The full and genuine development of a given country is the job of that country’s government. Foreign countries have never helped to develop other countries. The examples of Japan, South Korea, and other Tiger states prove that these countries were able to develop successfully because they rejected the proposals that presented to them by the Americans after the Second World War. The Japanese first rejected the neo-liberal agenda of the Americans, and the others followed suit to pursue the right strategy of development.
From this perspective, African countries need political and state reforms. The reforms in these areas are needed to guarantee true freedom to the people. When the people get the right to express their ideas and organize themselves, they can become creative. In an atmosphere of suppression, there cannot be genuine economic and social development. Again, this requires keeping foreign forces from all state organs. If elements that advance the interests of foreign forces are integrated into the state machinery, there is always instability and underdevelopment. This has been the case over the last 50 years.
African bureaucrats never felt that they were true citizens of their countries, and they forgot that they had the obligation to serve their countries and their people. Under such conditions, state organs and the governing class could not develop economic and social plans that could advance the interests of their people.
The main problem in many African countries is that after the first generation of rulers left, successive African leaders from the 60s onwards couldn’t develop real social awareness and consciousness. They became simply compradors that advanced the interests of this or that capitalist country. Especially in Francophone African countries, the political system and the currencies were under total control of the French government, and successive French governments have never allowed these countries to develop freely. Many French companies control the resources of these countries without bringing any tangible development.
This being the case, state and political systems in many African countries are considered private property of the ruling classes rather than instruments of proper administration and wealth creation. The ruling classes of many African countries think and believe that the resources of their countries belong to them rather than to the entire people they govern. Therefore, presidents and prime ministers of certain African countries sell their countries’ resources, including land for multinational companies. The money that is generated is then accumulated in foreign banks to finance the development of other countries.
In this way, many African countries are plundered from many different directions, and this creates a major obstacle to genuine development. These, and several other issues, are not mentioned by the IMF, the World Bank, and the African Development Bank that formulated the Compact with Africa program. Without having clear ideas on all these issues, and without having understood the meaning of real social and economic development, the situations for many African countries is very bleak. However, there are still possibilities to overcome these obstacles. Since history is a dynamic process, Africans still have the chance to develop their continent. They have the intuition, intelligence, and will to develop and bring justice to their continent. In order for this to happen, African governments and intellectuals must take bold actions in the following areas:
1. Proper Education: The two prominent demographic and development experts Professor Klingholz and Professor Lutz (2016) published a new study that shows how different nations can develop easily and become self-sufficient after they have taken the necessary steps in the area of education. Their studies begin from ancient Greek civilization to the 1970s. In their book, “Who can Exist in the Future? Education Decides over the Future of Human Beings,” they demonstrate that without Greek civilization, which was supported by a unique type of education system that could shape the human mind, without the education of the Renaissance during the 15th century, and without Martin Luther’s reformation, there could not have been such scientific and technological development in Western Europe.
The late comers, like Germany in the 18th and 19th century, America during the 19th century, Japan during the Meiji dynasty, the Scandinavian countries, and other East Asian countries, have all pursued a unique type of education system appropriate for real development based on science and technology.
Therefore, African countries must focus on mechanical and electrical engineering, physics and chemistry, vocational education, city planning and architecture, sociological studies and philosophy, and other fields that bring genuine development; meanwhile, they must discard macro- and microeconomics from their curriculum. The so-called “development economics” that is taught at many universities is not helpful in understanding the true meaning of economic and social development. It confuses students rather than giving them insight. None of the textbooks teach the genesis of capitalistic development or the scientific and technological revolutions, which are the foundations of genuine economic development.
When the great Prussian king Friedrich the Great asked Voltaire for advice on how to develop his country, the philosopher Voltaire suggested that he concentrate on arts and science. By following the advice of Voltaire, the great Prussian king introduced major reforms that helped his kingdom march on the path of science and arts. By concentrating on science and arts, African countries can also integrate parts of economic teachings, like industrial economics, organization, accounting, controlling, finance, and management into their curriculums.
2. The Need for Institutions: Many African countries do not have the necessary institutions to mobilize human and natural resources. The current institutions are backward, not efficient, and in most cases, not suitable for holistic development. The technocrats and bureaucrats do not feel that they are accountable to their societies and countries. Most of them work for the interests of foreign countries, and as such, they block real social transformation and economic development. In the absence of efficient institutions and government officials, foreign forces and companies come to Africa and plunder the continent’s resources. In many cases, these foreign forces advise bureaucrats to invest in areas that cannot create real social wealth and thus, perpetuate underdevelopment. Most of the investments that are implemented damage the society, economy, culture, environment, and psychology of the people of the host country. Therefore, a well-educated, conscious bureaucratic class is necessary for real scientific and technological revolution.
3. Physical Economy: The physical economic principle is the opposite of the monetary economic policy. Simply put, it is based on the creative capacity of the human mind. What is required is not monetary policy, but physical investments that are supported by internal credit systems. The foundation of such a strategy is machine industry that can be continually upgraded by constant scientific research and technological developments. From this perspective, priorities must be given in the area of rail road systems, or what Schumpeter call Railroadization, which has great multiplier effects. (Andersen, 1994) Since a railroad system consists of many aspects like machine industry, design, planning, and the productions of wagons and other spare parts, focusing on this sector brings the quickest development for any country. Especially highly-populated countries like Nigeria and Ethiopia need such a system.
In addition, without the development of well-designed cities and villages, the physical economy cannot be materialized. Well-organized spaces for building houses; shopping centers, including book shops; recreation centers; industrial location centers for small and medium size industries; etc. are prerequisites for physical economic development.
4. Development and Research: Without constant research in all areas, there cannot be real development. African countries should prioritize the areas of physics and mathematics. Without these two aspects, a country cannot develop the necessary instruments for production and studying the properties of materials and plants. In short, physics is the source of true wealth. Other fields like biology and chemistry can be studied and applied for development if the necessary instruments can be produced. However, physics is the foundation of real knowledge and development. No country can develop if it does not give priority to physics, and make continuous efforts in research and development.
5. Agriculture: The development of agriculture depends on whether or not a given country can produce the necessary farming instruments. Though many African countries have ample opportunities to produce a variety of crops, vegetables, and fruits for internal consumption and as raw materials for industries, instead, they primarily focus on cash crop production, which keeps them from developing and is a cause of permanent hunger and poverty.
Therefore, the connection of manufacturing activities to the agricultural sector helps a given country develop in all areas. As a matter of fact, countries that neglect to produce a variety of agricultural products cannot maintain a healthy society. If a country focuses on food production it can reduce costs that can be allocated to other areas. It is well-known that many African countries import food items that are neither compatible to their diet nor healthy. Due to globalization and free trade agreements, some countries import unhealthy foods that harm their people. Diabetes, heart problems, and obesity have become common in many African countries. A country can avoid such health issues if it relies on its own resources for food.
6. Energy: A given country can only develop with efficient energy systems. Without efficient energy systems, one cannot move machines and mold iron and steel. In many African countries, the main energy source is charcoal. In order to produce charcoal, a high volume of trees must be cut, which damages the fauna and flora. Because trees are indiscriminately cut by people who do not have any other alternatives and foreign companies that rob the continent’s wealth, many African countries are being converted into deserts. Therefore, foreigners should not be allowed to rob the continent’s wealth, and there should be strict control in this area; and no foreign company should be allowed to enter rural areas.
By and large, to solve the energy problem, African countries should develop other energy resources like coal, hydropower by building small and manageable dams, sun and wind energy, and small amounts of nuclear energy. The combination of all these energy resources reduces the dependence on charcoal. The availability of various efficient energy systems is the foundation of systematic industrialization and an integrated economic system.
7. Small and Medium Size Industries: Small and medium size industries are the basis of systematic industrialization. If a country does not prioritize these areas, they cannot develop organically. Decentralized industrialization is more important than large industries, because small and medium size industries pave the way for more creative activities in any given country. In addition to these, encouraging activities like the production of musical instruments, book binding systems, and porcelain and glass manufacturing bring healthy and real development to a country.
8. Reorganizing the Banking Sector to Finance Development: Financing development is not an easy task. As experiences of the last 35 years teach us, industrialization strategies that are based on international debt mechanisms are not the best option for development. Whenever countries that have borrowed from the international capital market are unable to repay their debt, they are forced to undergo debt scheduling processes, which increase the amount of debt. With such mechanisms, banks earn compound interest rates, which increase their wealth, and at the same time, pauperize the indebted country.
The international debt system is one of many systems that absorb wealth from underdeveloped countries and transfer it to the capitalist west. It is part and parcel of the international capitalist accumulation process. The cases of Brazil, Mexico, Argentina and other Latin American countries have shown that all these countries were forced under the control of the international financial system, and because of the IMF’s austerity programs, millions of people in these countries had to pay heavy prices. The political, social, economic, and cultural damages of the international debt mechanism are incalculable. The system is brutal and ruinous.
One of the strategies of the “Compact with Africa” program is lending money that is deposited in the form of pension funds in the banks of highly-developed capitalist countries. Because of the very low interest rate that exists in these countries at the moment, this huge amount of money cannot be invested in capitalist countries. It is therefore necessary to invest the money somewhere else in order to make a profit. The ideal place is now Africa, though the risk is not yet well known.
In order to avoid this, African countries must organize their own banking systems so as to generate internal financial resources. These countries can borrow from their people through their central governments or through local and municipal administrations by issuing special bonds and securities. At the same time, governments in cooperation with their central banks can create credit mechanisms that can be allocated for infrastructure projects, like bridges, canal systems, dams, and other big projects.
In addition to these strategies, food for work program can be organized and financed through the contribution of all the citizens, as well as from contribution made by those living outside the country. Such a program should have a minimum duration of 30 years. If each citizen contributes monthly or annually, the country can finance special projects that help the majority of the people. In this way, one can avoid external credits.
In short, if African countries want genuine development, they must reject advice from the so-called “international community” and its institutions. No country has ever developed by applying macroeconomic policies. Conscious mercantilist economic policies, based on theoretical, scientific, and philosophical knowledge, are the basis of genuine economic and social development. Only with state-supported development policies, private initiative, and the active participation of the masses, can African countries march on the path of true development. On the other hand, countries that have followed the advice of the IMF and the World Bank have been condemned to unending poverty and underdevelopment.
Studies conducted by various critical economists and edited by Doug Bandow and Ian Vásquez in their book, “Perpetuating Poverty,” show how the policies of the IMF and the World Bank have brought incalculable damage to many underdeveloped countries—especially in many African countries. This case also is confirmed by Professor Erik Reinert in his book, “How Rich Countries Got Rich… and Why Poor Countries Stay Poor.”(Reinert, 2007) These and other studies demonstrate that these two institutions and the international community do not intend to develop the African continent. It is an illusion to expect something good from countries pursuing neo-liberal economic policies, which foster inequalities. African countries must rely on their own intelligence and resources.
By Dr. Fekadu Bekele
The author is specialized in development economics. He has published numerous articles on a wide range of topics concerning development economics and international political systems. He advises various institutions and gives lectures on economic development. He is the author of “African Predicaments and the Methodology to Solve Them Effectively.”
He can be reached at firstname.lastname@example.org
Andersen, Esben S., Evolutionary Economics: Post-Schumpeterian Contributions, London & New York, 1994
Bandow, Doug & Vásquez, Ian, Perpetuating Poverty: The World Bank, the IMF and the Developing World, Washington D.C., 1994
Klingholz, Reiner & Lutz, Wolfgang, Wer Überlebt ? Bildung entscheidet über die Zukunft der Menschheit (Who exists? Education decides over the Future of Human Beings), Frankfurt/ New York, 2016
Reinert Erik, How Rich Countries Got Rich… and Why Poor Countries Stay Poor, London, 2007
Reinert, Erik, The Role of the state in economic growth: Journal of Economic Studies, vol. 26 No4/5,1999