1. What is Africa as 'Last Frontier'?
(a) The phrase could be interpreted from the perspective of the expansion of the world economy to new poles of global economic growth and transformation such as the BRICS countries and the Asian Tigers.
(b) It could also mean Africa as a virgin new territory for conquest by the unflinching advance of globalization and global capital, operating mainly through international trade and foreign direct investment.
2. Why Africa Matters to the World Economy
(a) It could matter as a source of extraction of raw materials and natural resources but not as a contributor to global prosperity through its own economic transformation. This is "negative mattering". It continues a trajectory that has remained fundamentally the same since the transatlantic slave trade and the period of colonial rule. This kind of mattering - extractive importance - is the current phase of the economies of most African countries. We should also note that, in this context, growth could be taking place but no structural transformation, which is what creates real prosperity, is happening. Even this source of importance may be in decline with the discovery of fracking and shale oil and gas.
(b) But Africa should matter as a growth pole in its own right, like Asia increasingly does. For this to happen, however, I argue that a paradigm shift must take place because the current paradigm, based on unrestrained free markets without a conceptual grasp of the opportunities, limitations and kinds of capitalism, and the structure of world trade, cannot create an enabling environment for Africa to matter in the world economy. With 3% of world trade and 5% of total global FDI, the continent still plays a negligible role in the global economy.
(c) This paradigm shift must take place in the minds of Africans first, based on new, fundamental understandings about the world, the continent's place in the world, and how to alter Africa's trajectory. These understandings must then be translated into better, more effective public policy and governance.
3. What are these paradigm shifts?
First, globalization, though a fact of economic and cultural life, is not neutral. It has drivers and passengers. African countries cannot assume that globalization is benign in its intent or agnostic in its belief when a careful examination will show that African countries are mostly consumers of the products of globalization. So, how Africa engages with the phenomenon of globalization will play an important role in the continent's economic trajectory.
Second, Africa will not matter economically until African countries become industrial, manufacturing economies rather than predominantly agricultural economies.
Third, for Africa to prosper, African countries need to develop a clear and comprehensive worldview. This is the essential philosophical foundation of prosperity - and the West and Asia provide important examples.
Fourth, based on the foregoing, the myth that Africa is rising needs some pause and evaluation. Let us ask some fundamental questions. Yes, growth rates have been better over the past decade, but are we seeing signs of real transformation? Are manufacturing economies now the norm, or will they likely soon be?1 Is growth outpacing population growth, or could population growth and non-inclusive economic growth without jobs create a youth bulge in future? What is the role of science and technology and innovation in African economies?
Fifth, African countries must move towards economic diversification and complexity, manufacture the consent of their citizens to clear visions and strategies for economic transformation, and strengthen weak institutions.
Based on these perspectives, African countries need to re-evaluate commonly held assumptions about globalization, foreign aid, free markets, foreign investment and so forth if they are to prosper.
This is why I wrote Emerging Africa - to decode and address the real factors that have held Africa back, and the secrets of prosperity they need to understand and apply in order to prosper, rather than merely repeating conventional wisdoms that have not brought about a fundamental change in the African condition.
Dr. Kingsley Chiedu Moghalu is the Deputy Governor of the Central Bank of Nigeria in charge of the Financial System Stability (FSS) Directorate.