Mercedes-Benz socialists on capitalism

An opinion by Dianna Game (Businessday)

Why is it so often those with the biggest cars and smartest houses who complain about how iniquitous capitalism is?

Smug claims about the death of capitalism in the wake of the global financial crisis have become commonplace in Africa, as elsewhere, and there seems to be real hope that a new world order will emerge that allows the continent half a chance of competing in it.

Unfortunately for the Mercedes-Benz socialists among us, any new order is likely to be more about shifting the emphasis of global trade and investment flows, rather than any radical change in economic model. If anything, capitalism is likely to emerge stronger from its bout of recessionary flu.

Nevertheless, change precipitated by the crisis does provide an opportunity for African countries to re-examine the political and economic models they have inherited – and struggled with for decades.

I have attended many forums held to discuss the impact of the crisis on Africa, and the opportunities for change it offers. I have yet to hear any tangible outcomes.

This is surprising, given how much money the continent’s politicians, academics, civil society organisations etc spend on trips around the world in the search for political and economic models that could help Africa Inc to be a success. The current global situation would therefore seem to be an opportunity for all those expensive trips to yield some results in terms of new thinking about making the continent a better place.

There are enough common threads for continental debate among our leaders on new post- crisis models for Africa. Vigorous continental, or even regional, discussions on the new challenges facing the continent do not seem to be happening. There are no emergency meetings of leaders to discuss the impact of the global crisis on Africa. There is certainly no sense of Africa as a driver of change. Rather, we are seeing the more usual Africa-as-hapless-passenger situation.

The most likely scenario is that countries will ride out the storm and hope the world will get back to business as usual, sooner rather than later. The reality is that African countries’ ability to adapt in the face of crisis is compromised by their failure to build their economies during the good times.

Mozambique, one of Africa’s success stories, still relies on foreign aid for 40% of its budget. The same is true of many other countries. Some have not had the vision to make the most of their success. Zambia grappled with the issue of mining royalties throughout the copper price boom — indecision that cost the country dearly in revenue terms.

The myth about how Africa has been relatively unaffected by the global meltdown was highlighted in a report that landed on my desk last week, detailing the impact of the crisis on southern Africa’s mining sector, which contributes 22% (92bn) of regional output and provides 13% of the jobs. Produced by Southern Africa Resource Watch, it contains some sobering statistics.

In the Democratic Republic of Congo, for example, two-thirds of jobs in the mining sector have been lost in the year to March. The sector is expected to shrink 28% this year. Zambia’s mining sector is expected to decline 32% in output terms and 38% in employment terms this year; Angola’s mines had already shed 10000 employees by March and the sector is expected to decrease 28%. SA has shed 40000 jobs. Similar statistics exist for other mining-dependent nations in the region.

And mining is not the only affected sector. Africa’s biggest failure of the past decade is the underdevelopment of agriculture. A continent that cannot even feed itself — despite its competitive advantage in terms of natural resources — is not one that can pontificate about reshaping the world.

A standing shame: Africa still uses the most basic tools in farming and heavily depends on donor aid.

A standing shame: Africa still uses the most basic tools in farming and heavily depends on donor aid.

There is no silver bullet. Even the model of new alliances across the global south requires some hard bargaining by African countries, using resources as the basis for strengthening partnerships. Even as the recession advances, this is not happening.

African countries do not need new economic models as much as they need to make the current ones work better for them by preparing now for the expected upturn.

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