About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Monday, August 18, 2014

Behind the Africa-America Summit

Why Africa needs trade and investment from America, not lectures on democracy and human rights 

Last week, we were in Washington DC to attend the America-Africa Summit. China, the European Union, India – even Turkey – have all held summits on Africa and with African leaders to discuss how to engage our continent in trade and investment. Given that America is governed by a “black” president, and given the hope and expectations many Africa elites had in Barack Obama, it is interesting he has joined the new “scramble” for Africa this late in the game. Good that Obama thought of his “home” even belatedly.

I was struck by exhaustion and spent much of my time on a drip in hospital than at the summit. However, I was impressed that Obama avoided bringing in the issue of governance (democracy, human rights blah blah blah) on the agenda and hence focused on common interests through trade with investment. I was pleased not because I think governance issues are not important – I think they are very, very important – but because they should be left to local players. If Africans want democracy, they should fight and sacrifice for it and not outsource it to Americans.

Attempts by Western powers to promote democracy in Africa have created a dependency mentality among our elites. Rather than see democracy as a system of government that evolves over time through political struggle and compromise, African elites want it to be a gift received on the silver platter of Western generosity. Thus, a large cross section of African elites are always waiting for Western governments and the global institutions they control to do for them what they are afraid to do locally i.e. invest in political organisation and mobilisation to promote improved governance.

Secondly, the American people and their government, however well-intentioned they may be, cannot dictate democracy on our societies. Democracy in Africa will not come from the dictates of Paris, London and Washington but from the struggles and compromises of African peoples and their governments. However, if America wants to promote democracy and human rights, it can be most effective if it looks at its role as being indirect and long term. Here, America can use its resources to stimulate, instigate, precipitate, catalyse, and cultivate the emergence of groups, institutions and structures that can promote democratic development.

Thus, democracy in Africa, to borrow an expression from Adam Smith, will result largely from the invisible hand of economic prosperity as it did in Taiwan and South Korea. Of course countries have different political dynamics – so not every country that grows rich will follow the footsteps of South Korea and Taiwan. There will be many exceptions and divergences to this rule. However, America cannot politically or militarily dictate political outcomes in Africa. But by promoting trade and investment, it has a high potential to facilitate the growth of a large and educated middleclass. This will provide the social software necessary for enlightened and democratic politics.

The second message to emerge from the conference was the importance of American investment in partnership with local businesspersons.

In the past, I have seen a naïve fascination with Foreign Direct Investment (FDI) on our continent. Governments in Africa are always eager to listen and attend to the concerns of foreign investors. This is good because FDI brings in capital, technical and managerial expertise, experience in running large and complex organisations and penetrating external markets. Yet obsession with FDI has led our governments to ignore local investors who contribute more than 80% of investment capital and employ the largest number people. Only local investors, and not FDI, will transform our countries.

This time, there was recognition that Americans seeking investment opportunities on our continent would do better to work with local partners. This would give them access of local norms, habits and consumption attitudes and patterns that are critical for success. In any case, partnership with local entrepreneurs confers legitimacy on FDI. But most critically, development is a product of political action. Thus, you need local capital to promote public policies and political institutions that can foster transformation. FDI cannot do this.

FDI also lacks networks of trust with local bureaucratic and political insiders to negotiate deals. (It would be difficult for John Smith to fly from London and negotiate a bribe with James Mukasa). This leads FDI to identify locals to act as a link between it and domestic bureaucratic and political players. These locals (neo-Marxists call them “compradors”) are commission agents who make a living by negotiating bribes for local officials on behalf of FDI.

This is a class that has developed and consolidated in Uganda under President Yoweri Museveni. It has skills for lobbying and bribing state officials for favours but not in changing public policy to facilitate the growth of a robust private sector. Thus, rather than organise collective action to change public policy (an undertaking with political risks) FDI realises that it does better lobbying for individual exception to the general problems that afflict business as a whole.

As a result, except for small island nations, our planet does not have many examples of nations that were transformed by FDI. The most successful economies such as South Korea and Japan (like France, Germany, and USA etc. before them) transformed through the development of what Marxists called the “national bourgeoisie.” This was occasioned by the development of large locally owned brands that went global – Toyota, Panasonic, Toshiba, Sonny (in Japan) or Hyundai, Daewoo, Samsung, LG (in South Korea) etc.

Indeed, many scholars argue that the inability of Latin American nations to transform as rapidly as their East Asian counterparts was in part due to the early presence of multinational capital in those countries. Of course the dominance of multinational capital in a country may be due to the absence of domestic capital – so it comes to fill a gap. But it also has the potential to stifle the development of domestic capital via its corrupting influence on local elites.

Take the example of Uganda: Most major investments are by multinational capital. This multinational capital influences public policy through global institutions such as World Bank and IMF. These institutions discourage governments from aggressively developing certain sectors of the economy that may foster transformative change, saying everything should be left to the market. But this recommendation favours sustaining economic structures (like production and export of raw materials) that relegate our nations to an inferior position in international trade.


No comments: