Globalization: Little Impact on the Continent

Erasing borders may have good and bad effects on the economies of Africa. Under the imperative "There’s no turning back," experts at the conference embraced reality and suggested ways for Africa to benefit from globalization.
by Julie Jette

Experts on the African economies say globalization has yet to benefit the continent in a significant way, and that what is really needed is political change and more investment from within its own borders.

The comments came during a panel discussion on "Globalization and Africa: Socioeconomic Growth or Disorder," held at the 5th Annual Africa Business Conference at Harvard Business School on March 8.

Harvard Business School Professor Debora Spar, the panel moderator, noted that political borders are more permeable now than they have been in modern times. "What's crossing borders? Money is crossing borders... ideas are crossing borders," she said.

Unfortunately, she added, there is little evidence that Africa, given its population and size, is benefiting proportionately from the phenomenon. The continent can claim only 2 percent of the value of world trade, only 2 percent of the world's economic output, and only 1 percent of the investment.

"Africa has still not played the role we'd expect it to play in this messy phenomenon of globalization," Spar said.

Pandora's Box

Mark Shuttleworth, an entrepreneur from South Africa, said globalization has had a destabilizing effect on some local cultures. But what has begun cannot be undone, he said.

"There is no point in imagining a world where Pandora's box has not been unlocked," he said.

"We cannot dig trenches around any country," agreed Patrick Utomi, a senior faculty member of the Lagos Business School-Pan African University.

Robin Kibuka, an adviser in the Africa Department of the International Monetary Fund, said, "Globalization is a force for development, but clearly it is a force for development that will have to be managed because it does create instability." For example, investors can move money more quickly than ever from one country to another, potentially leaving a developing country reeling from the effects.

Paolo Gomes, executive director at the World Bank, said globalization has reduced the ability of national governments to effect change on their own.

Africa has still not played the role we'd expect it to play in this messy phenomenon of globalization.
— Debora Spar

"I think the perception is that globalization is creating more losers than winners," he said.

But Papa Madiaw Ndiaye, director of the MIDROC-BVI-backed fund The Africa Fund, said, "What I do today is based on the premise that globalization will take place in Africa." Ndiaye said he believes that globalization has generated a discipline among many governments and businesses in Africa that was discussed for years but never implemented. However, he agreed with the other panelists that "this has to be managed carefully or we will never see the positive results."

The Good News

"It was a pretty negative assessment," Spar observed after the panelists offered their impressions of globalization's record in Africa so far. "What can we say that's good for globalization, if anything?"

There is no point in imagining a world where Pandora's box has not been unlocked.
— Mark Shuttleworth,

"I think it would be silly to say 'Let's pretend the world isn't out there,' because it is," said Shuttleworth. However, he added, Africa really needs the investment of its own people in order to attract healthy global investment.

Utomi said countries cooperating on a regional basis would also be a step forward for Africa.

Kibuka noted that other countries' trade policies have made it difficult for African industries, particularly textiles and agriculture, to compete globally. He said it is estimated that 27 million jobs in the developing world have not been created due to subsidies on farm and textile products in developed countries.

According to Gomes, there is little chance Africa can take advantage of any international business trends until more of its governments set the stage for a fairly competitive environment. "There is a need to create a new class of politicians," Gomes said. Africa needs "to create a critical mass of politicians in our countries."

Africa also needs those with money inside their countries to put their capital at risk there, Ndiaye added. "The local people have to feel secure about their environment for the outside investors to come in," Ndiaye said. "You need both inside and outside sources to make it happen."

About the Author

Julie Jette has been a business reporter for eight years.