Are we witnessing ‘New African Development’?

Parts of Africa may be experiencing sustained economic growth, but this shouldn’t be confused with development, something which is much harder to achieve

Graham Harrison

Between 2000 and 2010, according to The Economist, six of the ten fastest growing economies in the world were located in sub-Saharan Africa. Echoing that claim, the corporate-friendly McKinsey Institute published a report in 2010 that characterised selected African countries as ‘Lions on the Move’.  The World Bank’s biannual review Africa’s Pulse also paints a picture of historically unprecedented post-independence growth and a relatively strong weathering of global economic slowdown.

What does all this mean? It’s worth noting immediately that sub-Saharan Africa (from hereon simply Africa) is not usually a region that provides ‘good news’ stories about globalisation.  So what is undoubtedly striking is not only the achievement of sustained levels of growth from the early 1990s, but also the fact that some African economies have indeed handled the global economic crisis pretty well, with growth rates recovering to a degree that George Osborne can only dream of.

But does this mean that some countries in Africa are developing? This question is crucial, not only for the millions of ordinary people living in Africa in conditions of hardship, but also for how we think about the nature of development. Is there something of a ‘development renaissance’ in Africa? If so, what seem to be the underlying causes?

My comments here are cautionary. First – and going back to the founding credo of development economics – growth does not equal development.  Development has to address poverty and, beyond that, incorporate some considerations of inequality, employment and economic transition. In these respects, the picture is a lot more complex than headline Gross National Income (GNI) figures and African entrants to growth league-tables suggest.

The ‘poverty stories’ behind headline figures are complex. For Tanzania and Mozambique, growth has had a negligible impact on poverty, particularly in rural areas. In Ghana, Rwanda and Uganda, poverty reduction has taken place. In Ethiopia, strong growth has not affected mass poverty in many regions, especially in the lowlands.

Looking at specific country experiences is extremely important. Each shows that growth raises as many questions as it answers about development. In countries with large, small-scale, agricultural sectors, the issue of poverty is not principally about national economic growth, but depends on more interesting – more ‘political economy’ – themes such as: the nature of productive relations and technology within small-scale farming, the kinds of market relations within which agrarian households are embedded, the levels of effective institutional support from the state, and so on.

This kind of focus does not feature prominently in the ‘big story’ narratives. These launch off from striking growth figures to speak about commodity prices, increasing foreign direct investment (FDI), new technologies, and good economic management. The problem, however, with these issues is that you can’t help feeling that they miss the point!

Development is not about these things. Of course, commodity prices, technology and government strategy matter, but only inasmuch as they contribute to something more holistic and ambitious. The reason why development and growth are not synonymous is chiefly because development is a lot more difficult to achieve.   It has always been, in essence, a process of economic transformation, not simply growth.

In this respect, the record for Africa (even the ‘lions’) is extremely limited. Rick Rowden convincingly argues that even high-growth countries are not industrialising.  Commodity booms, post-war recoveries and a (moderate or niche) growth in FDI do not an industrial transformation make! It is as close to a historical fact as one can get in social sciences that development requires a process of industrial growth – and there is very little evidence that this is taking place in Africa right now.

Moreover, where we can see new forms of industrial growth and diversification, economic liberals and the cheerleaders of growth-based poverty reduction are not able to explain easily the nature of that growth. As research from the Overseas Development Institute demonstrates, new forms of industrial capital have emerged in countries where non-liberal state-business axes have emerged. The political economies of Rwanda, Uganda and Ethiopia demonstrate this.

These countries do not exemplify trickle-down or positive responses to market competition, but reveal instead recently-forged coalitions between business groups and ruling parties. Members of these coalitions have managed to get that difficult balance between political support and credible incentives to expand and take risks roughly about right. But whether these potentially transformative groups will generate strong dynamics of poverty reduction is yet to be seen.

The proportion of Africa’s population classified as poor by the World Bank was 45% in 1990 and is predicted to have fallen to 35% in 2015. Allowing for population growth, it would seem reasonable to say that the number of poor people has not fallen a great deal over the 25 years during which the ‘good news’ stories have emerged. Mass poverty is likely to remain until substantial economic transformations have taken place, and even then such transformations do not straightforwardly reduce poverty.

This depends much more on the politics of development: questions about the redistribution of property, the provision of social entitlements, the comingling of development and security, and the nature of claims made on states by social groups.

Currently, we have new African growth in some countries, not ‘new African development’.