Africa as an economic bloc can only matter in world economy, if there is a drastic paradigm shift in the way the economies perceive globalisation and the different kinds of capitalism, according to Kingsley Chiedu Moghalu, deputy governor, financial system stability, Central Bank of Nigeria (CBN).
Delivering a keynote address at the Woodrow Wilson International Centre for Scholars, Washington DC, USA, August 15, 2013, Moghalu said “Africa has only be important to the world economy in its extractive capacity, which is in gradual decline with the discovery of fracking and shale oil and gas.
“With 3 percent of world trade and 5 percent of total global FDI, the continent still plays a negligible role in global economy.”
To remedy the situation and for the continent to matter positively, he argued that a paradigm shift must take place since the current paradigm – based on unrestrained free markets without conceptual grasp of opportunities, limitations and even the different kinds of capitalism and their implications for African countries – cannot create an enabling environment for the continent to matter in the world economy.
To this end, he recommended that the paradigm shift should first take place in the minds of Africans, based on a new and fundamental understanding about the world, the continent’s place in the world, and how to alter Africa’s trajectory.
According to him, the paradigm shift should be in the main on how Africa engages with the phenomenon of globalisation, which plays an important role in the continent’s economic trajectory
For him, Africa will only matter if her countries become industrial and manufacturing economies, rather than predominantly agricultural economies.
“It means that the number of Africans employed by agriculture must fall sharply with a shift to industrial and service sectors as the main employers,” he said, adding that agriculture will have to become more efficient and industrial with mechanisation and high-yield seeds producing more with less acreage for greater number of people.
The point on shift from agriculture to industrialisation can be gleaned from the fact that 55 percent of world trade is based on manufacturing, while only 7 percent is based on agricultural products.
He also advised that African countries must develop a clear and comprehensive world view, just like their Western and Asian counterparts.
“The Western world view of scientific rationalism and individual rights and freedoms, which resulted in the dominance of science and technology, and innovation as well as property rights and institutions form the basis of the economic prosperity of the West,” he said.
This is ditto for the Asian countries whose world view is based on three core components – a cyclical view of time and space as ultimate reality, the pursuit of stability as an end in itself, and the society as being more important than the individual.
The CBN deputy governor also called for a complete revaluation of what he called “the myth that Africa is rising” since growth rates being recorded on the continent in the past decade do not have corresponding signs of real transformation; growth without structural transformation.
“Are manufacturing economies now the norm? Is economic growth outpacing population growth? What is the role of science and technology, and innovation in African economies?” he asked, saying that African countries must move towards economic diversification and complexity.
“Based on these perspectives, African countries need to re-evaluate commonly held assumptions about globalisation, foreign aid, free markets, foreign investments and so forth, if they are to prosper,” he stated further.
