Is Africa really rising? What does the continent’s booming economic growth mean for its people, and will it lead to inclusive, sustainable development? How can Africa unlock its development potential and bring prosperity to all? And what lessons do these challenges offer to an understanding of what development really means?
These are some of the tough questions that Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria, senior United Nations official, and founder and CEO of Geneva-based global strategy and risk advisory firm Sogato Strategies, tackles in his latest book: “Emerging Africa: How the Global Economy's 'Last Frontier' Can Prosper and Matter.”
Arguably the most profound recent book on the subject, “Emerging Africa” goes beyond simplistic views of Africa’s future to tackle the reasons — and more importantly, the solutions — for the continent’s most pressing problems. It asserts that Africa can not only prosper but finally gain more traction in the world through a far-reaching economic transformation of its economic system, which requires a total reinvention of the African mindset.
Moghalu uniquely combines in his latest work an interdisciplinary approach grounded in philosophy, economics, strategy and risk management to explain how societies can rise from poverty to prosperity.
He also provides insight on Africa’s past, present and future trajectory, contending that the continent is indeed emerging, but has not yet risen. It will, he argues, only rise once Africans develop and act on the basis of a clear “world view,” a global perspective on their own problems — and the solutions they need to implement to achieve radical economic transformation towards becoming the “new Asia” in the 21st century.
Published by Penguin Books in July and described by the Financial Times as “a welcome last word on the Africa Rising narrative,” the book is garnering global attention and can be considered as a marked departure from the prevailing wisdom of external experts. This, Moghalu said, is because the book represents a “clear demonstration of the capacity latent inside the continent to analyze and fix its own problems.”
Insider looking out, or outsider looking in?
With over two decades of international experience in global development and economic policy, Moghalu has seen himself as somewhat of an insider looking out when giving advice to policymakers, he told Devex in an exclusive interview just days after stepping down as deputy governor of Nigeria’s central bank in November.
During his five-year term, Moghalu said the institution performed quite well and played an important role in the development of Africa’s most populous nation. Monetary authorities, he explained, can become an agent for change across Africa if they are truly independent and allowed to participate in the country’s economic transformation beyond simply providing macroeconomic stability.
“Strong institutions are critical to provide the foundations of economic transformation,” he noted, adding that strong institutions in his opinion are those that “have strategies that are adopted and executed with discipline” — an approach that needs to be coupled with a new African mindset that understands that development and economic transformation don’t happen by chance, but are rather “the outcomes of long-term strategy, effectively executed.”
At a time when many Western economies are still struggling to fully recover from the global financial crisis, Moghalu believes that central banks and other institutions — if properly strengthened and acting in a strategic way — can help Africa “grasp the opportunity to do things differently.”
In the book, the author mentions capital, innovation and property rights as the three main requirements for successful capitalism. Even in developed countries, however, achieving all three is a huge challenge, especially finance, which in some rich nations has become “a playground of rich boys, playing Russian roulette inside of a small circle, with lots of money and lots of people getting rich.”
That doesn’t apply in Africa, so Moghalu avoids comparing African economies to Western ones. Rather, “countries that are in similar places in historical evolution,” like Singapore, Malaysia, Indonesia and other Asian economies that have emerged from colonial regimes to overcome this “delay” in historical evolution and are today economic powerhouses.
“The rise of Asia is a great inspiration,” he said. “For me, Africa and Asia share many commonalities, in terms of the structure of the bare societies, especially the importance of communities over individuals in terms of culture.”
A ‘world view’ to drive Africa’s development — and capitalism
“Emerging Africa,” Moghalu asserts, has made a unique contribution to the science of behavioral economics.
The author contends that development essentially begins in the mind, which has the power to create over time a new reality. Moghalu calls for Africa to adopt a more global perception that will enable Africans to use lessons learned in other parts of the globe to analyze their own problems and upgrade their thinking to come up with long-term solutions. Over time, he says, these will lead governments to become less and less dependent on foreign aid, as they have been for most of the past 60 years.
For instance, the mental challenge for African countries in adapting to globalization today, he explained, is “to make sure we put themselves in a position of competitive advantage” to participate in the process.
“If you are not in that position and if you persuade yourself to believe that you are actually participating in the globalization process and that’s a good thing for you,” Moghalu said, “whereas, in reality, you are a recipient of the products of globalization from manufacturers, pushed around the world by those … who have these advantages — then you are making a mistake.”
The author also encourages African countries — and developing nations in general — to challenge the conventional wisdom about capitalism, in particular how it has led to the rise of the West, but has not been the economic salvation for Africa and other parts of the world.
“African and developing countries should interrogate capitalism and bring capitalism to their own view of development and prosperity by establishing, in a very practical way, that there’s no one type of capitalism,” he said.
Here, Moghalu said that China offers an interesting example.
“We need to make sure that public policy in developing countries can interrogate the different types of capitalism and assess them against the context of their countries and their societies and [then] decide which ones or which combinations of the different types of capitalism should be the driving force for the economic developmental strategy,” he noted, adding that in his view development strategies — even when using private capital — should focus on the wealth of nations more than that of individuals.
‘Innovation is the secret to Africa’s prosperity’
In recent months, Nigerian billionaire philanthropist Tony Elumelu’s efforts to encourage entrepreneurship across Africa have created much buzz within development circles, and Moghalu agrees that Elumelu’s rare approach to going beyond simply making money is a brand of “Africapitalism” that should definitely be encouraged.
For this author, though, it’s just a starting point. Genuine innovation, he said, is needed in order to scale up efforts.
“Innovation is the secret path to Africa’s prosperity,” he said. “Africa is engaged in globalization from a standpoint of strength in the area of culture … but that is a soft side of globalization.”
The real power, Moghalu explained, is in technology, which drives the competitive advantage. Innovation in Africa, he said, has yet to find a common and practical application in public policy that will bridge the gap between locally available talent and the financing to take those innovations to scale.
With that premise in mind, the author encouraged international development programs in Africa to contribute to economic transformation by not only funding innovation in its early stages but also financing the products of innovation to create real wealth in the form of human capital. Donors, he suggested, should thus concentrate much more on investing in education and building practical technological skills that would drive development.
“Development can only effectively be driven by the people whose development they are talking about. It can never be achieved simply by outsiders because there is no society where that has happened,” Moghalu said. “A society that has been developed by advanced industrial economies created by foreign aid? There is no such society.”
Africa not rising … yet
Despite what so-called Afro-optimists argue, the author believes Africa is not rising yet, although it is slowly emerging as an economic force after decades of decline.
“Africa is emerging in the global economic compass as a place of potential and opportunity, but for whom do these opportunities exist? Is it an opportunity for the African themselves or is it an opportunity for opportunist foreign investors?” Moghalu asked.
GDP growth alone is not enough to say that the continent is rising, if that growth is not accompanied by long-term economic transformation — which is what the continent really needs.
“I interrogate the ‘Africa rising’ narrative because it is sometimes necessary to interrogate conventional wisdom,” the author explained. “I cannot share the belief that Africa is rising when in fact there are many objective economic elements for economic rise that do not yet exist in the continent. There is nothing that has changed on this note in the fundamental structures of African economies that are still driven by subsistence agriculture and the export of raw materials. If that hasn’t happened, on what basis is the continent rising?”
Now, Moghalu pointed out, many African countries are moving in the right direction. One of them is his native Nigeria, which over the next five years will attempt to implement crucial reforms such as the ones currently underway in the energy sector to develop oil refining capacities that will enable the country to be less vulnerable to price shocks than its near neighbors.
Moghalu finally challenged the common perception that democracy automatically leads to development. “Democracy is good, but it is not the rituals of democracy that deliver development. It is the substance of good governance and public policy that does so.”
In challenging prevailing orthodoxy in his recent book, Moghalu has clear views on the roles of China and the World Bank.
“China clearly has a strategic policy towards Africa,” he said. “I am just struggling to figure out what is Africa’s policy toward China.”
And while development and economic transformation can only be achieved from the ground up, Moghalu believes the World Bank’s support role will have more impact if President Jim Yong Kim’s reforms are successful.
“Conceptually, a World Bank more focused on being a knowledge solutions bank is a more powerful vision that addresses the real factor that drives development — domesticated human capital,” he said. “Project loans without human capital transformation have been going on for the past half century, and it hasn’t yielded economic transformation.”
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