Will Compact with Africa Work for Africa?

Published on 8th October 2019

It has become a ritual to discuss Africa and its economic crises at every major summit. The same experts and states that are mainly responsible for the continent's economic and social crises are once again the main actors to discuss Africa. The plans and promises that are repeatedly announced have not yet changed or eliminated the basic crisis of the African society. Because the actors and the method are one and the same, it could not work. Instead, the continent's economic and social crises have worsened.

The economic program called "Compact with Africa” which was drawn up at the G20 Conference on behalf of the G20 Finance Ministers of the IMF, the World Bank and the African Development Bank in cooperation with the Ministry of Finance of the Federal Republic of Germany, is nothing other than a new neo-liberal concept. How and what is tackled is not entirely clear.

The program contains only three aspects that have been identified as problems or causes of the continent, namely,

1. Macroeconomic framework,

2. Business framework,

3. Financing framework.

What this has to do with the development of a society is not entirely clear. The plan does not start from the basic problems of the African social structure and its manifestations, like poverty, unemployment problem, problem of housing, lack of clean water, problem of education, lack of proper nutrition, etc., but provides a framework for foreign investors. The spatial aspect, i.e. ordered cities with appropriate building structures, which are indispensable for investment and business activities, is not the subject of such a program, which claims to finally tackle the problems in Africa. The burning problems of African society, such as the fulfilment of basic needs, are not even beginning to appear in the program. What is invested, how and for whom is not determined by the African population or by the governments themselves, but by the so-called foreign investors.

This kind of investment does not pass through the different stages of investments that are required for societal change and technological transformation. Since it is detached from research and development it is practically impossible to develop new technologies in each African country.  It is simply an investment that is being invested by passing the needs of the society. Its main strategy is to extract the maximum profit and transfer it to the capitalist countries. It therefore blocks the development of a home market or an integrated market across a given country. The plan also overlooks the need to establish a systematic division of labor at the national level, which is needed to change a society both materially and spiritually. In short, the plan does not foresee the need for systematic industrialization of Africa on the basis of manufacturing, science and technology.

The Compact with Africa program is based on non-existent parameters, such as macroeconomic parameters, which do not exist in many African countries. Please see the critical discussion above in this text. In addition to these the program overlooks the existing repressive state structures and lack of democratic rights that do exist in many African countries. By in large the plan is not compatible with the African social and political conditions and as such it is not an African program.

If you look at all the plans, such as the Marshall Plan for Africa and the Pro-Africa Plan, the basic ideas are the same. If one compares the Marshall Plan for Africa with the Marshall Plan in Germany, after the Second World War, the Marshal Plan for Africa diametrically opposes the Marshal Plan for Europe, or Germany. With the Marshall Plan for Europe, the destroyed cities, roads, bridges, apartments, etc. were completely rebuilt within only 15 years. The systematic reconstruction of Germany in particular made the country one of the world's leading nations, and Germany is now the world's leading exporter of high quality machines, cars of different types, electronic appliances, and many other products. At that time, state intervention in the economy played a decisive role in creating an orderly social structure. Without state intervention and without the creation of a credit institute for the reconstruction of the country (Kreditanstalt für den Wiederaufbau), Germany would not have been able to build a viable and dynamic economy. The mobilization of all forces that were able to work played a decisive role in the reconstruction of Germany. Therefore, efforts were made at that time to solve the most important problems of the people, such as lack of housing, lack of clean water, heating possibilities and electricity as well as sufficient food. Once a country has met these conditions, it can move on to the next stages. However, all these aspects are not part of the Marshall Plan for Africa.

In any case, the three plans were not drawn up by African governments in consultation with African intellectuals and the population. Although the plans mention the need for development and peacekeeping as their main objective, both the causes of the non-development of African society and the many wars that are fought in Africa have not been addressed. In this respect, the causes for the underdevelopment of African society and the armed conflicts have not been addressed or recognized in any way, and therefore no suitable plan can be drawn up. No attempt was made to question the previous economic policy practices of the IMF and the World Bank and to find out why both the so-called modernization plan and the structural adjustment program failed. It is therefore impossible to draw up an effective plan. Moreover, it is not explicitly clear which scientific methods or theories were used to design the various programs. It is well known that there can be no practice without sufficient theory and scientific methodology. However, it can be deduced from the plans that the programs are nothing more than a continuation of the neoliberal economic policy that the IMF and the World Bank have repeatedly recommending and prescribing to African governments. In short, there is no paradigm shift to solve the African crisis and fundamentally change the society.

In my opinion, the social problems in the various African countries can only be solved holistically. Whether this path leads to a market economy is of secondary importance. It is important that first and foremost the social, economic, cultural and psychological crises in each country should be systematically resolved in order to build a functioning society. The satisfaction of basic needs plays a central role here. Without vitamins, minerals and protein-containing foods, the human body and mind cannot function efficiently. It is also well-known that in modern times, aspects such as housing, medical care and education must be at the forefront in order to build a sustainable society. Unfortunately, these factors, which are important for all people, regardless of race, religion or ethnicity, are not addressed in the slightest. If the basic needs are ignored, Africa cannot be supported.

By Fekadu Bekele PhD.

The author is a development economist and a political analyst. He can be reached at: [email protected]

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