No matter how the African economy transforms, it will not reproduce the Asian development model.
The “Father of Development Economics” and the “Father of African Nationalism” soon separated. William Arthur Lewis gained fame for studying the Industrial Revolution, and Kwamy Nkrumah, the first president of Ghana, made it his mission to resist British rule. After Ghana became independent in 1957, Nkrumah invited Lewis to become its economic adviser.
This seems to be a wise choice. Lewis was known in the anti-colonial circle for his tact, respectability and trustworthiness. He also won the Nobel Prize in Economics shortly afterwards and was also the first black to receive this award. He stated in a groundbreaking paper that people in developing countries are poor because they are not engaged in proper occupations. If they are transferred from subsistence farms to factories and commercial farms, the economy will naturally grow.
How to implement? Nkrumah wanted to drop the money directly into the factory. “I am a politician,” he explained, “must take a gamble for the future.” Lewis urged balancing measures, “if agriculture stagnates, industry cannot grow.” This job as an economic consultant, Lewis Only worked for 15 months. At the same time, East Asian countries have moved toward industrialization and the ranks of developed countries, while African countries are still standing still.
| The manufacturing industry is in the ascendant|
Under a pandemic that disrupts the global supply chain, the question of how to improve Africa’s economic vitality is becoming increasingly urgent. South Africa’s Finance Minister Tito Mbovini hopes to “develop indigenous manufacturing in Africa to produce the products we need”; Uganda is trying to curb imports; Ghana also voiced that it will give priority to import substitutes.
In fact, various forms of transformation had already begun before the epidemic. The proportion of Africans working on farms dropped from 66% in 2000 to less than 58% in 2015. Most people move to informal service industries and small commodity manufacturing, such as taxi drivers and carpenters, which earn more than farming. Their transformation does not represent the industrial revolution that policy makers dream of. However, there are countless cases hidden behind this major trend: Nigeria is slowly getting rid of its dependence on oil exports; Rwanda holds various conferences to receive high-end consumers and tourists; as a few manufacturing industries, it has developed successfully. One of the African countries, Lesotho shipped clothing along the roads of South Africa, and then exported it all over the world.
Bossa Buta, an Ethiopian, lives in a mountainous area full of teff. The 86-year-old businessman has been in the grain business since Haile Selassie I (the former emperor of Ethiopia). He said that the market has undergone an “unparalleled” transformation. Ethiopians grind the plant particles of teff into powder, make a batter, ferment it slightly, and then bake it into huge round pancakes. This kind of fermented back cake with a unique sponge texture is called Injela, and it is a delicacy for every family in Ethiopia. Many people are now reluctant to do it themselves, and are more willing to buy ready-made ones. There are more than 100,000 employees in the production and sales of Injera alone.
This is true throughout Africa, where household-made items become commodities and are sold. Farmers only spend 40% of their working hours on farms, while the rest is spent on side businesses such as transportation or trade. They bought half of their daily food, concrete bricks and tin plates for household use.
Commercialization is most obvious in towns and cities. People’s demand for processed foods, meat products, dairy products and vegetables has greatly increased. “African kids want to try these new things.” said Monica Musonda, founder of an instant noodle company in Zimbabwe. The Ghanaian company “Keco King” made millet porridge into convenience food for office workers to enjoy; another multinational company bottled and sold traditional herbal bitter liquor.
Many African manufacturers started as trading companies and switched from importing to local production. At the same time, a large number of foreign companies have entered Africa. McKinsey consultants estimate that in 2017 Chinese companies took on 12% of Africa’s industrial production and employed millions of people. Only a few African companies consider exporting to Western countries, and 93% of their profits come from local and regional sales. The Chinese company “Paradise” in Uganda was founded by a businessman who imported suitcases and is now engaged in the production of steel, plywood and mattresses; the American company “Roha” has established a glass bottle factory in Ethiopia to provide local brewers with sources .
Carlos Lopez of the University of Cape Town said that internal consumption and investment are driving the development of the African economy, and the expansion of regional trade has made this momentum even stronger, especially in the industrial sector. Manufactured goods account for only 19% of African countries’ exports to the rest of the world, but they account for 43% of total trade in Africa.
| Economic transformation is imminent|
However, African countries cannot get rich by producing and selling themselves. The comprehensive purchasing power of sub-Saharan African countries is less than that of Germany. In order to open up a larger market, African companies must look to the world and adapt to global competition in order to strengthen their own strength.
Some argue that the key to early economic growth in East Asian countries lies in an active government, high investment and continued attention to the export of manufactured goods, and Africa is far from being able to replicate them. The early wave of import substitution was interrupted by the debt crisis. In the 1980s, African countries showed little interest in industrial policies. The International Monetary Fund and the World Bank put pressure on the government to open the African market to foreign competitors, and many local factories have closed.
Unlike Africa, East Asian countries have no treasures such as oil buried under their territories. Economic growth depends on people’s hard work. Low wages have won East Asian countries a competitive advantage. Researchers at the Think Tank Global Development Center said that although there are millions of poor people in Africa, many African countries are unable to follow the Asian model due to high labor costs. The drop in transportation costs has led many African companies to engage in processing trade with imported materials: clothing companies sew shirts with imported fabrics and buttons, and automakers assemble parts. This makes it easier for them to climb the first step of industrialization, but it is difficult for them to climb further.
So African countries are looking for a new way out. “Traditional labor-intensive industries and export-oriented industrialization strategies have had little effect.” said Yau Ansu, an adviser to the Ministry of Finance of Ghana. “But countries like ours can choose another economic development model to help our agriculture Add value to natural resources.” For example, the “Blue Sky” company in Accra, the capital of Ghana, sells fruit cuts to European stores.
The horticulture industry is also an example. In normal times, Nairobi will flow out more than 400 tons of cut flowers every day. In the small town of Zwie in Ethiopia, several kilometers of flower houses, accompanied by dust and donkey carts, spread like a hangar, and roses are grown to transport them to the Netherlands. The epidemic has plunged many African companies into crisis, but when tourism and international trade recover, it is also a time when opportunities are opened to Africa.
This is not traditional manufacturing, nor is it self-sufficient agriculture. Experts from the World Development Economics Institute of the United Nations University summarized these industries, including tourism and customer service hotline centers, as “smokeless industries.” The diversity of African industries means that there is more than one road to Rome.
| Changing mindset to adapt to reality |
Six years ago, Roger Lee decided to open a new factory. As the boss of Hong Kong Lianye Garment Co., Ltd., he has expanded his business to Indonesia, Malaysia and other countries. The local government of Ethiopia supports him, and the products produced here can also enter the American market tax-free, so he rented a shed in Awasa Industrial Park.
If Asian-style manufacturing can develop rapidly somewhere in Africa, it is likely to be Ethiopia, which has the world’s lowest wage level. Before the epidemic, apparel companies such as Hong Kong Lianye Garment Group had employed 27,000 employees in Awasa. The owner of an Asian factory said that the city reminded him of the Bangladesh port when his uncle started from scratch 30 years ago.
However, Awasa is only a pilot, and things may still go wrong. The ethnic conflict in Ethiopia has caused factories to close their doors. The vast majority of workers are young women from rural areas and it is difficult to achieve production goals. “They don’t have the mentality to work in the factory.” A production manager sighed.
The low wages that attract investors make workers hesitate. In the first year of operation in the Awasa Industrial Park, the employee turnover rate was close to 100%. Experts from the University of Chicago and Oxford University tracked and investigated new employees hired by factories and commercial farms in Ethiopia, and the results showed that 1/3 of them left their jobs within three months, and 77% of them left within a year.
The reality of Ethiopia reveals the core contradiction of Africa’s economic transformation. While economists worry about millions of people being unemployed, factory owners are desperately looking for employees who obey management. Workers are often late and resign during the harvest season. Contracts are difficult to perform and the market is prone to chaos.
If someone comes from Lancashire, the birthplace of the British Industrial Revolution, or Guangdong, the forefront of China’s reform and opening up, he must be familiar with all of this: a society that conforms to the rhythm of agricultural civilization will produce profound changes in the transition to an industrialized society. fracture. It brought new concepts related to law, time, and discipline, and created a new type of human being: commercial farmers, docile workers, and methodical managers. There are gains and losses. It is not difficult to understand why some people are indifferent and even hostile to this transformation.
The same hesitation has also appeared on some African leaders who have long relied on aid and oil exports, but the fate of population growth is pushing the continent forward. Approximately 15-20 million young Africans enter the labor market every year. If they cannot find a good job, many people will probably take to the streets to express their dissatisfaction. Therefore, even if the Asian economic development model cannot be reproduced, economic transformation with African characteristics is still a goal worth pursuing.
No matter how the African economy transforms, it will not reproduce the Asian development model.