Africa: On the Move?

The economies of Africa are on the move. After years of setbacks, growth rates are rising, as political and economic reforms sweep the continent. Statist economic policies and non-representative government are giving way to more dynamic and inclusive economic and political arrangements. This, at least, is the current received wisdom in the international development community.

President of the World Bank James Wolfensohn, in his 1997 address to the Board of Governors, reports “real progress in Sub-Saharan Africa, with new leadership and better economic policies.” ¹ Wolfensohn’s remarks echo those of Michel Camdessus, managing director of the International Monetary Fund (IMF) who said at the 1996 Annual Meeting of the World Bank and the IMF: “Africa, for which so many seem to have lost hope, appears to be stirring and on the move.” ² Evangelos Calamitsis, Director of the IMF’s Africa Department, makes a similar claim. ³ The upbeat official diagnosis of African economic prospects is captured in the title of an article, “Africa on the Move,” published in this journal in 1997. The authors, Callisto Madavo and Jean-Louis Sarbib, are both Vice Presidents for Africa at the World Bank. ⁴

But is the official optimism warranted? Are Africa’s prospects as bright as the managers of the Bank and Fund claim? Hopefulness has its uses, but so does realism. And the reality about Africa is far less heartening than Wolfensohn, Camdessus, and the rest admit. Ours is not a quibble whether Africa’s glass is “half full” or “half empty.” Despite recent economic improvements in Africa, we see profound impediments to economic recovery and sustained development. Our point of reference is the paper by Madavo and Sarbib in SAIS Review since their views powerfully summarize the official consensus of “cautious optimism” about Africa. Wary skepticism is more in order. ⁵

Africa on the Move: The Main Arguments

Madavo and Sarbib make four main points. First, they see greater social stability and freedom from armed conflict in Africa. Central to this stability is the emergence of a new generation of African leaders: “committed, qualified, and nonideological.” Once heavy-handed and corrupt, leaders now follow a new principle of “no-nonsense, accountable pragmatism.”

Second, Madavo and Sarbib see a dramatically improved policy environment being established by the new leaders. Better policies have given impetus to private resource flows to Africa. These consist of foreign direct investment (with management control), equity flows (without management control), and private loans. The first, which usually entails setting up new, externally controlled enterprises, has been the most important during the 1990s. The other two financial flows, though small, are showing some increase for some countries.

Madavo and Sarbib’s third point is that the development assistance community, especially the World Bank Group, has been promoting Africa’s economic revival. Foreign aid plays a critical role in closing the gaps in financial markets left by private investment. As the largest development institution that operates in Africa, the Bank has taken the lead in urging African governments to reform their economies.

Fourth, these changes are improving economic performance. New leadership, new policies, additional foreign assistance, and appropriate policy advice are producing more rapid and equitable growth in Africa. We critique each of these points below, starting with the last one.

Economic performance in Africa

Is Africa on the move? Five African countries (Equatorial Guinea, Lesotho, Uganda, Mozambique, and Mauritius) are among the 25 fastest-growing countries recorded by the World Bank for 1990–95. However, four others (Angola, Cameroon, Sierra Leone, and Rwanda) are among the 25 slowest-growing countries for the same period. Several countries (including Zaire, and war-torn Liberia and Sudan) did not make the Bank’s list due to lack of data, but their inclusion would not have improved the picture. Thus, while some parts of some economies in Africa are making progress in raising incomes, creating jobs, expanding exports, educating children, and rebuilding basic infrastructure, these are not the norm. Nor should the piecemeal improvements in Africa be allowed to obscure how far the region as a whole has been...