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Africa: Lessons From China's 20 Years of Reforms
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East African Business Week (Kampala)
ANALYSIS
5 May 2008
Posted to the web 5 May 2008
Beijing
China's economic development over the past two decades has been likened to a miracle by many Economists.
Unlike the Southeast Asian tigers that also transformed from agricultural societies to industry-based economies in the last few years, China's transformation has been impressive and has had a wider global impact.
Her success can be attributed to a combination of factors including its capacity to continuously attract massive foreign direct investments (FDI) spearheaded by its powerful and influential overseas communities and a qualified and disciplined workforce.
African countries on the other hand may not have China's assets (huge consumer market, wealthy overseas communities, etc) but present other advantages that call for different economic development models with a mixture of the compatible attributes that have positively worked for China.
What are some of the lessons?
China's economic success has inspired African countries by illustrating that if China can succeed so can Africa. China has come to embody a developmental model worth emulating and many governments have started implementing policies that they hope would turn their countries into the next China such as attracting massive FDI, value addition, major exports of manufactured goods and services, etc.
Africa presents enormous potentials and can be unbeatable in a number of fields. With proper policies and strategies that would focus on valorizing and optimizing those assets, the continent stands a greater chance of ushering in a new era of economic development. It is high time Africa started optimizing proceeds from its natural resources, modernize its agriculture, and harness the huge potentials of its Diaspora.
Abundant Natural Resources
Nature has been extremely generous to Africa in terms of natural resources. About 30% of the planet's proven mineral reserves are in Africa, including 60% cobalt and 40% of gold. The continent is currently the leading producer of some of the most important minerals and metals such as Bauxite, Chromium, Cobalt, Diamonds, Gold, Manganese, Nickel, PGE and Uranium. Africa contributes 12% to the world's total oil production and sits on 9.5% of the world's total proven reserve (over 114 billion barrels).
Africa's other important natural resource is its rich biodiversity. Ecotourism provides the opportunity to develop leisure complexes which can take advantage of the very special places that abound on the continent.
From vast game reserves to tropical jungles, pristine beaches along the coasts to the snow-capped volcanic Mount Kilimanjaro, from the immense Sahara desert to the memorable Egyptian pyramids and many more exclusive sites.
Africa has so far failed to reap the full benefits of its natural resources. As a truly strategic producer of some of the precious metals the continent must develop new strategies to add value to those resources.
Possible strategies may include enactment of laws making it mandatory for all mineral and energy resources to be processed to some degree before exporting and or requiring them to build infrastructures such as roads, electricity and water supplies around the mining areas.
The tourism sector, which is currently Africa's most important industries attracting millions of visitors each year from around the world is still underexploited. According to the UN World Tourism Organization, 40.3 million tourists visited Africa in 2006, which is 10.5% higher than the previous year. Africa remains a very minor tourism region and urgent efforts are needed to offset the poor transport infrastructure and the health situation on much of the continent, particularly as regards malaria.
Harness the full potential of the Diaspora
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According to the Global Economic Prospects 2006, The African Diaspora sent home US$ 81 billion in 2006 through official channels. The report also notes that "econometric analysis and available household surveys suggest that unrecorded flows through informal channels may add 50 percent or more to recorded flows".
The figure is higher than the combined FDI and development aid to Africa in 2006. Most of the remittances are going to assist families, thus unproductive.
...to be continued next week
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