GLOBALIZATION AND AFRICA

Introduction
The term Globalization means different things to different people. It is capable of any number of conflicting and sometimes, contradictory interpretations, particularly of a qualitative value-laden nature It has numerous implications for trade, investment, politics, culture, human rights and other areas However, our preoccupation in this session is essentially with the economic aspects

Introduction
It is characterized by an intensification of cross-border trade and increased foreign direct investment (FDI) flows, promoted by rapid liberalization and advances in information technology While globalization holds out to some participants the promise of growth in trade and international investments, and therefore, prosperity, it heightens for others the risks of instability and marginalization, especially in sub-Saharan Africa

Introduction
This session examines: Issues of development and Africa, focusing on Sub-Saharan Africa (SSA); Whether Africa can avoid globalization; The avenues of globalization as well as its impact; and The means for maximizing the benefits of globalization

Development and Africa

In conceptualizing development, it is convenient to adopt a needs approach, which emphasizes the ability of a country or region to provide basic needs of food, shelter, clothing, etc to its citizens. We therefore characterize Africa along the universally accepted indices of development What are the characteristics of Sub-Saharan Africa?

Development and Africa

Stunted Growth: The region grew at between 1.8 2.0 percent only in the period 1981-90 and 1991-99 respectively. Judged against the population growth rate, it is low compared to other regions of the world (e.g 8.0 for East Asia) While there has been an increase in real output growth in recent times (e.g 4.3 and 4.6 percent in 2003 and 2004 respectively), this lies below the about 6 to 7 percent needed to reduce poverty.

Development and Africa

Low Economic Integration: SSA is the least integrated sub-continent compared to others. What obtains is the proliferation of many economic groupings, often with overlapping functions e.g in West Africa, there is ECOWAS, The Manu River Union (MRU), and The Francophone Union, all often competing rather than cooperating. There are also about five such groups in East and Southern Africa

Development and Africa

Excessive Debt Burden: In 1990, SSA owed a total of $176.8b, which increased to $230.1b by 1998. Recent debt relief granted to some African countries have reduced the debt burden, but reports have it that some of the countries have started to pile up fresh debts

Development and Africa

Excessive Debt Burden: In 1990, SSA owed a total of $176.8b, which increased to $230.1b by 1998. Recent debt relief granted to some African countries have reduced the debt burden, but reports have it that some of the countries have started to pile up fresh debts

Development and Africa

SSA is a poor region: In 2000, of 34 countries indicated by the World Bank to be poor, 28 were in SSA. In 1999, SSAs GNP at PPP dollars was $929.3b, East Asia and the Pacific $6423.8b and MENAs $1337.5b SSAs per capita GDP was $1450, East Asias $3500; Europes $3500 and MENAs $4600

Development and Africa

SSA is a poor region: Even when one looks at the UNDPs Human Development Index (HDI), the continent still does not fare well. It is the poorest continent in the world

Development and Africa

Inadequate Infrastructure: General dearth of infrastructure, both social and economic The information superhighway relies almost exclusively on telecommunications. Although GSM has brought about improvement, access to telephone (fixed and mobile), personal computers and internet in SSA remains the lowest in the world. A similar picture obtains for other infrastructure

Development and Africa

Concentration in Primary Products: SSA is essentially a primary producer. These products are subject to declining terms of trade, price volatility and thus, unstable earnings. Between 1990 and 99, SSAs domestic value added from manufacturing was 17% compared to East Asia and Pacifics 28%

What Explains Africas Poor Performance?

Adverse geographic and demographic conditions Terms of trade and other external shocks Macroeconomic policy weaknesses Structural policy failures Weaknesses in governance, notably poor management of resources Political instability

Can Africa Avoid Globalization?

According to Ahassane Quattara, a past deputy managing director of the IMF, Africa cannot escape globalization, and they should not try to avoid it. Africa needs to join, but in joining, should prepare itself for it. He advises that Africa can proceed to the international community via strong regional cooperation

Avenues of Globalization
International Trade: Africas share of world trade has been declining as a result of restrictive trade regimes, slow income growth, high transport costs and distance from international markets Capital Flows: What Africa had been experiencing was capital flight. Although there has been some increase in FDI flows in the late 90s and 2000s, Africa has been worse off Net official flows of aid or ODA has also fallen significantly

Avenues of Globalization
Human Migration Advances in Telecommunications and transportation Spread of knowledge and technology Economic Integration International Organizations (IMF, World Bank, WTO): Africa has often been a passive participant in most of these organizations. They are not adequately represented

Impacts of Globalization
Increased prosperity and reduced poverty for some countries, particularly in East Asia Marginalization of Africa in sense that aid has reduced rather than increased Other potential impacts are:

Impacts of Globalization
More efficient utilization of resources Greater specialization among nations and, thus, increased welfare Increase in output and trade through liberalization Higher quality products and lower prices through competition Exposure to new ideas, technology and culture

Requirements for Maximizing the Benefits of Globalization

Policy Reform Liberalization of trade regimes Pursuit of programme of integration Investing in people and building capacity Improving infrastructure and spurring agric development Promoting a sound banking and financial development

Requirements for Maximizing the Benefits of Globalization

Encouraging private investment through liberal incentives Reducing the size of the public sector through privatization Reform of the regulatory framework Transparency in governance Simplicity of procedures Fight against corruption

Requirements for Maximizing the Benefits of Globalization

Responsibility of officials and rule of law Individual freedom and collective expression Independence of legal system Reduction of dependence on primary commodities and improvement in manufacturing value-added Reducing poverty and increasing savings

Requirements for Maximizing the Benefits of Globalization

Facilitating market access through active participation and advocacy in WTO Encouraging private capital flows Supplementing debt relief with increased new level of financial support Need for a strong international monetary and financial system patterned to solving the problems of Africa More and better debt relief

Conclusion
Admittedly, some of these are structural reforms which take time and involve substantial `learning from experience'. Building institutions is much more difficult than changing policies, so Nigeria and other African countries may have to rely more on the trade channel in the short and medium term as their major means of reaping the benefits of globalization

Thanks for listening