Asia’s Lessons to Africa

Published on 3rd January 2006

Last month, the media had its attention directed towards Brussels, where deep divisions arose over the EU’s budget and Hong Kong where deadlock still reins amid protests from anti-globalists fighting for a voice in the World Trade Organization (WTO) negotiations.  One question to ponder over the two is; do any of these two conventions, with whatever it is that they have for developing countries offer any chance for change?

On the flipside of the western story and their grand tariff withdrawals for developing countries is Mugabe’s unsettled white farmers’ issue, failing democracy in Uganda, Niger’s poverty crisis, Egypt’s hidden secrets among many others. Talk of challenges and Africa presents many typical cases.

Someone once said that Africa’s situation cannot be linked to Asia’s past and their transformation should therefore not be interlinked. His argument was based on the fact that Asia’s system has been unified unlike that of Africa. To a small extent, this is true; however, the unity seen in Asian economies is based on mutual benefit and not political gains. This tells us that due to our inability to utilize our comparative advantages, we have all joined in a ‘race of fools’ with every country rushing to outdo the other mostly in the production of agricultural produce.  

What is unique about Asia? Is it their government system, resources, infrastructure or it is just a region of circumstances? Countries in the region have branded their tourist sites and have had a world acclaim; Singapore has proven very attractive for offshore investors. 

China too has a lot of good picks. It has merged its low costs, vast manpower reserves, financial and technological strength of its neighbors. The result of this, according to the Wall Street Journal (http://www.wsj.com/), has created an informal ‘Asian Union’ – a deeply integrated Asian economy with a GDP equal to America’s, a population six times as large, the technological and financial strengths of an advanced technology and cost advantages of a developing one.

Recently, Asian leaders agreed to create a new loosely united regional grouping, including India and Australia, to work on combating Asia’s economic security and political problems. This is an addition to ‘ASEAN’ and ‘ASEAN PLUS THREE’ associations that the United States now expresses a lot of interest. The Prime Minister of Malaysia, Abdulla Ahmad, suggested that Australia, New Zealand and India (forming ‘ASEAN plus Three’) could not be integrated to the same degree as other East Asian nations because of their ethnic, historical and strategic differences.

Note the fact that such relationship cannot be met by protectionist legislations or penalty tariffs. Asia too, cannot succeed by blocking out Chinese goods. What strides to this effect has Africa made? How long can we wait to see a result oriented African Union (AU)? How long should we wait before we start counting their successes? How can we attract more nations for strategic gains into the AU to perhaps create ‘AU plus Three’ or at least ‘AU plus One’? It is surely not by the great Nile wars, it cannot be achieved by embracing Mugabe’s unchanging stand on white farmers or Museveni’s wishes to keep Besigye (the opposition leader) behind bars until he (Museveni) has won another term as president. It is not by having Egypt withdraw from receiving Kenyan coffee or Kenya rejecting Egyptian processed sanitary towels.

Analysts say that China’s (one of the ASEAN’s) economy may by 2020 equal that of the United States, and one may ask, what’s the trick behind their three fold growth since the 1980’s. They, like most Asian economies have invested heavily on ports, road systems (cheap transport), telecommunications networks, research centers and universities. This has shifted China from light exports, labor intensive manufactured goods to heavy industry and technology and now to a new role as a financier and outward investor.

Overall, Asia has pooled strengths. Indeed, 75% of China’s US$ 60 Billion FDI came from Hong Kong, Taiwan, Japan, Korea and South East Asia. Their trading partners are also drawn from the same regions.

Here is a perfect comparison between two countries, Oman (Asian) and Egypt (African), depicting their trade dependence/relations.

Asia-Oman

Population: 2.5 million

GDP Growth Rate: 2.3%

Exports: Oil, Metals, Fish, Textiles

Export Trading Partners: US 18.4%, Italy 13.8%, UK 8.5%, France 3.9%

Africa - Egypt

Population: 66.3 Million

GDP Growth Rate: 3.0%

Exports: Petroleum, Cotton Yarn and Garments, Textiles, Aluminum

Export Trading Partners: Japan 20.6%, South Korea 18.6%, China 13.8%, Thailand 11.8%    

Source: 2005 Index of Economic Freedom

Note the disparity in the Asian countries’ reliance on its neighbors within the region (ASEAN) and Africa’s reliance on the Western nations, totally leaving out the neighbors.

This is an indicator of lack of local trade ties that African states lack. Ties which, if tightened would help boost countries in the region economically and act as a leverage against the barriers poised by the richer nations.

In addition, Chinese government builds around 200 research centers every year. Chinese college enrollment has quadrupled since 1980’s to 20 million. Africa on the other hand is still battling with African leaders who have run down corporations and public parastatals. As they witness the high rate of brain drain, expatriates still run most multinational and national corporations. With the exception of South Africa, African colleges still rate poorly internationally as far as recorded research is concerned.

Another greater contributor for the great success is the saving culture of Asian states. According to the Wall Street Journal, Chinese families save as much as 40% of GDP. Hong Kong, Korea, Taiwan and Japan have exceptionally high savings rates. Africa’s saving rates stand at 8.1% of GDP. America is at between 1% and 2% of GDP since 2001. With more people borrowing in the U.S., the low saving rate has facilitated the consumption and shopping boom. Is Africa headed for the American way or the Asian way?

What more can Africa expect if her opportunities just remain in dormancy while its reliance on EU, IMF and the G8 countries increases by the day? What they all seem to be facilitating is the consumption and shopping boom of our politicians and not infrastructure development. Its time we answered the question “How long shall we wait before our challenges have been overcome by in-house solutions like Asia?”

 


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