The March 2013 BRICS summit in South Africa had all the signs of an Africa that is daring to rise in the face of a world that has finally taken note of the continent’s determination to say no to ‘down ever’ and yes to ‘up now’. Indeed the political challenges have not dissipated into thin air. But the amount of positive progress so far installs confidence among businesses that want to invest in Africa . And so when the BRICS assembled down in Johannesburg under the host of President Zuma, they had a balance of thought as they talked about the possibility of forming an Africa-centric bank that would rival the likes of western-centric IMF and World Bank. BRICS is an acronym for Brazil, Russia, India, China and South Africa. While the BRICS group has been around for too short a time to influence any opinion, it seeks to set the foundation stone rolling for a future that will mirror successful stories of purely economic unions such as the OPEC (Organization of the Petroleum Exporting Countries) and OECD (Organization for Economic Cooperation and Development).
As the world watches how the European Union is dealing with the crisis in Cyprus, we must spare a few minutes and wonder: is an African Economic Union a possibility that will one day steer Africa’s business agenda? Of course, a number of regional political and economic unions already exist in Africa whose efforts help foster market relations among member countries. The ECOWAS, COMESA, EAC and SADC immediately come to mind. Judging from the problems the EU has had to grapple with since its inception; one gets the feeling that such an endeavor is not a walk in the park, particularly in Africa.
Far too aloof?
The African Union has been accused of having been far too aloof when dealing with the recent Arab revolution in the Maghreb and the political cum military crises in Mali, Central African Republic, Mauritania, Niger, Guinea, Guinea Bissau and the Cote d Ivoire. These accusations often brew the question of how then can a unified African market through a strong African Economic Union be possible?
Some believe that economic unions must always be regional in nature. They must not always involve countries from the same geographical region. Just like human relationships, they tend to work better when involving elements that have a lot in common.
Each of the 50 plus countries should probably be judged differently. The story of the Asian Tigers is a wonderful attestation to the fact that a country must not always rely on foreign assistance to make an economic leap. The four nations, Hong Kong, South Korea, Singapore and Taiwan are well known for their exceptionally high growth rates and rapid industrialization between the early 1960s and 1990s.Many economists attribute this giant leap to purely internal solutions such as;
A focus on their respective competitive advantages; Hong Kong and Singapore are now leading financial centres whereas South Korea and Taiwan are leading manufacturers of information technology. Samsung the multinational conglomerate that is known for electronic products, is a South Korean company.
A highly educated populace; most of the Asian Tigers had achieved free primary education by the end of the 1960s.
High savings rates that have to a large extent cushioned these countries from major financial crises.
A focus on exports; the regimes in these countries created incentives for a selected group of exporting firms.
Low deficit levels; Taiwan, Singapore and Hong Kong had no external debt since they did not borrow from other countries. One lesson can be learned from the Asian tigers; Africa’s problems can be fixed more permanently through proper economic planning internally. Kenya’s vision 2030 is loosely based on the Asian phenomenon. External solutions such as financial aid are only temporary by nature. In 2009, Africa lost $74.2 Billion through kickbacks, graft and tax evasion. This was three times the aid the continent received that year (Huffington Post.)
Indeed an economic union may not be the exact panacea to Africa’s challenges. But it could as well be that good route to a strong foundation that will cement African business. Nevertheless, Africa is quickly realizing that to rise up, it must first pick itself up- a realization that has awakened a global appetite to do business in Africa.