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Africa: Towards Structural Transformation?
AfricaFocus Bulletin
Apr 19, 2013 (130419)
(Reposted from sources cited below)
Editor's Note
At a gathering hosted by the Pan African Parliament in
February this year, an impressive range of African
thinkers, parliamentarians, and civil society
organizations called for focusing development efforts on
"structural transformation." This was needed, they noted,
to overcome the limitations of the Millennium Development
Goals and the damaging efforts of "structural adjustment"
and more current "austerity" agendas. The points made
seem to reflect an emerging consensus within Africa, but,
as always, implementation in the face of inertia and
vested interests will be a gigantic challenge.
While the consensus may be shared among many analysis and
officials in key UN agencies, moreover, more traditional
views are probably still dominant in agencies such as the
World Bank, national finance ministries, and many other
government circles both within Africa and among "donor"
countries An issue of the World Bank's Africa Pulse
released this week, for example (see link below), focused
on economic growth and on the MDGs, but had only a
perfunctory acknowledgement that beyond that "challenges
remain."
More generally, the world-wide emphasis on austerity,
reducing in reduced economic stimulus and reduced
government investment in needed long-term goals, poses
serious problems not only for Africa but also for
"donors" who might invest more in long-term development.
And despite new attention to the global leaking of
capital into tax havens, measures to counter this reality
are still more wishes than realities.
Other recent sources of relevance include:
"Africa: Raising Resources to Finance the Post-2015
Development Agenda"
Pan-African Parliament, Johannesburg, South Africa
12 February 2013
http://www.socialwatch.org/node/15857
"The Age of Austerity: A Review of Public Expenditures
and Adjustment Measures in 181 Countries"
Initiative for Policy Dialogue and the South Centre
Working Paper, March 2013
http://www.southcentre.org/ / direct URL:
http://tinyurl.com/c6y6esc
"As Africa's New Wealth Grows, Poverty Must Come Down"
World Bank, Africa Pulse, April 15, 2013
http://tinyurl.com/c54tqnc
For previous AfricaFocus Bulletins on economic issues,
visit http://www.africafocus.org/econexp.php
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Structural Transformation in the African Context:
Reflections on Priorities for the Post-2015 Development
Agenda.
http://www.socialwatch.org/node/15854
[This meeting took place in Midrand, South Africa on
24th- 27th February, 2013 and was jointly organised by
the Pan African Parliament, the United Nations Millennium
Campaign, UNDP, ACORD, Tax Justice Network-Africa, Third
World Network-Africa and Christian Aid. There was expert
participation from UNECA, the African Union and African
Futures.]
African thinkers, parliamentarians and civil society
organisations who gathered in Midrand, South Africa,
hosted by the Pan African Parliament, articulated what is
emerging as a growing consensus in various fora taking
place on the continent: 'the building blocks of
development' have to be front and centre in the post-2015
discussions; and the imperative to underpin a
developmental/structural transformation has to inform the
approach taken to governance (developmental governance),
financing and the global developmental partnerships, as
well as the socio-economic development goals and
targets.
The Millennium Development Goals (MDG) agenda
helped to focus the world's attention on the importance
of explicitly concentrating on and channelling resources
to poverty reduction and various dimensions of social
development. In Africa, this was against the backdrop of
structural adjustment and 'development as usual' policies
which had not only failed to deliver human development
outcomes, but also resulted in reversals in a number of
countries.
[See UNECA, AU, ADB, UNDP joint analysis on The African
Common Position on the post-2015 Development agenda.
Structural Transformation was also the main theme of the
Monrovia meeting of member of the High Level Panel of
Eminent persons, Feb 2013]
In spite of gains on the various MDGs, in the context of
a post-2015 development framework, it's clear that there
needs to be a focus on a developmental transformation
that encompasses the structural transformation of
Africa's political economy, coupled with developmental
governance and a focus on the social, economic,
environmental and spatial dimensions of sustainability
and equitable development- in order to attain sustainable
human development on the continent over the medium term,
as well as poverty reduction in the context of current
systemic vulnerability.
1. The priority that is being assigned to structural
transformation has to be understood within the context of
Africa's historical position in the global division of
labour, largely as an exporter of raw materials and
natural resources. Its economy and social structures are
rooted in the production and exports of low value,
diminishing returns goods. This role ties Africa's
fortunes to the volatility of the primary commodities'
market and the political whims of aid providers.
The low value addition explains the paradox of: high
Gross Domestic Product (GDP) growth, alongside poor human
development; expanding volumes of natural resource
exports that goes side by side with Africa's diminishing
value share in global trade; and explains the inability
to finance social development and the lack of diversity
and capacity in its economic and social institutions.
2. Africa's desire for an agenda which addresses
transformation is also derived from its recent experience
with Structural Adjustment Programmes and the MDGs.
Although the latter helped to bring needed attention to
absolute poverty, it did little to address Africa's
dependence. Indeed, implemented within the framework of
the Poverty Reduction Strategies of the International
Financial Institutions, the MDGs may have inadvertently
contributed to entrenching Africa's dependence on primary
commodity exports and low-value added and low
productivity agriculture, resulting in the expansion of
Africa's dependency on aid, food and even policy over the
period. Africa's inability to finance its development
from its own resource also contributed to weakening its
voice in the international political arena.
3. The call for economic transformation in Africa derives
from the need to put an end to the perverse process which
transfers Africa's wealth elsewhere, thereby perpetuating
misery and endangering the very survival of the
continent's population. Only an Africa with
transformative socio-economic development will avoid the
unattainable imitative development path and promote
sustainable development in a resource constrained world.
4. The first task of structural transformation in the
African context is the transformation of the system of
'production' from one dominated by primary extraction and
low value-added agriculture and services, to one in which
high value is added through the application of
technology, innovation, beneficiation, better linkages
between sectors in the wider economy and a fairer share
of natural resource rents. Africa's transformation
fortunes rest heavily on how natural resources -- the
extractive sectors in particular -- and agriculture are
managed and transformed.
The Africa Mining Vision and the Comprehensive Common
Agricultural Programme adopted by the African Union (AU)
provide road maps in this direction. But transforming
these sectors requires technology, innovation and a
healthy and educated workforce living in freedom.
Economic transformation is therefore inextricably linked
to the social conditions of society.
5. Successful transformation will over time result in the
reduction of the share of relatively dominant sectors of
today (agriculture and raw minerals/fossil fuels) in the
economy, relative to manufacturing and value added
services. The ultimate measure of successful economic
transformation is a mixed (small, medium and large
enterprises) and balanced, economy. Such an economy will
put money, wealth and capability in many hands, thus
contributing to further progress and the financing of
public goods through enhanced taxation and consumption of
goods and services.
6. The ultimate success of social transformation is that
a transformed economy is creating and financing a better
life for all people (men and women, children and elderly,
physically abled or disabled), ensuring universal access
to essential services, providing additional social
protection for the poorest and weakest in society and
ensuring an equitable, peaceful and harmonious society.
7. In technical terms, four essential and interrelated
processes define structural transformation in the
economy: a declining share of agriculture in GDP and
employment; a rural-to-urban migration underpinned by
rural and urban development; the rise of a modern
industrial and service economy; and a demographic
transition from high rates of births and deaths (common
in underdeveloped and rural areas) to low rates of births
and deaths (associated with better health standards in
developed and urban areas).
Economic and structural transformation is also associated
with rising agricultural productivity, an integrated
economy and rising per capita growth rates. (Timmer 2008,
UNECA presentation). It will require, among others, the
full and effective implementation of the African Common
Market, the African infrastructure strategy and other
regional integration agreements, to achieve
transformation as described above. Therefore, in relation
to the post-2015 development agenda, it will be important
for Africa that a Goal of 'structural transformation' be
established which can be measured and tracked by the
indicators outlined above. Issues such as the intraregional
portion of Africa's trade and progress in
infrastructure development are important measures of
development 'enablers'.
8. Economic and structural transformation is also
associated with economic growth which is both inclusive
and sustainable. Economic growth is inclusive if its
benefits are fairly distributed in vertical terms
(between the poorest and richest households, wages and
profits); in horizontal terms (between geographic
regions) and in terms of demography (age composition of
society and other societal identities such as gender,
religion, and other socially excluded groups).
Economic growth is sustainable if it is equitable in
terms of impacts as described above, and if it uses
natural resources, including energy, fisheries, water,
forests, soils and biodiversity resources sensitively,
and if growth does not suggest insatiable and wasteful
consumption. To this effect, a goal related to economic
growth must be qualified, and tracked, by its
distributive impacts as outlined above.
9. Structural transformation also pre-supposes a
transformed relationship between state and citizens.
Except for the brief period in many African countries
following de-colonisation, the experience of political
governance has been largely negative, fraught with
corruption and nepotism, human rights violations,
military or one-party dictatorships and poor stewardship
of the economy. The African political elite have largely
been more accountable to external powers -- political and
big business -- through aid dependency, commodity export
dependency, and outright political and military
interventions. The period of structural adjustment
programmes, spanning two-three decades - exacerbated this
growing distance between people and governments, by
diminishing the role of the state in the direct
provisioning of essential public services to the poor, by
trimming the state down and weakening its capability to
serve the people including peace, security and democratic
accountability and by deepening inequalities that
contribute to tearing the society apart.
Therefore in relation to the post-2015 development
agenda, the capacity to generate adequate own resources
to finance Africa's development must assume the
importance of a Goal in itself. This will enable Africa
to track changes in its revenue and financing portfolios,
to reduce dependency, ensure the channelling of resources
to economic and social need and reduce illicit outflows,
and by these measures, increase the legitimacy of the
state in the eyes of its people.
10. A post-2015 agenda must be based on new relationships
of accountability between people and state, rooted in a
focus on participatory democracy, service delivery, human
rights, the accountable use of public resources, social
protection of the weak and poor, gender equality and
better economic governance. The pathways for these
challenges have already been defined in Charters,
resolutions and programmes agreed to by African Heads of
State and Government, in the context of the African
Union.
These include: the African Charter on Human and
People's Rights; the Protocol to the African Charter on
Human and People's Rights on the Rights of Women in
Africa; the African Charter on Elections and Democracy;
the New Partnership for Africa's Development (NEPAD);
and, the African Peer Review Mechanism (APRM), among
others. A successful post -2015 agenda must be consistent
with the principles and programmes contained in them, and
require their full implementation. In this context,
Africa must include in its monitoring framework for a
post-2015 development agenda, indicators of
implementation of common programmes, agreements and
Charters that African governments have voluntarily agreed
to. This is an important accountability framework for
regional integration and political accountability at the
cross-boundary level.
11. The relationship between the African state and the
international community must equally undergo transformed
change, one that is rooted in the principles of equality
of nations and peoples; mutual collaboration for mutual
interest and respect for the ability and right of
Africans to lead their own change. But for this to
happen, Africans must understand that they need to put
their own house in order: rely less on aid, use their own
resources properly, ensure a fairer share of natural
resource rents, and rely more on mobilising, retaining
domestic resources, including effective taxation and the
plugging of illicit financial outflows.
To this effect, Africa must include, in its post-2015
monitoring framework, indicators to track progress
towards natural resource beneficiation; natural resource
rent sharing; tax systems, structures and share of tax
revenues to GDP, indicators of capital flight and other
such measures. These are important building blocks for
Africa's voice in global partnerships.
12. These realities suggest that a post-2015 agenda must
represent a paradigm shift: a shift from a culture of
dependence on external resources and leadership, to one
of greater reliance on domestic resources and capable
institutions; a shift on the understanding of governance
from one dominated by narrow ideas of 'good governance'
that suggests a lean and non-activist state making room
for the market, to one that understands the intricate
links between governing the economy (for structural
transformation), governing the social and political
system (for human development and individual freedoms)
and governing the natural environment (for
sustainability). The task, as defined by the African
Union, is to build 'democratic developmental states'.
Transparency and accountability are key for development
and vibrant states.
13. These shifts will not be possible without an enabling
global development architecture that is supportive of
economic transformation and democratic governance in
Africa. This global development architecture must be
responsive to national and regional conditions and
priorities. Given Africa's deep integration into the
global economy, transformation will be hampered without a
stable, resilient and sustainable global financial system
conducive to productive investment and having safeguards
against perverse resource transfers from poor to rich
nations.
Hence, the imperative to rein in speculative
capital, illicit capital flows and tackle tax havens and
secrecy jurisdictions which haemorrhage Africa's
resources. Africa has a strong interest in effective
global partnership arrangements that are aimed at
ensuring global financial stability, a predictable and
conducive global trading environment and transparency in
international financial transactions, including the role
of tax havens. The high-level Commission of Eminent
Persons on illicit financial Flows from Africa (the Thabo
Mbeki Commission) established by the African Union should
channel specific recommendations to the international
community and the post-2015 secretariat on these matters.
14. New global realities such as: the financial, food,
energy and environmental crisis; the prolonged recession
and deepening austerity in matured industrial economies
on which Africa depends for trade and finance; the spread
of terrorism and foreign military interventions across
the Sahelian belt of Africa; population and urbanisation
dynamics in the face of growing inequalities, all impose
serious threat to Africa's development. These threats
however, can also be opportunities for Africa to shape
new forms of partnerships based on greater transparency,
equality and accountability founded on mutual/common
interests.
The resurgence of middle income countries and even
Africa's own economic expansion (narrow as it may
be), offer an entirely different environment and policy
space, from the 1980's and 1990s. There is scope for a
more pro-active African voice in shaping global
partnerships and institutions. The post-2015 development
era should be more creative in how it measures and
accounts for partnerships. Among others, it should track
changes in voice and participation in key global
institutions among countries and regions.
15. Finally, we note that none of the above is possible
without leaders of integrity, vision, public- service
orientation, self-belief and a stubborn focus on
structural transformation in the context of democratic
governance. This is perhaps Africa's biggest challenge.
For that reason, a post-2015 development agenda will
serve Africa well if it provides the incentive to promote
and effectively monitor both democratic as well as
developmental governance.
AfricaFocus Bulletin is an independent electronic
publication providing reposted commentary and analysis on
African issues, with a particular focus on U.S. and
international policies. AfricaFocus Bulletin is edited by
William Minter.
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