most of the agricultural land to be opened up may be in another country. Moreover, because much of the output—ore or agricultural—is for export, the monopoly position of the port gives the government of the coastal country the ability to negate a pricing agreement confined to rail charges by inflating port charges. Another complication occurs because the rolling stock keeps crossing borders. Unless there is a coordinated approach to legal recourse, the engines and cars cannot be used as collateral for loans, which will make the financing cost unnecessarily high. Finally, because the goods transported by the railway cross borders, they are vulnerable to delays because of slow or predatory customs procedures. Hence governments must make credible commitments to maintaining the free flow of goods in transit.
For a transnational rail line to be commercially viable, the risks for investors and customers must be addressed at the start of negotiations. In effect, the governments involved must agree in advance to a limited but clearly specified degree of pooled sovereignty. An intergovernmental rail authority must be established that has sufficient power to negotiate credibly with a rail company and its commercial users. Clearly, the decision to set up such authorities is beyond the realm of ministers of transportation and rests with presidents and parliaments.
The way forward
After half a century of neglect, it is tempting to resolve the need for rail investment by succumbing to the offers of mining companies. While that would undoubtedly get railways built, it would come with two hidden costs. Once a particular mining company owns a rail network, other mining companies will be reluctant to be depend on it, which would give the network builder enormous bargaining power with respect to future resource discoveries. Governments tend to look at the short term, but mining companies have learned to consider the long term. Further, mining companies have little interest in multiuser railways. They are liable to regard low-value agricultural users as a nuisance. In contrast, governments have an overwhelming interest in ensuring that rail networks serve many users. During negotiations, mining companies will doubtless tout their willingness to provide comprehensive rail service to all, but afterward governments may be in a bind if a mining company finds so-called facts on the ground that it says prevent construction of a multifunctional railroad.

In the scramble to negotiate mining deals, African governments risk missing a historic opportunity to transform the transportation arteries of the continent. The past impasse over rail provision did not stem from a lack of financing, but from inadequate political design. Because railways are network industries, they cannot be kept in check by competition nor—because of deficiencies in African governance—by regulation. The solution is to write contracts subject to dispute settlement boards. Because railways have high fixed costs, social efficiency will require subsidies for price-sensitive users. Subsidies cannot come from cash-strapped governments, but can be achieved through price discrimination. In Africa, rail arteries must be transnational, which can lead to intercountry disputes and holdups that would deter private investment. Yet these risks can be addressed by subregional rail authorities with decision-making power.
Africa’s current generation of political leaders has the opportunity to open the physical geography of the region. The decisions they must make are complicated, and much is at stake for the economic well-being of the continent. But forewarned is forearmed.■
Paul Collier is Professor of Economics and Director of the Centre for the Study of African Economies at Oxford University.

9/11 Ten Years On: A Risk Diffused

by Dr Alexis Crow
In the run-up to the anniversary of the attacks of September 11 2001, the Obama administration is circulating two different messages: one for domestic consumption, and one for its overseas allies.

The first message is aimed at rallying political support, and is likely to tout the killing of Osama bin Laden as an operational victory in the midst of a larger strategic campaign. The second message emphasises that the anniversary of 9/11 is – according to one official – 'not just about us.' The Obama administration seeks to transmit what it calls a 'positive, forward-looking narrative' to its allies. Yet how positive can the US and its allies be in the continued struggle against Islamic fundamentalism?

On the one hand, we have moved away from the presumption (led by the US) that the 'war on terror' was the defining strategic imperative – or the ordering principle for international security – of the era. This is a welcome fact for the very reason that the war on terror was unwinnable. It was exhaustingly costly to those who chose to wage it – from the lives lost, to the material and economic costs, as well as from a political standpoint.

The challenge of global Islamic terrorism now has diffused into a set of diverse risks: it has joined the ranks of older Cold War threats such as nuclear proliferation and state failure – and also the ranks of newer 'post-modern' risks such as cyber-war, climate change, and energy security.

Policy-makers need to respond with a pragmatic, realistic assessment of fighting terrorism in such a complex strategic landscape. It will require creative thinking in terms of resources, infrastructure, and partners – specifically, dynamic relationships with new partners with whom America and its allies have not previously engaged.

Crucially, this means that the US should not view risks such as terrorism through a Cold War system of deterrence, which is currently being hyped as Washington’s innovative strategy on terrorism. This 'new' policy of containment and deterrence is not entirely engaging and creative, and fails to take stock of the complex strategic landscape in which Euro-Atlantic societies operate. Yes, drone attacks are effective and promise immediate effect without lasting commitment, but disrupting transnational and global terror networks, engaging with partners on terrorist finances, halting piracy off the coast of Somalia – all of these risks require new thinking. The US could lead the way by adopting a flexible combination of tools, allies, intelligence, and push to engage with countries such as Russia and China.

Such a policy shift is politically expensive in the West: it necessitates an admission that the single risk of terrorism has been supplanted with many others, and furthermore that risks cannot be managed alone and may require cooperating with non-traditional allies or even the 'bad guys'. Only in such a way can the US and the wider West be 'forward-looking' beyond 9/11.

Libya: AU’s lost opportunity

By Elizabeth Sidiropoulos

VICTORIOUS: A rebel fighter stands on the back of a truck with a rocket launcher in Muammar Gaddafis Bab al-Aziziyah compound in Tripoli last Wednesday. The ransacking of the compound marked the effective collapse of Gaddafis 42-year-old regime. The AU has played a marginal role in resolving the Libyan crisis, says the writer. Picture: AP

In life realities on the ground often lay waste to the best-laid plans. So has it been for the AU in the Libyan crisis. Since the rebels entered Tripoli on August 21 the hand-wringing around the AU’s marginalisation by Nato during the campaign has reached a crescendo.

In that period, the Transitional National Council (TNC) has been recognised as the legitimate government in Libya by many states, including 20 from Africa; there has been a diplomatic flurry of activity on both sides of the Mediterranean with pledges for reconstruction assistance… and oil contracts; and the Libya Contact Group met in Istanbul – all this before the AU’s Peace and Security Council meeting on August 25 and 26. Has the AU lost another opportunity and how did it come to be much less important than the Arab League on the Libyan question?

First, although the AU had drafted a road map as early at March 10, it failed to win genuine support for it from both sides of the Libyan fray.

Second, the Arab League and Turkey’s support for Resolution 1973 provided, in Western eyes, sufficient legitimacy for Nato. Western and Arab interests coalesced in Libya. Resolution 1973 makes only scant reference to the AU, but emphasises the important role of the Arab League “in matters relating to the maintenance of international peace and security in the region”.

The resolution further notes that member states that have notified the secretaries-general of the UN and the Arab League are authorised to take “all necessary measures to enforce compliance with the ban on flights”. No mention of the AU. Should the three African states on the UN Security Council not have sought to insert the AU into that paragraph?

Third, once Resolution 1973 was passed by the UN Security Council, the AU failed to recognise that if it wanted to stay in the game it would have to escalate its diplomatic engagement (given its absence of hard power) not only with the Libyan parties, but critically with Nato, the Arab League and key countries such as France, the UK, the US, Turkey and Qatar. The Nato sorties, supporting the armed rebels, inevitably shifted the balance of power in Libya.

Fourth, it was extremely unlikely that the Europeans particularly would cede any political initiative to the AU – not only for the oil, but because Libya borders on the EU. African migrants have used Libyan shores as a springboard to enter Europe for a long time; the upheaval engendered by the Arab Spring across the southern Mediterranean exacerbated this, with the concomitant anti-migration backlash in Europe.

Last, while the AU’s Constitutive Act provides for involvement in members’ affairs where there have been gross violations of human rights, the fact remains that the AU lacks the political will (and often the means) to play hardball with some of its recalcitrant leaders who flaunt the very principles that the organisation is meant to espouse.

The West and Arab states were not going to rely on the AU. A drawn-out process of negotiation, while Gaddafi waged a war of attrition on the opposition, was not going to be permissible. Thus, once the “dogs of war” were unleashed, the AU’s road map lost any political capital it may have had as a credible alternative: ostensibly open to the AU’s overtures, Gaddafi would have stalled rather than negotiate himself out of power, and Nato’s entry meant that the rebels sniffed victory.

Lest we forget, Resolution 1973 was adopted in the face of an escalating brutal assault on protesters by an increasingly belligerent Gaddafi, who had failed to heed the calls from many quarters (including the AU) to cease military operations against civilians. Reforms had been promised several times but never carried out. In February and March Gaddafi calculated that the rebellion could be crushed. He was in no mood to negotiate with “rats”.

Furthermore, the Libyan uprising was part of the wave of grassroots uprisings against dictators (mostly West-aligned) that started in Tunisia. Even the Libyan leader had been rehabilitated in Western eyes a few years earlier. The cry in the Arab streets was for an end to these oligarchic regimes that had led to economic hardships.

Ironies abound, of course: the Arab League’s membership is hardly a who’s who of democracy; the TNC’s democratic credentials still need testing; and Bahrain, where Saudi Arabia helped to quash protests against the state, is not the object of the same concerted international response. “Regime change” was inevitable, but probably should not be articulated so unashamedly by Western powers, and the rebels have perpetrated crimes against civilians, too. Yet, these do not exonerate a megalomaniac dictator who did not realise that his time was up.

The AU often hesitates in condemning African leaders who use violence to obliterate internal opposition. Its intention may be to avoid escalation, but when is the right time to escalate the firmness of the dialogue and when is the time to use a combination of tools to effect an outcome? As the AU hopefully assesses its performance over the last few months, these are the tough questions it must seek to understand.

The AU rightly opposes unconstitutional changes of government, but still has to resolve the dilemma of what to do with regimes that provide no real political space for opposition and political contestation.

So what should be the AU’s next steps? Its road map may still be relevant in principle, but developments have overtaken it. The Libya Contact Group has met. The “Friends of Libya” will meet in Paris on Thursday. The AU and six African states (including South Africa) are only observers at the Contact Group. The AU can’t expect to influence outcomes in Libya from the margins of the locus of power or by running a parallel process to that of the Contact Group. It should seek to integrate its high-level ad hoc committee into these processes.

It should also recognise the TNC. Not doing so quickly will make it more irrelevant in the post-Gaddafi Libya and unable to play a meaningful role in pushing for, as its August 26 communiqué said, “an inclusive transitional government, the establishment of a constitutional and legislative framework for the democratic transformation of Libya… and the national reconciliation process”. The latter should be linked to a transparent investigation of atrocities committed by both sides. At the Security Council, South Africa, with Brazil and India, should argue strongly for the UN to reclaim its central role in the process, as the Contact Group reports have argued. If the AU does not take these actions now, its objections to its marginalisation will become a self-fulfilling prophecy.

Asia’s Development Miracle and Africa’s Development Tragedy of the Late 20th Century: Key Lessons

1. Introduction

At the time of decolonisation in the 1950s and 1960s, the level of economic development in most of Asia was comparable with that of Africa. For instance, four decades ago, the per capita income of South Korea was comparable with that of the Sudan in Africa. However, since the 1960s, South Korea has achieved an incredible record of growth to become one of the 26 richest countries in the world and was able to join the trillion dollar club of world economies in 2004 while the Sudan is still one of the 33 Least Developed Countries (LDCs) in sub Saharan Africa (SSA).

The Asian miracle and the failure of SSA in the late 20th century puzzles many development thinkers primarily because unlike the Asian countries, the African countries had relatively large endowments of natural resources and hence were expected to achieve higher economic growth in the post independence period.

Although most African countries which gained independence in the 1960s showed rapid economic growth, their growth could not sustain beyond the first oil shock in 1973. By the early 1980s, African countries already began to show sings of economic stagnation and their external deficits had become so severe that donors and other financers were no longer willing to continue to provide support. Thereafter and following the 1980 Washington Consensus, most African countries were forced to adopt the neoliberal Structural Adjustment Programmes prescribed by the World Bank and IMF. However, the outcomes of these programmes were often controversial and sometimes counterproductive.

Meanwhile the divergence in economic performance between Africa and Asia continued. Average annual GDP growth rates for SSA were 1.7% over 1980-90 and 2.1% over 1990-97 while that for East Asia was 7.8% and 9.9% respectively (World Bank, 1999) (in Masware, 2006). While much of the SSA growth was in agriculture, most East Asian growth was in industry. In SSA, real GDP growth has seen a general decline from about 3% in the late 1970s to about 1% in the following decade recovering only slightly in the 1990s ( Lawrence and Thirtle, 2001). On the other hand, for the rapidly growing Asian economies also known as the high performing Asian economies (HPAEs) per capita income growth has been positive since the 1960s. Thus East Asia became an undisputed development success while SSA became a development tragedy of the late 20th century.

The rest of the paper is organised as follows: section 2 provides a comparative development perspectives for the two regions. Section 3 presents Africa’s opportunities and challenges in the 21st century while section 4 concludes.

2. Africa and Asia’s Economic Performance Compared

As stated earlier, after a relatively higher growth during the first decade of independence, the economies of SSA stagnated while countries in East Asia which were at similar level of development with SSA in early 1960s showed rapid and sustainable economic growth. Over the period 1965-89, real per capita annual growth of SSA averaged less than 0.5% compared to 5% for the high performing Asian economies which included Hong Kong, Indonesia, Malaysia, South Korea, Singapore, Taiwan and Thailand (Maswana, 2006). As a result in 1997, SSA GDP per capita was US$560 as compared to per capita income of US$4,230 for Latin America, $750 for China and $24,710 for the industrial world (Maswana, 2006).

In its 1993, The East Asia Miracle Report the World Bank (in Maswana, 2006) offered number explanations for rapid growth in this sub region. Among these high savings and investment rates, a relatively high degree of equality, high growth rates of human and physical capital, high productivity growth, (including agriculture), and high growth rates of manufactured exports were considered to be key drivers.

Development theory and practice indicates that economic development generally consists of nations undergoing a series of structural transformations from tradition bound, less productive and less profitable activities to modern technology bound, more profitable and value-added activities. According to Clark and Roy (1997) (in Maswana, 2006), this transformation include the change from less sophisticated to more sophisticated agricultural techniques, from an agricultural to a manufacturing, to perhaps service economy, from light to heavy to high tech industries in post agriculture economies.

While structural tranformation was sustianed and rapid in Asia whose manufacturing export jumped from 22% of merchandise exports in 1963 to 87% in 2000, SSA experienced only a slight change from 7% to 20% in the same period (Maswana, 2006). The main reason for such failure in SSA worng governement developeemnt strategy that neglected the agrciutlture sector. Since the 1960s, the level of the public resources allocated to agriculture in SSA has been consistently low relative to the sectros’s size and contirbution to the GDP. Accoridsng to the World Bank (2000) (in Maswana, 2006), in most African countries, the sector recieves less than 10% of the public investment spending while the sector accounts for about 30-80% of the the GDP.

Another reason for the divergence in growth performances between East Asia and SSA was disparities in savings and investment rates. Saving rates nearly doubled in some countries in East Asia, where they averaged 30% of disposable income between 1984 and 1993 , while SSA’s already modest savings rates fell to 10 to 15% (World Bank , 1999) (in Maswana, 2006). During the period 1980-2004, the savings rates in Africa was 16% of GDP, but it was erratic and remained lower than investment rates of 19% for the same period while savings and investment rates in Asia averaged 30% in the same period and the saving rates in Asia have surpassed investment rates in Asia since the 1990s (Maswana, 2006).

In addition, Asia received an increasing capital flows while capital flows to Africa were limited. In 2007, Asia received over 62% of the FDI destined to the developing countries and the region is regarded as the most preferred destination for foreign investment in developing countries while Africa received only about 10% of the FDI flows to the developing countries.

Moreover, Africa’s trade and industrialisation strategy lacked the dynamism observed in Asia and elsewhere. During the first decades of independence both SSA and East Asia followed Import Substitution Industrialisation strategy that was meant to create domestic industrial base that would be able to compete with the rest of the world at a later stage. However, while Import Substitution Industrialisation strategy in Asia created a foundation for a transition to export-led industrialisation which later served as an engine of growth in the region, in Africa the import substitution strategy led to currency overvaluation, development of parallel currency markets and shortage of foreign exchange required to purchase intermediate inputs used to produce both tradable and non tradable goods and hence transition to the export led industrialisation strategy never materialised.

However, there is no general agreement regarding the causes of rapid development in East Asia. As stated earlier, the causes of rapid development in East Asia are considered to be high rates of saving and investment, appropriate politics, policies, and bureaucracy, investment in human and physical capital, and technology, and promotion of agriculture, export orientation, entrepreneurship, the cultural dimension, and the state with active intervention.

Although there seems to be no general agreement regarding the causes of the East Asian economic miracle of the late 20th century, there is a general consensus on the importance of the following factors: high rates of savings and investment, investment in education, capital accumulation, sound macroeconomic management, relatively open trade policy, dynamic agricultural sector, maintenance of relatively equitable income distribution, and political credibility.

However, still there is no single East Asian development model that can be replicated in Africa. Instead, there are different experiences, policies and outcomes. Booth (2001) (in Lawrence and Thirtle, 2001) argues that there are at least three models of east Asian development: These are (a) a manufactured export led, state interventionist model based on the experience of Japan, Taiwan, and South Korea, (b) the freeport commerce and service dominated model of Hong Kong and Singapore, and (c) the natural resource model of Indonesia, Malaysia and Thailand.

The SSA’s success could depend on more noneconomic lessons from Asia, such as the existence of national identity and political commitment to growth with equity. In contrast to the developmentalist and distributive role of the state, especially in Korea and Taiwan, where relatively authoritarian states identified their maintenance of power with a successful economy, the SSA authoritarian states have become kleptocracies (Lawrence and Thirtle, 2001).

Lawrence and Thirtle (2001) highlight further three essential policy options: First, policies to support agriculture are important, but should be based on price incentives and market opportunities. Second, industrial policy may be ill advised because of the difficulty of identifying target manufacturing industries. Finally, trade liberalization based on the removal of domestic distortions would be the best option for SSA.

3. Africa’s Development Opportunities and Challenges in the 21st Century

After a period of falling per capita incomes that started in the 1970s, African economies began finally to turn around from about 1995, with initially modest increase in per capita incomes (Bigsten and Durevall, 2008). Since 2001 the African economic turn around has become real and sustainable with average growth rates of over 6% per annum partly due to the resources price boom but also due to improved economic policies.

The progress has been largely due to improved policy performance, particularly the adoption of less-distorted macroeconomic frameworks, increased reliance on private sector as a driving force for economic growth, and the improvement in governance in many countries. Although the political news is largely mixed, the emergence of more participatory government regimes has improved confidence and modestly increased investment in more sub regions of the continent (UNECA, 1999).

However, SSA is still one of the least developed sub region with massive poverty and underdevelopment. Thus while there are opportunities for SSA to claim the 21st century there are numerous challenges.

Studies have shown that to reduce poverty in Africa by half during 1999?2015, balanced policies to enhance economic growth and reduce inequality and an average annual rate of growth of at least 7 per cent are minimum requirements. Policies and programmes that promote broad-based, labor-absorbing patterns of growth are critical to ensuring that the poor participate and benefit from income growth. Poverty has a root in the interlinked population, environment, and development dimensions and must be tackled accordingly (UNECA, 1999).

Another change is Africa’s ability to join the information revolution. Africa is the most subdivided continent?with 165 borders demarcating the region into 52 countries, 22 of which have a population of 5 million or less, and 11 of which have a population of under 1 million. The limitations of size are very real from demand and supply points of view, and this makes regional cooperation a sine qua non for competitive entry by any individual African country into world markets. There is also a need to broaden the concept of regionalism and accordingly rethink Africa’s regional integration strategy (UNECA, 1999).

Industrialization is the key to increasing Africa’s participation in world commerce and finance, is crucial to the structural transformation of Africa’s economy, and provides the platform for enhancing Africa’s competitiveness in an increasingly globalized economy. Yet the level of Africa’s industrialization remains low, as illustrated by three key facts: first, there are only a handful of countries where manufacturing as a share of GDP exceeds 25 per cent?the benchmark for considering a country as having achieved the threshold of industrial take-off; second, the export composition of African countries continues to be dominated by primary rather than by processed or semifinished products; third, the ratio of public expenditure and private investment in scientific research and development remains minuscule as a percentage of GDP in all African countries (UNECA, 1999).

The continent has to devise polices to attract FDIs, has to rapidly expand human and physical infrastructure and fully participate in the global information revolution.

Africa has to build its capacities to accelerate growth to 8 per cent per annum and sustain it at that level well into the second and third decades of the 21st century. Only addressing these issues will prevent countries which are recovering at present from slipping back into stagnation. Thus, in spite of the recent good news, the challenges ahead for Africa to deepen economic and social progress and to sustain it over the next two decades are formidable.

Africa is a region with a very high economic risk. This means that both domestic and intentional investors demand a very high risk premium on their investment in the continent. Therefore the quality and stability of the economic environment within which economic agents operate depends on the institutional structure and the quality of government. Although the recent process of democratisation and some improvements in the process of governance are encouraging, the low quality of governance is still the most severe development problem in Africa (Bigsten and Durevall, 2008). Africa has to address the governance challenge as a matter of urgency to sustain and improve the current growth opportunities.

4. Concluding remarks

Although SSA and East Asia were at comparable level of economic development during the decades of decolonisation, East Asia quickly outperformed Africa in economic advancement. There is now a general consensus on the importance of the following factors in ensuring rapid development in East Asia : high rates of savings and investment, investment in education, capital accumulation, sound macroeconomic management, relatively open trade policy, dynamic agricultural sector, maintenance of relatively equitable income distribution, and political credibility.

Due to these factors East Asia achieved rapid transformation from non sophisticated, low-valued added economic activities to highly sophisticated high-tech led and highly profitable modern economies. On the other hand, Africa remained the poorest and the most marginalised continent in the world.

However, after more than two decades of decline, the African economies saw a turnaround beginning in mid 1990s. The turn around has accelerated since 2001 with sustained annual average growth in excess of 6%. However, to meaningfully reduce the rampant poverty in the continent in the foreseeable future, the continent needs to accelerate its growth to over 8% per annum.

There is no single East Asia development model that can be replicated in Africa. To achieve and sustain higher growth levels, Africa needs to devise balanced economic polices that put the private sector at the centre of economic growth and job creation, rapidly expand human and physical infrastructure and fully participate in the global information revolution, industrialise rapidly, devise polices to attract FDIs, and address the current severe problems of governance.


• Bigsten , A. and Durevall, D. 2008. The african economy and its role in the world economy. Current African Issues 40. The Nordic Africa Institute.

• Maswana, JC, (2006). Economic Development Patterns and Outcomes in Africa and Asia. Congo Economic Review. Working Paper WP04/06-2006.

• Lawrence, P. and Thirtle, C. (eds) (2001) Africa and Asia in Comparative Economic Perspective. New York: Palgrave.

• UNECA, 1999. The ECA and Africa: Accelerating a Continent’s Development Chapter1. United Nations, ECA.

South Sudan: Opportunities and Challenges

by Alex Vines
When South Sudan becomes the world's newest state on the 9 July, the opportunity is there to build a more sustainable and peaceful relationship with Khartoum and its neighbours. Joining the UN, African Union and other international clubs (including the Commonwealth) will be the easy part. Establishing a fully functioning state is a long term project. When the celebrations are over, South Sudan will begin the difficult task of state building.

Few new states founded since decolonisation have faced the developmental challenges of land-locked South Sudan, a state which lacks infrastructure and economically is dependent on oil produced near the northern border, to the tune of around 95% of government revenue. Its vast agricultural potential has yet to be exploited.

The challenges are huge
Peaceful co-existence with the North is critical. Khartoum needs to honour its promise to be the first to recognise the new state. A long shared history and ongoing commercial, cultural and political links mean that the two Sudans will remain intimately entwined.

But internal politics in North and South Sudan have the potential to sour the relationship between the two states. The recent fighting and bombing of villages in South Kordofan in North Sudan will take on an international flavour after July 9. This is an area with considerable support for the Sudan Peoples' Liberation Movement (SPLM) who are the governing party in the South but will remain active as a political party in north Sudan. Links forged over decades of war with areas like the Nuba Mountains will continue to be relevant for Southern politicians.

The legacies of the civil wars in Sudan remain unaddressed. Rival leaders who fought the Sudan Peoples' Liberation Army/Movement in the south have been paid off or given grand titles to maintain their support. However this is not a sustainable long term strategy. Disgruntled commanders in the South have already rebelled against the government in Juba and this trend may well continue. South Sudan will need to create space to peacefully and openly manage dispute and expectations.

The prognosis is not all bleak
Many doubted that Sudan would make it through the six years of transition mandated by the Comprehensive Peace Agreement without a return to full scale war - that it did is a testament to the benefits of peace. South Sudan will find new partners willing to make investments and sell goods and services. Tapping into resources, financial and human, especially from East Africa may give South Sudan a quicker route to prosperity.

South Sudan's independence is a historic moment. It offers citizens a unique opportunity to put an end to over a century of conflict and marginalisation. International support can help state building but its sustainability will only come from the political vision and hard work of the South Sudanese themselves.


By Mammo Muchie


Network of Ethiopian Scholars (NES)

April 24, 2011

“This is my plea to the new generation of African leaders and African peoples: work for unity with firm conviction that without unity there is no future for Africa…I reject the glorification of the nation-state, which we have inherited from colonialism, and the artificial nations we are trying to forge from that inheritance. We are all Africans trying to be Ghanaians or Tanzanians. Fortunately for Africa we have not been completely successful…Unity will not make us rich, but it can make it difficult for Africa and the African peoples to be disregarded and humiliated. And it will therefore increase the effectiveness of the decisions we make and try to implement for our development. My generation led Africa to political freedom. The current generation of leaders and peoples of Africa must pick up the flickering torch of African freedom, refuel it with their enthusiasm and determination, and carry it forward.”Julius Nyerere, First president of Tanzania

‘The present consolidation of African states within the former colonial frontiers runs counter to much of what had been both predicted and desired during the colonial era. It was widely assumed that as soon as Africans came to freedom they would sweep aside the arbitrary boundaries imposed by the imperialists which cut across tribes and overrode the dictates of geography and economics. The continent had been partitioned to meet colonial convenience, but it would now be reshaped to realize its natural contours and return to its natural essence.’( Rupert Emerson,1962)

“...Constructing a nation from scratch: We know we don’t have the knowledge. We know we do not have the resources. We know we do not have the experience. Our conclusion is: let’s face it.” Isaias Afewerki, current president of Eritrea (quoted from National Geographic, June 1996, p.87)


Failure to defend Ethiopia’s history, is also a failure to live up to the worthy expectations of all those who derive so much spiritual energy from the idea of Ethiopia as a free provider to the world of the ‘resistance-liberation logocentric imagination’ that is much needed as a tangible resource still in vulnerable and penetrable Africa. Ethiopia is synonymous with the very idea of a de-colonising imagination. Its history of successful resistance is the timeless bearer of this alternative decolonising logo for the spread of the African world’s liberation imagination. Ethiopia- as an anti-colonial symbol- is very relevant today, as it was yesterday and will be too in the future. The significance of Ethiopia’s history now, at a time when Africa is being re-threatened with war needs to be appreciated. Its importance during this time when the former colonial powers are returning to Africa with military aggression cannot be lost to both those willing to resist the new aggression and those who commit this latest aggression. At the core of Africawinet is this Ethiopiawinet that is a bearer of dignity and resistance to the repeated humiliation Africa is confronted with by external aggression. Ethiopiawinet is at the core of the African renaissance. It is also at the core for ending Africa’s repeated humiliation. This is because African unity can be anchored with a value and dignity that Ethiopiawinet attained over 500 years of resistance. This achievement by the Ethiopian-Africans that resisted all forms of humiliation is a positive data for building Africa’s united future and to bring back the African unity first agenda to the fore today. It is for these reasons we respect our ancestors, whatever their shortcomings, and problems they were unable to solve in their life times and left behind for future generations to settle. They left the timeless inspiring resources to build Africa’s united future. The positive data they left us in the Ethiopian history remains to this day a relevant asset to build Africa’s much united future. Ethiopians now and in the future must always value and treasure this great historical achievement and not play the current ugly, divisive and cynical ethnic games that the selfish ruling elite play by dividing and degrading this core provider of Africa’s overall liberation imagination into vernacular-ethnic enclaves. Ethiopians as Africans and not as degraded ethnie must unite and strive to make ethnicism as a past by coming together with foresight and sense of history. They should do it now and not tomorrow to restore the historical imagination that will make a difference to the African world as a whole!

1. What is Ethiopiawinet?

Ethiopiawinet should be built and developed from the following characteristics Ethiopia has to this day:

a) Long history-perhaps as long as Persia’s and China’s,
b) An internally generated civilisation (written, art, architecture, music, religion and so on),
c) A history of resisting and scoring victories against economically and politico- militarily superior forces,
d) A unique psychological make up where the notion of the divine and the sacred graces every activity that the people engage in.

The individual, the state and the nation use for their lives divine presence whether they are Christians, Muslims, Judaic and even Pagans. The state had its own ethos and had its own ‘Fetah Negist’ and ‘Kibre Negist.’ In war we note how the idea of the divine is invoked to give courage to the troops when they charge(e.g. Giorgis’s participation in Adwa!) and in victory the people show humility by referring that all their power is due to God.

Whether we like it or not religion is a way of life to the rural majority of the population. And the change we want, the modernisation we seek is to make life better for the majority of the rural areas. We do not go and preach Jeffersonian democracy or Marxism to them. If we are serious we go and learn from them and build on their beliefs and make modernisation sensible by translating it into the language and way of life they are used to. This is how Japan, Korea and others did it by appreciating their context but not rejecting it like the strange ruling elites that replaced the traditional system are doing now!

Even China with its Marxism did not reject Menicusian, Confucian, Taoist and Buddhist values which the population had. They tried to Sinnify their modernist weapon Marxism so that the people can embrace it. Like everything else which came into contact with China, Marxism became absorbed rather than the other way round! They call it Marxism which Chinese characteristics and in reality in China Marxism was not used like in Ethiopia. Mao Tse Tung started by investigating first the peasant movement in Hunan where he was born, not by throwing half-baked and non-comprehended phrases from Lenin and Stalin. He did not select phrases that insult to persecute and even kill his comrades as it happened in Ethiopia. Never forget in Ethiopia after people were killed, the strangest things also have taken place where apparently along with the dead body was placed 'I was a dog' and I deserve to be killed -- or some strange ani-Ethiopian and anti-humane things were done! When a person dies in Ethiopian culture, one always tries to remember the good the person did by trying to forget the bad the person did. This is the noble culture that was inherited from Ethiopia’s past that was abused by doing these strange things to dead bodies!

There is an Ethiopian value system from our tradition that we need to bring back and blend with modernisation. The core ideas are the four key principles of Ethiopiawinet. We need to treasure them, not fight Ethiopiawinet! What makes the person from the South to those in the North connect mysteriously is this shared experience which was passed on from the wider Ethiopian culture confluence and communication.

2. The Mistakes of our Generation

Our generation was engaged in intellectual copying. We ignored both
history and reality and embarked on a journey that has cost Ethiopia
dearly. Basically we said because Marx, Engels and Lenin are right,
Emperor Twedros, Yohannes, Menelik and Haile Selassie are wrong. This was a very dogmatic logic, ignoring both historical evidence and reality. Did we not pay a price badly for this. We still do. We better ground ourselves from our own history, our own challenges and how to change society by a process of grounded appreciative theorising. We did not do this. We need to bring back the anti- colonial and anti- imperialist and
nationalist imagination coming naturally from Ethiopia’s history that continues to be treasured by Africans the world over.

Our generation rejected this by mounting two major myths: a) the Dergue employing Jacobin-Stalinist terror tried to force its hackneyed “Marxism” down the throat of the bewildered population, b) the various ethnic based fractional movements echoing rhetorics from China, Albania, Vietnam and so on tried to create ideologies of Tigreanism, Eritreanism, Oromoism and recently Amharism and anything and everything but Ethiopianism. They even have ethnic flags. We have many flags in Ethiopia now, not one flag that I see every day also in much of Africa and the rest of the world. Others are proud to use the Ethiopian flag, whilst the ruling ethnic elite diversify the number of flags to entrench ethnicism and undermine Ethiopian history.

Ethiopia is in a strange paradox: Ethiopia reminds me of Witgestein’s prescient remark of a nation being run by elites who are trying to disrupt its future by climbing through the chimney and the window of ethnic fragmentation, when all along the Ethiopiawinet as Africawinet door to build its glorious future has been wide open.

What is wrong with holding on and inheriting our Ethiopia and add modernisation, renewal and democratisation without breaking the framework and subtracting the nation and parcelling the state? Do we need to regress by relying on the politicisation of culture, language and blood to blackmail our way into power with Ethiopia as it is or by breaking it up altogether?

I believe the best and most possible cultural rights and expression for all the ethnic communities without subjecting them to ethnic cleansing and other violence is feasible with a healthy Ethiopiawinet. I do not see why we should not organise by affirming Ethiopawinet and maintain active local engagement wherever we come from. The key is to democratise the state, individual and the nation by affirming and not being condescending
to the past.

The theory of the nation which decomposes Ethiopia by weaving the myths of Tigreanism, Eritreanism, Oromoism and so on goes counter to the core experience of the people, their long history, tradition, character and above all their historically evolved nationhood and state formation.

The Lenin-Stalin notion of the nation which the fractionalisers have imported their divisive politics from to Ethiopia is too scholastic, mechanistic, and deterministic. Itemising factors of language, territory, psychological make up and unleashing every petty nationalist bigot to search how his ethnic group might fulfil one or the other factor in full or in part is one of the most unattractive ventures which corrupts science and social practice at the same time.

Neither the ethnicism of Tigreans, Oromos and so on and nor Stalin’s shopping list definition of a nation are relevant to the Ethiopian situation. They cannot be a higher reality to the experience of our people. An experience where there was injustice along with civilisation, a history of epic resistance and a unique psychological make up involving the concept of the sacred in the every day living of all Ethiopians. The attack on this divinely graced Ethiopianet ” wukabi gefafi new” (is de-spiritualising/demeaning!)!

It has been said that the longer we look back in the history of a nation, the further we can look forward or forge ahead in building a collective future. It has also been claimed that history is to a nation as a memory is to an individual. For an individual to lose memory is to lose a grip of reality. It has been a maxim held by African sages: ’They lost their history, so they lost everything.’ A nation, if it wishes to remain a nation must not be denied its right and indeed privilege to make a conception of history that
yields direction and a future and insulates it from falling into a directionless and chaotic path like present day Somalia.

Arguably, contemporary challenges and demands must be taken into account into a nation’s history-making processes, but they must also be confronted to avoid the mindless rejection of Ethiopia’s historical achievements and the intelligent learning from the innumerable failures that is necessary to do individually and collectively as a people. Anything made at the expense of making a nation lose its historical identity, which is not, incidentally constituted from more than the sum of the arithmetic additions of a sum of languages, religions, territory, number of people in an ethnic group, and other variables is to undermine the ontological foundation of Ethiopia as an idea, a dream, project and nation.

Those who wish to opt out make not only themselves suffer, but also those who wish to remain with a positive and constructive rather than destructive and negative appreciation of Ethiopia’s long history. We have seen what came of Eritrea after leaving Ethiopia? We were told Eritrea would be
the South East Asian tiger, but is it that now? Is that what has become of Eritrea by the EPLF’s and TPLF’s gratuitous saying good bye to Eritrea’s core history which is tied with an umbilical chord with Ethiopia’s long social-economic history. History provides self-knowledge to a nation and that self-understanding is a necessary condition to undertake any meaningful development. Lack of consciousness of a nation’s history is not simply an intellectual failure. It can be a moral failure as it can expose unnecessarily a nation to unpredictable danger and suffering. We owe it to our ancestors who bequeathed a nation with history to avoid extremism, negotiate out of our conflicts, and find mechanisms to make social peace amongst individuals, communities and personalities.

It is with a larger purpose and depth of thinking, commitment and dedication that we should cherish both the long memory and current meaning to us of being Ethiopian. There is intrinsic merit to preserve this ancient nation, and not give in to the degrading mantra of ethnic enclosures that has degraded civic Ethiopian citizenship to a particularly virulent and limiting concept of the ethnically defined and vernacularly fenced off citizen. This primordially and biologically condemned citizen must be fully liberated to emerge as the Ethiopian citizen par excellence. There can be no compromise on the Ethiopian and African framework for citizen expression and engagement. Everything is negotiable once the framework is accepted. There can be no negotiation with those who arrogantly and impudently call Ethiopia a fiction and an invention. Without the idea of Ethiopia, there is no idea of a future. Let us not forget that Ethiopia was the first non-European country that defeated a European power. The Japanese sent delegations to learn how Ethiopians organised to defeat a European imperial power. Many Africans in the Diaspora from America to the West Indies were inspired to continue the struggle for liberation owing to this historic achievement. Ethiopia can achieve even more by doing away with tyranny and poverty for good provided it overcomes the pettiness of its politics and reach out to the grand vision of historical presence.

I ask all of you to memorise!

The world fears time
Time fears history
History fears Ethiopia!

Mammo Muchie, DST/NRF Research Professor of Innovation Studies, Also Professor DIR, Aalborg University, Senior Research Associate, SLPTMD, Oxford University,UK.
He can be contacted from any of the links below!