Why has it been difficult to adopt an export driven policy for economic development in Africa; case of 1996-2020 Kenya’s Industrial policy

Introduction

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Africa is a continent endowed with massive resources. According to Nkrumah (1965), Africa has vast resources which have enriched other continents at the loss of Africa. In addition to Africa being home to 53 of the most important minerals in the world, the continent has great forests, water, arable and pasture lands, and a youthful population which when properly tapped into translates to development. Nkrumah notes that even with possession of all these resources, Africa cannot show much when it comes to industry and manufacturing. But why is it that Africa has not developed even with all these resources? Have the existing approaches become null and cannot steer Africa’s development forward?  Is it because Africa has heavily depended on aid-led development or because of their agrarian nature of economies?

Background

Countries of the world, both in the Global North and the Global South, are striving for development. They are striving to bring about a structural change in the economic sphere through increase in manufacturing and employment opportunities, and technological advancement. Additionally, there is an attempt to reduce poverty levels and bridge the income inequality gap between the North and South and between the people of the world (Szirmai, 2015). In order to achieve this, states have adopted development-led strategies. These strategies lay down the priority goals and explain the way to achieving these goals. They also set down the policy tools and provides the duration within which the goals should be achieved. They are visionary and address the medium-term and long-term issues to be addressed (Priewe, 2015).

States have adopted different strategies for development. For instance, when the import substitution strategies came to an end in Latin America, debate on whether substitution or inward development was better than export orientation or outward development arose. In the end, export orientation strategy emerged as the winner. The successful Asian countries including Korea, China and Vietnam applied the export promotion policy. It should be noted that when pitching for export-oriented strategy, trading terms on demand elasticity and technology are key factors. When a country exports commodity with low income and price elasticity, then growth and development are low, and the reverse is true (ibid)

Kenya developed a policy framework in 1996. The policy was intended to ensure achievement of industrialization by the year 2020. The policy emphasized on supporting target industries to encourage their growth and promote export. These industries included metallurgical, non-petroleum-based chemical, petro-chemical, pharmaceutical, machinery and capital goods industries. But even with such policy in place, the top imports of Kenya are Refined Petroleum, Cars, Packaged Medicaments, Wheat, and Hot-Rolled Iron, importing mostly from China, United Arab Emirates, India, Saudi Arabia, and Japan. (OEC, 2019)

Nature of Africa’s economies

African states’ economies are agrarian in nature. Nkrumah (1965) argues that Africa continues to rely and depend more on agriculture and mining as sources of its national income when the developed countries depend on industry, manufacture and commerce.  The low income and price elasticity of the agricultural products renders development minimal.

Six decades since the end of colonialism, African countries are still struggling with underdevelopment. Strategies have been employed to salvage these states out of the poverty cocoon but not much has been achieved. With majority of these states being agrarian, their competition at the international stage bears minimum fruits as they compete with states that are producing high value products. A case in point, Sub-Saharan Africa’s contribution to global trade was and remains marginal. Compared to East Asia between 1990 and 2012, East Asia’s contribution to world trade grew almost fourfold (Priewe, 2015).

Efforts to adopt a policy that will see African countries move out of being agrarian and focus more on high value commodities has born minimum results. For instance, in Ethiopia, an industrial policy has been adopted. But, even with the policy, there are no actual details on how the policy will be executed. This presents a challenge on how Ethiopia, and the other African countries will catch up with the already developed countries through economic transformation (Oqubay, 2015).

General path to development

After world War II, states embarked on strategies that would enable quick development. Such ideas did not however yield the desired results.  States especially those in the Global South practiced import substitution policies such as tariffs but this too was not successful. As a result, many concepts emerged including the Washington Consensus in 1989, and neo liberalism. liberalism (Priewe, 2015).

The Washington Consensus

In 1989, John Williamson provided a summary of economic policies that were perceived as better strategies for economic development in Latin America. This summary was a consensus by four institutions based in Washington including the State Department, the Treasury, the World Bank and the International Monetary Fund (IMF). The consensus was a response to the state’s role in opening up the economies through industrialization and import substitution. Currently, the consensus focuses on privatization, market liberalization, and macroeconomic policies such as redirecting public expenditure to public goods such as education and infrastructure. The economic growth of countries that employed the policies of the Washington Consensus were limited. For instance, Latin America’s years of employing the consensus policies showed more stagnation than those in which it had employed other economic policies such as import substitution. (Serra & Stiglitz, 2008).

Neo-liberalism

Neo-liberalism, a concept developed in the nineteenth century is a model that believes that markets operate best when there is no government intervention and regulation. It advocates for policies that will ensure a free market in which there is free flow of goods, labor and capital within the financial markets. It calls on avoiding fiscal policies but instead give priority to price stability through self-regulation overgrowth and employment objectives. The main reason behind neoliberalism is the perception that developing countries as well as transmission economies are affected by market distortions therefore invisible hand of the government and lack of regulation translates to growth and development (Clark & Clark, 2016).

The main tenets of neoliberalism that leads to economic growth are free trade and free financial flows across borders. With the free flow of goods and services, it is presumed that the developing economies can tap into exploiting their low labor costs and raw resources while the developed states which are capital intensive will be able to provide technology and capital. That opening up the borders serves as a source of Foreign Direct Investment (FDI)

Theoretical review

World Systems Theory

The World Systems Theory is a discourse in International Relations that looks at the global system through the lens of development and underdevelopment. The proponents of this theory motivated by 1968 world revolution conceived the idea that to understand the global inequalities manifested in underdevelopment and development in nations across the globe, one needs to look at the systems and structures that the world is built on. The core idea of the theorists is that global power relations have shaped development leading to institutionalized exploitation which has resulted in a stratified global structure (Chase-Dunn & Grell-Brisk, 2019). The world systems theory focuses on the division of labor as well as the market as key forces that have engendered the inequalities that characterize the world today. The contribution of this theory to the field of International Relations is massive. First, it drove the focus of the discipline to the world insofar as the level of analysis is concerned by theorizing that the whole system of the world was a proper unit of analysis. The second contribution is that it a sociological, historical and economic conversation into international relations.

The World Systems has several key assumptions. First, it views the world as a “social system” with structures and members who are governed by rules (Martinez-Vela, 2001). It is a dynamic system where some features change but others remain static. They also assume that life in this system in self-contained meaning it is driven by internal dynamics (Martinez-Vela, 2001). The other assumption is that there are opposing forces in the system and each force seeks to benefit at the expense of others. The proponents of this theory take the world economy as this system and thus assume that market forces and labor as the driving forces and not political forces. They assume that the relationship among the countries in the system is interdependent where countries depend on the others for some necessities (Martinez-Vela, 2001). The approach also assumed that all countries must follow a certain developmental path.

Different concepts are synonymous with the world systems theory. For example, Immanuel Wallerstein introduced a three-tier world system whereby there are the core, the periphery and semi-periphery. Other theorists such as Amin and Frank conceived the globe as a dichotomy of core and periphery. Recently, there have emerged key concepts such as the global north (the core) and the global south (the semi-periphery/semi core and periphery). The south-south relations and the north-south relations have their roots in these concepts.

The Core represents the developed world while the periphery is the developing country. The semi-core are the economies in transition which bear characteristics of both the core and the semi-core and this explains why sometimes the semi-core and periphery are clustered together within the global-south nomenclature.

Conclusion

The reasons why it has been difficult to adopt an export driven policy for economic development in Africa is up to us to interpret based on the above research. Aid dependency, agrarian nature of economies of capitalism?  

References

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Priewe, J., (2015). Eight strategies for development in comparison, IPE Working Papers 53/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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ed on aid-led development or because of their agrarian nature of economies?

Review of Richard Gibb’s work on Regional Integration and Africa’s Development Trajectory: meta-theories, expectations

The article “Regional Integration and Africa’s Development Trajectory: meta-theories, expectations and reality” offers a comprehensive analysis of regionalism in Africa and elucidates why as a tool for economic growth, market-led regional integration has continued to fail. Using the case study of Southern Africa, the author has critically analyzed how the theories that explain the political economy of regionalism are very Eurocentric and do not put into account how the regional integration in the developing world especially Africa has evolved. The article contends that regionalism notions from the west have been pegged to development and that for developing countries to succeed, they must follow the outlook championed by the west.

Regionalism in the context of Africa

After colonization, the 1648 Westphalian state model was transposed to African with the expectation that it would work for the continent as it had worked for Europe.  With this, the west left Africa with a fragmented state system, combined with political and economic instability. It was thus necessary for independent African states to find a way of transforming the nominal political freedom they had obtained into economic freedom for them to gain respect at the international sphere. In addition to Inter-state organizations and institutions, donor communities and multilateral agencies, government policy makers, united and prioritized regionalism as a roadmap and rationale to economic recovery.

Regional integration, as the main driver for addressing Africa’s deep economic problems, together with regional solidarity was identified as one of the main principles of the Organization of Africa Unity (OAU) and its successor, the African Union (AU).

The theoretical landscape

Gibb posits that the meta-theories that have worked in the west cannot be used in Sub-Saharan Africa with ignorance of its economy and political dynamics. That the avoidance by market integration approach to recognize the dynamism of states involved in integration is a challenge to development in Africa. Theories that dominate the explanation of European integration have been used to rationalize and explain regionalism in Africa. Three theories include liberalism of intra-regional trade to promote market integration, dependency-led thinking to promote cooperation, and the neoliberal Washington Consensus that has prioritized open regionalism. Gibb posits that these theories have prioritized the economic aspect without putting into consideration social and political objectives of the state that support majority of regional agreements. That the theories focus more on the mechanics of integration, in terms of explaining how co-operation works but fail to bring out the reasons why cooperation occurs in the first place.

Based on Balassa’s conventional analysis of economic integration, market integration has focused on the stage of customs union. It is important to note that Balassa’s model has hierarchical integration stages including, from preferential trade-free trade-customs unions-common markets and economic union-and political union. With market integration approach adopted in the 1960s and absorbed into modernist conceptualizations of development, this theory has adopted a prescribed finalism perspective with a specific outcome in mind. From the developing world perspective, it fails to explore the influence of political dynamism of individual states involved.

Market integration and why it has failed in Sub-Saharan Africa; case of Southern Africa

Regional integration approach is rooted in neoclassical economic thinking particularly the neoclassical international trade theory. It puts emphasis on intra-regional trade liberalization, comparative and competitive advantage, free movement of factors of production and, over time, the equalization of costs. It is rooted in the Europe’s experience especially the European Economic Community (EEC). But African regionalism, according to Gibb, has failed due to the following reasons; first, there is a lack of economic complementarity between integrating states. Concentration of majority of these states is on primary production including agriculture and minerals and this has meant that there is lack of goods and services that can be traded amongst each other.  Second, integration in Africa is driven by the elite. This means that it is the elites who determine how strong regional integration can be. Third, African states trade very little amongst themselves but trade more with countries outside the continent. Forth, various market-led integration pre-conditions have not been met. They include poor transport system, poor services, and lack of good banking structures, labour skills and competitiveness; fifth is the unwillingness of these states to cede elements of their sovereignty. Regional integration up until political union means that states have to give some of their political power to the regional bodies, of which majority of African states are not ready to do so.

As a dominant theory adopted by regional blocs on the continent, market-led theory has had a deep impact on Southern Africa. Gibb focuses on four most important regional blocs namely; SADC, COMESA, SACU and EAC. According to Gibb, with the exception of SACU, it has been problematic establishing a functioning free trade area (FTA) in the other blocs. The reasons for this are multiple memberships of member states; resistance by regimes governing those states, whose interests maybe against the success of regionalism; and weak states.

Evaluation and critique

The author has done a commendable job by capturing the reasons that have led to failure of the regional blocs in Sub-Saharan Africa. One area where he has excelled is to conceptualize regional integration in the context of Africa which is lacking and weak; a problem he has traced to the 1648 Westphalian peace agreement on statehood that was imposed on the continent as the root for all the other problems. In the wake of decolonization, African states were compelled to adopt certain values, cultures and morals.

In a nuanced way, he has brought about the idea that for regionalism to be a success, it is important to understand the connections and interrelationships between economic, political and social and objectives of states. This is because regionalism is highly pegged on sovereignty, a political aspect and not only on economic aspects. As for Gibb, the present situation of overlapping memberships undermines the success of regionalism in Africa. There is thus need to re-evaluate terms of agreements if regionalism were to succeed in Africa. Also, there is need to see how Africa can increase intra-Africa trade and unchain itself from extraversion that the continent finds itself in. 

Conclusion

In conclusion therefore, the article offers a nuanced prognosis of what ails regionalism in Africa by looking at the theories upon which regionalism has been conceptualized structured and pursued in Africa. The problem according to the author is systemic and structural. The elucidation of the problem of limping regionalism in Africa as a consequence of adopting Eurocentric theories that pursue economic goals whilst ignorant of the social and political uniqueness of Africa is, per the article, what must be sorted first before there can be any hope of success of regionalism and the allied benefits.

Controlling Illegal, Unreported and Unregulated (IUU) Fishing-a road map to attaining Sustainable Development Goals

To what extent could the control of Illegal, unreported and unregulated (IUU) fishing curb food insecurity, promote global environmental governance and economic development?
On 25 September 2015, the 193-member United Nations General Assembly (UNGA) formally adopted the 2030 agenda for sustainable development. This agenda encapsulated a set of 17 new global goals that are universal, integrated and transformative vision for a better world. The goals include: ending poverty in all its forms everywhere; ending hunger to achieve food security and improved nutrition and promote sustainable agriculture; promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all; conserve and sustainably use the oceans, Seas and marine resources for sustainable development
To achieve these goals, the Intergovernmental Committee of Experts on Sustainable Development Financing averred that public finance and aid would be central to support their implementation; and also money generated from the private sector, through tax reforms, and through a crackdown on illicit financial flows and corruption. A major conference on financing of the SDGs, held in Addis Ababa, Ethiopia in July 2015, failed to ease concerns over the lack of sufficient funds to meet the aspirational nature of the goals (the summit failed to produce new ways of acquiring finances to fund the goals or offer ways to transform the international finance system).
Could the control of illegal, unreported and unregulated fishing help in achieving these goals? In many parts of the world, marine fisheries have been the desired source of protein and play a crucial role in maintaining food and economic security. With the speeding up of globalization process, the rapid population growth, increase in demand for fish, development of urban markets and introduction of new technologies, there is an expansion of fishing operations. The rapid growth and globalization of the fisheries sector has also transformed fishing patterns. Current trends in the production of global marine fisheries resources have presented an alarming concern for food security and sustainable development. For instance, some of the fishery resources that were previously regarded as inexhaustible have either been depleted or over exploited. Food and Agriculture Organisation (FAO) of the United Nations states that, of the major marine fish stocks or species groups, 52% are fully exploited, 17% are over exploited, 25% are underexploited or moderately exploited, and the remaining 6% are becoming depleted.
The decline in global fisheries resources has been attributed to a number of interrelated factors; illegal, unreported and unregulated fishing. Fish piracy continues to thrive worldwide despite national and international efforts. Illegal, unreported and unregulated (IUU) fishing, which involves all types of fishing vessels, regardless of their registration, size or state of repair affects both territorial and international waters. Illegal fishing is conducted by national or foreign vessels in waters under the jurisdiction of a state, without the permission of the owning State, or in contravention of its laws and regulations. Unreported fishing is when fishing activities have not been reported or have been misreported to the relevant national authority, in contravention with national laws and regulations. Unregulated fishing refers to fishing activities conducted by vessels without nationality, or by those flying the flag of a state not party to that organization. IUU fishing has depleted global fish stokes and undermined efforts towards achieving the principle of intergenerational and intra-generational equity. As IUU fishing is done illegally, the social and economic welfare of those involved in fishing legally is affected negatively.
IUU fishing causes economic, social and environmental problems. According to the Food and Agriculture Organization (FAO) of the United Nations, IUU fishing accounts for up to 30% of the total catches in some important fisheries and that catches of particular species could be up to three times the permitted amount. The data suggests that high seas IUU fishing is concentrated on a few high value species, such as Patagonian toothfish and tuna. Unregulated catch has threatened the sustainability of world fish stocks and undermined efforts to manage resources. In terms of social and economic impacts, IUU fishers operate at lower costs thereby gaining an unjust economic advantage over legitimate fishers who also depend on fish to sustain their livelihoods. According to OECD, high seas IUU operators usually exploit fishers from developing countries as many of the crew on IUU vessels come from poor parts of the world. Given that they have few other employment options, they work on IUU vessels for low wages and in extremely poor working and living conditions.
If controlled, legal fishing presents various opportunities: countries that depend on fisheries will be food secure. Availability of adequate and nutritious food presents various advantages-it translates to good health; access to food by household translates to children being well nourished. This increases basic learning capacities of children. Food increases the capacity to concentrate and perform well in school; a food secure household is likely to have higher incomes. This is because food security translates to high performance at places of work and trade in surplus agricultural products and thus higher incomes. Higher incomes provide resources that ensure sustained growth in human development. Households with higher income spend on various sectors such as education and improvement in health which are among the components of human development.
Why does IUU fishing continue to thrive even though it is illegal and presents various disadvantages? Factors that create incentives for IUU fishing include: Insufficient or inefficient enforcement of national and international regulations including low monitoring, control and surveillance capacities and low level of sanction which reduces the cost of risk faced by IUU operators; ineffective flag state control over vessels which allow operators engaged in IUU fishing activities to face reduced operating and risk costs; prevalence of poor economic and social conditions in some countries which reduces the cost of fraud, crew costs, the cost of risk and the costs associated with maintaining appropriate safety and working standards; and incomplete international legal frameworks.
Various international and regional agreements have been adopted to curb IUU. Globally, the International Plan of Action on IUU fishing is mandated for this. Regionally, considering the serious economic, social and environmental problems caused by IUU fishing activities, the OECD’s committee for fisheries, in the Programme of work for 2002-2005 launched a study; “which will provide policy makers with environmental, economic and social arguments in support of measures in relation to IUU fishing activities, Including the FAO International Plan of Action on IUU fishing… ” (FAO fisheries report No.666, 2000). The drawback of these is that there is Insufficient and inefficient enforcement of at both national and international levels.
To resolve this problem, world leaders could do the following; while laws regarding illegal, unreported and unregulated fishing exist, there is Insufficient and inefficient enforcement of at both national and international. This is because these laws and especially the International Plan of Action on IUU fishing are non-binding. In this regard, to improve the effectiveness of these laws, an online network database on fishing should be created. This will be a forum of information exchange allowing for communications and questions between countries and experts on key issues of relevance. This means that the platform will be one stop for national laws, International laws, best practices and information sharing.  With information sharing on the issues of fishing, IUU fishing may significantly reduce.

“The City You Need, the World they want”-UN Habitat III conference insights!

Urban youth face unprecedented challenges, from climate change to unemployment to multiple forms of inequalities and exclusion, particularly for youth belonging to vulnerable or marginalized groups. To provide an open space for critical exchange between urban researchers, professionals and decision makers who believe that urbanization is an opportunity and can lead to positive urban transformations, the UN Habitat III organized a conference in Nairobi.
The UN Habitat III Urban Youth Campus conference took place on 10th and 11th February 2016, at the United Nations Office in Nairobi, Kenya. It brought together key partners and stakeholders that support urban youth initiatives as well as 173 youth from diverse backgrounds to voice their ideas. I was privileged to be part of this conference.
Objectives
The conference, dubbed “The City You Need, the World they want”, was part of a series of other 25 Urban Thinkers Campus’ held between June 2015 and February 2016. The following were its objectives;
• To recognize and build on young people’s present capacities and the valuable contributions they are already making.
• To recognize and listen to youth voices and respond to their challenges and priorities, touching on human rights, migration, displacement, conflict and post-conflict areas, disaster and risk reduction and refugees
• To examine existing policies and programmes so as to assess the extent to which they are sufficiently oriented towards creating a better urban future.
• To make recommendations to the UN-Habitat with respect to the ways that it engages with and exercises its mandate in relations to urban youth especially in developing countries and its engagement with youth in its efforts towards the new urban agenda.
Thematic areas
We were allowed time to openly discuss and learn, share and debate of preselected themes; Youth and Urban Governance; Youth and Livelihoods; Youth and Urban Planning/Public spaces; Youth and Risk reduction and Rehabilitation; and Youth and environment. All the participants deliberated on these themes and outputs provided in Kenya would be used together with those from other conferences conducted in build up to the main event (To take place in Quito August).
Best insights as a youth in agriculture
The subthemes tackled under the Youth and environment theme included; Youth and Agriculture; Climate change; Renewable energy and Green jobs. Under these subthemes participants discussed challenges affecting the youth and gave recommendations.
Youth and Agriculture
As brought forward by the participants, the challenges facing youth in agriculture include; a poor mindset, climate change, lack of access to quality and timely information, insufficient access to financial services, Lack of involvement in policy dialogues and customary laws. Participants brought forward suggestions on how to address these challenges as; Mindset change among the youth, amendment of inheritance laws, provision of credit facilities to youth, youth inclusion in policy dialogues and implementation of policies.
Climate change
The challenges emerging in this sector included; lack of awareness on environmental conservation, nationalization of environmental programs which render them ineffective(Case of Kenya), insufficient finance in capacity building with regards to climate change and environmental conservation and constant and ongoing deforestation, trees being the major source of energy. In tackling them, participants suggested that; individuals should use alternative sources of clean energy as well as taking up individual responsibility on environmental conservation and waste recycling at more extensive levels.
Renewable energy and Green jobs
Some of the challenges that hinder the youth from adopting green energy include; high costs of equipment and lack of knowledge in this field. To tackle them, it was suggested that taxes be excluded from equipment that promote renewable energy (solar panels), to encourage expandability of the practice.
The UN Habitat III Urban Youth Campus conference, being part of a series of other 25 Urban Thinkers Campus’ was very informative.