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July 21st, 2009
"Africa's Turn" for Economic Growth May Continue Amid Global Economic Crisis

Earlier this month, the G-8 pledged $20 billion to fight increasingly widespread hunger in Africa. Next week, USAID will begin emergency food assistance to 2.8 million people in Zimbabwe. But at least one economist is cautiously optimistic about Africa’s ability to maintain the modest but steady economic progress it achieved before the global economic downturn.

When MIT and Harvard-trained economist Edward Miguel’s book, Africa’s Turn, was published in November 2008 he argued that ‘it is now possible to wonder whether the terrible decades of war, famine, and despair are finally over.”

Miguel points to democratic reforms and peaceful elections in Tanzania and Ghana as examples of ongoing political stability. In Botswana, he says the government continues to carefully manage the country’s mineral wealth.

Many of Africa’s resource-rich nations reaped record profits from high commodity prices in the past decade but have since seen prices drop.

Now, more than half a year into the global economic crisis, Miguel told WIDE ANGLE “there have been positive developments in the past ten years that should help African countries weather the storm.”

Sierra Leone may be a test case for maintaining Africa’s success. The country endured a civil war from 1991 to 2001, and then experienced rapid economic growth due in part to its diamond export industry. Those commodities are now worth less, but Miguel hopes the country can still continue its series of peaceful elections.

“We may look back on the last decade as a golden era in Africa’s development,” said Miguel. “But Africa’s growth is based on more than commodity prices.”

He argues that traditional infrastructure such as roads that are key for transporting goods are important for governments to build even with limited resources. Just as important is new technology infrastructure such as cell phone networks.

Miguel’s colleague, Tufts University economic professor, Jenny Aker, studied how the introduction of cell phones to the grain markets in Niger allowed traders to search for the optimal sales prices in far-flung markets. Her research showed that cell phones improved both trader and consumer welfare in Niger, and may have averted an even worse outcome during a 2005 food crisis.

“While basic needs cannot or should not be overlooked, cell phones could be a powerful development tool for farmers, traders and consumers,” noted Aker.

More wide scale reforms such as the introduction of a commodities exchange market in Ethiopia may also help farmers to get the best prices for their goods. Miguel argues the exchange – combined with traditional and new technological infrastructure – is “one piece of the puzzle” that will allow Africa to overcome its reliance on foreign aid even during the economic crisis.

This week PBS WIDE ANGLE travels to East Africa to tell the dramatic story of an Ethiopian economist on a mission. Seeking a market-based solution to ending hunger in her famine-plagued country, she creates Ethiopia’s first commodities exchange. Check your local PBS listings for air times for The Market Maker.

  • abdulai

    Interesting to note the growth the continent has sustained during the past few years – but one must also wonders whether these resources are being distributed equally. It’s one thing to achieve economic growths but it’s a whole another thing to capitalize on that growth and improve the living condition of the people. For example, while Sierra Leone is said to have maintained a certain economic growth, a large portion of the population lives in extreme poverty. Basic necessities, electricity and running water, are scarce in most parts of the country. Corruption is still rampant within the elite, accountability is nonexistent.

    It’s true that alot has been achieved in many other countries, Botswana, Senegal, Mali, Tanzania, just to name a few, but a lot more needs to be done in many of the African countries. This idea of relying on aid for development is a bandage solution – African governments and their Western partners must focus on fair trade – a trade that puts both sides on equal footing. A win-win situation that helps local farmers. Foreign investment must also be encouraged by both sides especially the African governments – this can only be done if there is political stability in the country, but not with rigged elections as it is being the case in some countries including Togo, Congo Brazzaville, Guinea-Conakry (before the military coup), Mauritania (more than a week ago). There is a strong need for good leaderships.

    Western countries must also stop cheating on African countries through unfair trade policies. You can’t expect poor countries to develop their economies if you’re going to keep subsidizing your own farmers and deny the same opportunity to your so-called trade partners. Agriculture can play a major role in the continent, but many countries don’t have access to the same seeds that Western countries do have. With a modern agriculture, hunger can be stamped out of most most countries.

    For all these reasons, many in the continent will only notice the economic meltdown through television screens or newspaper columns but not in real life. Part of the reason can certainly be traced in the thin relationship African markets have with their Western counterparts. Bank lending isn’t as huge as it is in so-called developed countries. But perhaps if Africa had a fair trade with the West, everyone in the continent would be feeling the same pinch.

  • Sara Brown

    When people think of Africa they also think of a great adventure.

  • Shanna Pershing

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