Very recently Nigeria, Africa’s most populous country, was also briefly Africa’s biggest economy, largely as a result of its export of oil. But then the global price of oil dropped (partly because of the American shale boom), the flow of cash from the international money spigots slowed to a dribble, and economic development primarily premised on raw commodity exports once again showed itself to be a fickle thing. As the price of oil fell, Nigeria’s rate of economic growth halved from more than 6% in 2014 to just barely 3% in 2015.
By contrast Ethiopia, Africa’s second most populous country, is an importer rather than an exporter of oil. It has, however, sustained economic growth rates in excess of 10% a year for the decade from 2004 to 2014. What they notice today in Ethiopia’s capital, Addis Ababa, makes global observers think back to China’s Shanghai in 1987. Appropriately for this moment in its development, Ethiopia is focusing on helping smallholder farmers adopt new agricultural technologies and gain access to markets, following the historical examples of Taiwan and South Korea. Agriculture makes up more than 73% of total employment, 46% of GDP, and 80% of foreign export earnings in Ethiopia. As a result of Ethiopia’s efforts at agricultural change, poverty fell from 44% in 2000 to 30% in 2011— which means that the share of Ethiopians living in poverty dropped by a third. And Ethiopia could do so much more yet agriculturally (including improving the degree of property security enjoyed by its smallholder farmers).
The Africa that has been rising on the back of high commodity prices will increasingly find itself with no reliable means by which to sustain its economic growth—especially if the world turns more swiftly to shale gas, carbon capture and storage, nuclear, and solar than current trends allow us to imagine. The Africa that will rise and then sustain its new heights is the Africa that will transform the lives of its smallholder farmers, and from the sound foundation of a healthy agriculture build the industries that are the true engines of national wealth generation. Nigeria is an example of the former, Ethiopia (to me, surprisingly) of the latter.
But just as I get excited by the prospects of African countries following the kind of growth path currently being tried by Ethiopia, I am reminded that “by any measure Africa’s failure to industrialize is striking,” as John Page of the Brookings Institution writes:
In 2013 the average share of manufacturing in GDP in sub-Saharan Africa was about 10%, half of what would be expected from the region’s level of development. Africa’s share of global manufacturing fell from about 3% in 1970 to less than 2% in 2013. Manufacturing output per person is about a third of the average for all developing countries and manufactured exports per person, a key measure of success in global markets, are about 10% of the global average for low-income countries.
In their new report, Made in Africa: Learning to Compete in Industry, Dr. Page and his Brookings colleagues argue that “boosting manufactured exports, supporting industrial agglomerations, and building firm capabilities” are essential to Africa overcoming its failure to industrialize. Building big businesses with productive shop floors that manufacture stuff people in other countries want to buy: that would indeed appear to be the next challenge for Ethiopia and other countries truly intent on being the rising Africa.
The challenge is not, however, simply a matter of figuring out at the national level how to reform agriculture and how to industrialize. National economic development also depends on successfully negotiating an international trade and financial order that makes it difficult for countries like Ethiopia to nurse their infant industries. According to Dr. Page and his colleagues (as well as experts on the miracles in Taiwan and South Korea like Joe Studwell and Alice Amsden) the advice and requirements of the World Bank and the IMF have frequently been counter to historical experience with regard to what actually does allow countries to industrialize. Knowing how best to deal with these institutions of international economic governance (and with the governments of other countries) is as important and as difficult as figuring out the national aspects of development.
A myriad of diverse actors are involved in the process of successful national development: smallholder farmers, agricultural extension officers, traders, factory founders, shop floor managers, manufacturing laborers, bankers. But all the endeavors of these actors depend on stable and functioning states with effective and accountable governments—in particular, governments with bureaucrats who are committed servants of the national interest.
And so the Africa that will rise will be the Africa with bureaucrats who care about the national interest of their countries, who are learning how to negotiate the international order, and who focus on helping smallholder farmers, export-oriented industrialists, and their bankers succeed.
Gideon Strauss is a Senior Fellow of the Center for Public Justice and Associate Professor in Worldview Studies at the Institute for Christian Studies.
Photo Credit: By Jean Rebiffé via Flickr. View of Addis Ababa during sunset.