EDITORIAL COMMENT: Focus on innovation and  trade to advance, not aid

Reliance on foreign aid weakens Africa and postpones the day when the continent can and should stand on its own feet, using trade and investment to move forward rather than, in President Mnangagwa’s vibrant language, holding out a begging bowl.

Moving away from aid does not mean, of course, that we should not be welcoming investment, nor does it mean that we should not be accessing the loan facilities of the World Bank, the African Development Bank, the global banking system and other international and regional funding agencies.

Those sources of finance and capital are fundamentally business deals, with the investors seeking a return on their capital and the World Bank and others charging interest and eventual repayment of loans. 

It is useful to look at the two largest economies in the world, those of the United States and the People’s Republic of China. Neither economy was built on foreign aid, and neither country received any foreign aid after its successful revolution.

But the United States was a major recipient of inward investment. British investors in the 19th century in fact led the foreign investment drive into the United States, and a large portion of the vital railway network was financed by British investors, for mutual benefit. That railway network allowed the huge single free-trade market of the United States to become a practical reality.

An ever odder note in the history books is that the United States borrowed a lot of British money directly and indirectly to make the Louisiana Purchase, when it doubled its area by buying out the French claims to the land between the Mississippi River and the Rocky Mountains during the Napoleonic Wars. 

China, when it entered rapid economic growth in the 1980s, was not a recipient of aid, but the rapid industrialisation was accelerated by trade, and by a willingness of a large number of businesses around the world to sign manufacturing deals with Chinese companies to have products made in China.

The country grew to become the workshop of the world through trade and that contract manufacturing, a sort of investment in some senses.

The rapid industrialisation and growth in both countries was strongly supported by the sheer size of the two countries, and the resulting very large and automatic single markets. 

This is important and that is why Africa must accelerate the development of the African Continental Free Trade Area (AfCFTA), and make sure that it ends not only tariff barriers, but also non-tariff barriers and that it does build a single market, a stage higher than a free trade area.

AfCFTA is a precondition for rapid industrialisation of Africa, not just providing the necessary markets but also the necessary raw materials. The free trade works at all levels and sometimes the raw materials end might be more important than the final product end.

To take one example, we have noted that all the raw materials for all fertilisers exist somewhere in Africa, but that no country has all the raw materials within its own territory. So an African fertiliser industry requires free trade to move processed raw materials to the growing number of fertiliser factories, and then to move final products, in bags, to the farmers. 

There are many other examples where an industrialist in one country will require some of the raw materials from another country, and then need the single market to sell the final product. 

President Mnangagwa noted in his address to mark the 61st anniversary of the founding of the Organisation of African Unity in 1963 other conditions for African generated economic growth and the end of any reliance on aid.

First Africa needs to be able to feed itself. This means using the very large area devoted to farming properly and in full, and with effective measures taken to cope with climate change and the resulting droughts and floods. 

That requires the inputs, hence the importance of building a full African-wide fertiliser industry, but also leads directly into the second important point made by the President.

This is building up the education systems, so that the practical and required skills are there and that enough people have these skills for both research and production.

Again, when we look at the developed world, we see that the huge expansion in education, and in practical and technical education, fuelled the advance. We perhaps need to also note that our former coloniser, Britain, fell back in the rankings largely because of a late start to universal education and then seeing technical education as something second-class. 

Another point stressed by the President derives from a decent education system, the growing number of people able to innovate and turn their innovations into practical reality. 

Again when we look at the US and China we note that a lot of the economic growth in both countries came from some extraordinary innovations in products and production systems. 

The point is that the cultures in both countries encouraged innovative changes rather than a perception of how something was done 100 years earlier should be preserved.

Africa, under its modern generation of leaders, is turning the dreams of the early Pan-Africanists who led the liberation of the continent from the assortment of colonial rules into a reality. 

There is general agreement across the continent that we are moving forward in the right directions and that this progress can be accelerated with practical measures such as encouraging our citizens to innovate and produce, encouraging investment, and creating that continent-wide free trade area.

When we look at the requirements we see a lot of things that need to be meshed together, but missing from that list is “aid” or holding out a begging bowl. 

It requires Africans themselves to believe in themselves and push forward along a broad front of policies.

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