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Africa or its nation states 16 Jul 2024

Although Africa is one of the world’s most endowed continents, it is the least developed of them all. This contradiction is rooted in the economic and psychological harms of the trans-Atlantic slave trade, colonisation of most African territories, and extant neocolonialism. Since the Portuguese took their first set of African captives as slaves in the 15th century, Africa has remained economically subjugated. The disorientation this has caused African leaders is both systemic and growing worse.

The trans-Atlantic slave trade depopulated African territories by up to 12 million people, at a time when agriculture, which was the mainstay of virtually all the world’s economies, was generally labour intensive. Colonialism entailed the direct taking over of these territories to gain access to their cash crops and mineral resources on non-commercial terms after slave trade was abolished in the 19th century. Neocolonialism has essentially introduced subtilty into the continued pillaging of the continent by the former colonial powers.

This is the shared history and the current reality of the 55 countries that make up the African continent today. But though divided by national borders, the countries have continued to forge continental solidarity – as many believe. But Africa’s brotherhood is a smokescreen. While African leaders band together at supranational levels, they are fomenting division in their own countries. And while they openly commit to the economic growth and development of the continent, they are actively undermining the potentials of their countries to achieve sustainable economic progress.

African solidarity was important in securing the political independence of the African colonies from the colonialists and for ending the apartheid regime in South Africa. Beyond this, the individual African countries are supposed to be competing to grow their local economies and develop, while cooperating to harness or address their common geopolitical opportunities or challenges. But these days, continental development aspirations have subsumed the national ones in Africa. From the continent’s political leaders, business leaders, and civil society organisations (CSOs), everybody wants to develop Africa. But while at it, the countries are evidently slipping deeper into glumness.

The case of Nigeria exemplifies the illusion of a rising tide that lifts all boats, contrary to the supposition of the former US President John F. Kennedy. Nigeria secured independence in 1960 as a federation. Accordingly, its three geopolitical zones at the time, sharply divided by ethnicity and to a lesser extent religion, had strong regional governments. Compared to today, the central government then was weak. This made the regions the epicentres of the country’s socioeconomic growth, as healthy rivalry for economic and social progress among the regions served as a catalyst for regional growth. Nigeria’s regionalism, thereby, accelerated growth in its regions, which coalesced as national progress and projected the entire country as one of the world’s emerging economic powers. The US Central Intelligence Agency (CIA) estimated that, in the 1960s, the Nigerian economy grew at a yearly average rate of 4-5% despite the civil war between mid-1967 and January 1970, which was fought with deliberate starvation of the secessionist Biafran population and caused wider economic slowdown.

The regional political system, which drove this post-independence Nigerian economic naissance, gave way to a more centralised structure from the next decade. A ‘unitary’ system of government, by leaders in either military uniform or civilian garb, has since held sway in a country with three major ethnic groups, with none of them able to impose itself on any other one alone. The ensuing centralisation of political power and fiscal framework has fostered distrust, laziness, structural rigidity of the economy, and a scale of corruption that could only be explained by a lack of patriotism.

While the country knows what worked for its accelerated economic progress, it has not been sufficiently motivated to return to it. From the reality of strong regional governments driving national development, Nigeria has been stuck in the delusion of a strong central government, which is not only decaying but is also holding its constituents down.

On a wider scale, African countries, failing at national development, are talking up continental growth and development. They most recently formed the African Continental Free Trade Area. Going by the number of participating countries, which is 54, AfCFTA is touted as the largest free trade zone in the world. But this merely misconstrues a well-functioning, international free trade area as a tea party. But, whereas the AfCFTA agreement entered into force on 30 May 2019 and was operationally launched on 1 January 2021, the manufactures to be traded do not yet exist as African countries offer primary products that are in multiple jurisdictions of the continent for export markets.

The same flight of fancy by Africa’s political leaders has since caught the appeal of its business leaders. Many business leaders in African countries, especially Nigeria, now fancy themselves as “African” business leaders. Their businesses, which have yet to address the needs of their respective local markets to any meaningful extent, have become African businesses. But we know of US and not North American businesses; Chinese or Indian and not Asian businesses; and, despite the supranational political and economic union of some European countries – the European Union (EU) – what we hear more often than not are German business leaders, French businessmen, and UK investors.

The civil society space is now completing the ‘Africanisation’ of leadership in African countries. In this regard, Nigerian NGOs are increasingly becoming continental institutions. Although there is so much that they need to achieve locally, their remits and interventional coverage have become continental, despite the aphorism: all development is local.

The Africanisation of the continent’s NGOs provides more than an inkling of the disorientation of leadership in African countries. Failing to achieve scale with their interventions in their countries, the NGOs are looking for it across the continent. This model is imbued with foreign dependency. The African ‘multinational’ NGOs have to rely on external funding, mainly from Europe and the United States. Their external funders, who, like the payer of the piper, dictate the tune. Accordingly, Africa’s social sector agenda is being decided outside the continent.

It is important to expose the prevailing Afrocentricism as lame and driven by a misunderstanding and deceit. Africa is not a country. It is the world’s second-largest continent by geographical size and population. But Africa, with $8.9 trillion GDP (in PPP terms), accounted for only 4.9% of global output in 2023, according to IMF’s estimate. With this output value distributed across 55 countries, it becomes clear that Africa’s economies are quite small, especially from the viewpoint of global investors.

But Africa should not be viewed from just one lens of its aggregate output size. Much of its GDP is even in its vast informal sector that is hardly accounted for. Other numbers matter, too. For instance, Nigeria’s population of 224 million in 2023 was more than one and half times bigger than the population of Russia, the biggest European country by population. Nigeria’s demographic profile holds significant investment attraction as does its vast arable land, solid minerals, local manufacturing, services, etc.

However, positive reorientation on Africa by Africans is more important. From time immemorial, the nation state has always embodied the aspirations of its nobility, or the generality of the people, for economic progress. But the quest for it is often beyond its borders. This does not only mean that the desire for economic progress in Africa is a matter for the African nation states. But it also means, at the outset, that Africa would be the main competitive field for its countries to achieve substantial economic progress. This should not alarm anyone. It is already well accepted that internal and external competition is good for market development. As it is also clear, the presence of competition does not mean the absence of cooperation. Accordingly, Ray Noorda, the former CEO of Novell Inc., coined the term “coopetition” in 1992 to describe cooperation among competitors.

Regional cooperative frameworks, whether they are to facilitate intra-regional trade or security, are rooted in the quest for competitive national progress. When the UK felt the EU was undermining its national progress, it pulled off Brexit. But Germany, which exported €877.7 billion of goods to other EU countries in 2023, the largest amongst the 27 Member States of the union, has continued to champion the existence of the common market. France has been pushing for pan-European security architecture because such a framework would be exceedingly economically advantageous to the country.

The economic rise of China was not synchronous with Asia. In the first decades after World War II, Japan had left China behind economically. But challenged by its history of humiliation and adoption of economic reform in the late 1970s, despite the lack of cooperation from Japan, its closest Asian geopolitical rival, China was able to exploit Asian and other markets to achieve a stupendous exports-led economic growth. But as it has been in Asia with the economic rise of China, regional economies benefit from, or are inspired and/or challenged by, the growth of their neighbours. Mainland China has received little credit from Western media and academics for its influence on Asian growth since the last two decades of the 20th century; they instead talk about the “Asian Tigers” – Hong Kong, Singapore, South Korea, and Taiwan – whose growth the World Bank credited to adoption of neoliberal reform. But with the positive correlation between trade and development, sustained uptrend in intra-Asian trade and the continent’s trade with the rest of the world was synchronous with China’s economic rise.

However, the elephant in the room in Africa’s development is the Nigerian disappointment. The country demonstrated how influential it could be for Africa’s political stability and economic progress in the first two or three decades of its independence. But since the country began to retrogress, especially from 2015, Africa has been in a morass. This period has also coincided with the economic decline in South Africa and the rise of xenophobia in the “rainbow nation.”

Afrocentrism should also be noted for its deceit. Many African leaders, while actively undermining the democratic process, including free and fair elections, in their countries, are champions of democracy at subregional and continental levels. Such democratic deceit has been perpetuated by the West in Africa for over six decades, directly and indirectly. Despite its merits, democracy is being used to narrow leadership selection in the continent while foisting, or propping, autocratic (military or civilian) regimes that do the bidding of the controlling Western countries.

With this stratagem, Africa continues to be massively exploited by countries scantily doing good on the continent. A landmark 2020 UN report showed Africa is losing approximately $89 billion annually to illicit financial outflows from the continent, an amount that exceeds the value of development aid to the continent. Therefore, rather than being a “net creditor to the world” as depicted by the report, Africa is trapped in foreign debit.

The solutions to Africa’s underdevelopment are with its nation states. Therefore, if African leaders genuinely want economic progress on the continent, they should focus on developing their countries. The political leaders need not jettison democracy or raise rhetorical or economic hostility towards the past abusers of the continent. Instead, they need to focus on harnessing the economic potentials of their economies by strengthening public institutions, investing in social and physical infrastructure, respecting the rule of law, and fighting corruption. Quite importantly, the national political leaders should support the big indigenous businesses in their countries to grow bigger. From supporting domestic production, government’s incentives should be significantly broadened to support export growth.

Similarly, Africa’s private sector leaders should focus on deepening value creation in their national economies over the next few decades. They should partner with the national and subnational governments on import substitution. Too many African countries, including Nigeria, have relied too much on US and European – and lately Chinese – multinationals for the production and supply of basic goods, including medicine and processed food products. Lately in Nigeria, the exit of a handful of multinationals has worsened product scarcity and inflation, laying bare the productivity weaknesses among the indigenous businesses.

But to be frank, the ego of being an “African” business leader, instead of national identification, is misguided. Nigeria is a big canvas to build a local business that would become global. Until one realises that Ghana more than quadruples the population of Switzerland, one might think that the West African country is really too small to emerge as a major world’s economy and for its indigenous firms to achieve global renown like Nestle, Novartis, and UBS who are proudly Swiss. A shift in the mindset of Africa’s political leaders should be complemented by similar reorientation of the private sector leaders in African countries. Both should be driven by the ideology of national progress.

However, Africa’s multilateral development finance institutions, foremost of which are African Development Bank and African Export-Import Bank, should continue to pursue their continental mandates. But like it is in other regions, their national equivalents in Africa’s biggest economies, such as Nigeria, South Africa, and Egypt, should become much bigger to drive their international economic competitiveness. In Nigeria, two of such institutions that should be aggressively grown are Bank of Industry and Nigerian Export-Import Bank. As of June 2023, the total assets of the continental Asian Development Bank was valued at $302 billion. This was dwarfed by China Development Bank, which had the value of its total assets at $2.6 trillion as of December 2022.

Africa’s NGOs, in particular the think tanks, should also focus their thoughts on developing and supporting the implementation of local solutions to local challenges. The social enterprises can leverage public funding and financing by endowments funds instituted by the successful business leaders. The existing practice whereby Nigerian banks dedicate 1% of their profit before tax (PBT) to corporate social responsibility (CSR) projects could be expanded to other industries. Such a fund could be centrally managed as an endowment fund and be professionally managed, too.

This is not to say Africa’s NGOs should exist in national cocoons. Rather, they should integrate with institutions beyond their national borders in Africa and outside the continent to share ideas, information, and data in multidirectional flows. They should free themselves from their financial dependency on external sources that then influence their agenda.

Africa’s development depends on, and will only reflect, the progress of its nation states. The reverse flies in the face of empirical reality and will continue to fail to deliver the good.

Jide Akintunde is Managing Editor, Financial Nigeria publications. He is also the Director of Nigeria Development and Finance Forum (NDFF).