Getting Out of Poverty – Africa should manufacture in order to get out of poverty
I am indebted to Boateng Osei’s article that appeared in The Southern Times on May 1, 2011 (originally published by New African magazine).
Boateng’s article was entitled “Cracking the Code: Unlocking Africa’s Secret to Wealth”.
Reading through this article, it created an important picture in my mind.
“Kumbe” (a Kiswahili word to express surprise), Britain, France, United States of America and other rich countries today were economically poor like any poor countries found in Africa today.
Kumbe, these nations languished under poverty like other poor countries today.
Britain, as one of the richest countries today, is used in this discussion as a reference point.
The majority of African countries, like Namibia, are rich in mineral resources, but due to a lack of manufacturing skills and technological know-how, Namibia has one of the world’s highest inequality rates.
Before reading Boateng’s article, I was doing research for a number of years on hybridisation and endogenisation of ideas; local culture versus global culture and technological innovation both at local and global levels.
Through this research I came to the conclusion that there is no country on Earth that can boast that it has not borrowed any knowledge and various skills from other countries.
I concluded that nations and communities do hybridise and endogenise their existing knowledge base, skills, ideas and technological know-how through imitation and emulation.
This research led me to understand how rich nations gradually moved from poverty to create wealth by means of emulating or imitating more advanced societies.
Boateng reminds Africa to remember that “nations that went from poverty to wealth all used the same toolbox”. I reproduce this tool box at the end of this discussion.
Boateng reminds Africa to remember that the city-states of Florence and Venice in present Italy and the Dutch Republic were the first manufacturers, well before nations such as Britain, France and Germany.
Britain in particular borrowed and emulated the city-states of Florence and Venice, and the Dutch Republic.
It is high time for Africa to dig deeper into economic history and learn how other nations have progressed.
Boateng reminds Africa to remember what Erik S Reinert did. Reinert, a Norwegian economic historian, wrote a book titled “How Rich Countries Got Rich … And Why poor countries Stay Poor”. (Written in Norwegian in 2004 and was translated into English in 2007).
Reinert documented the history of economic thought for the last 500 years.
Julius Nyerere, the Founding President of United Republic of Tanzania, in a speech in the Ghanaian capital, Accra, on March 6, 1997 said: “If numbers were horses, Africa today would be riding high! Africa would be the strongest continent in the world, for it occupies more seats in the UN General Assembly than any other continent.
“Yet the reality is that ours is the poorest and weakest continent in the world … and our weakness is pathetic. Unity will not end our weakness, but until we unite, we cannot even begin to end that weakness.” (Taken from The Southern Times, December 16 2012.)
Africa is the richest continent on Earth. But Africa is deliberately portrayed as the weakest and poorest continent in the world.
This is a false picture and Africa internalised it for over 100 years.
Looking at the mineral resources of just three African countries, for argument’s sake, Angola, the DRC and Namibia, shows that our riches exceed the whole of Europe put together.
If Africa requires being economically strong, she should set herself a serious agenda for emulating and imitating similar toolboxes used by all rich nations.
We should disfavour export of raw material while importing finished goods.
Africa is reminded to remember that any country that is an expert on exporting raw materials and importing finished industrial goods remains poor.
Dudley Seers (1998) reminds Africa to remember that a good economy is the one that reduces poverty, unemployment and inequality.
For instance, the Gini coefficient (measure of inequality) for Namibia in 2010 stood at 0.58; the highest in the world.
The unemployment rate in Namibia in 2010 stood at 51.2 percent.
What do these figures tell us?
Surely, these horrible figures cannot be divorced from the lack of a manufacturing base!
We must remind African youth to remember a number of important lessons about the “economic past”.
Eric Arthur Blair (author of “Animal Farm” under the name George Orwell) wrote in the 1940s that “he who controls the past controls the future. He who controls the future controls the present”.
Economic history is important. But economic and historical knowledge is normally ignored.
And yet economic history tells us how the current rich countries became rich and the current poor countries became and remain poor.
Erik Reinert’s book is an attempt to answer these crucial questions. Any serious African politician and academic should read this book.
Firstly, Africa is reminded to remember that many of the most powerful civilisations that existed were not European (Boateng, 2011).
Boateng says Europe has been an expert in emulation and imitation of technologies and skills from other civillisations.
Secondly, Africa is reminded to remember that a good example of economic emulation was England in the 1400s.
Africa is reminded to remember that in order for England to get rid of poverty, it emulated and copied the economic structures of Venice and the Dutch Republic.
The city-state of Venice and the Dutch Republic during 1300s, Boateng writes, “were far away the best economic successful stories in the then poverty-stricken Europe”.
Venice was founded in 413AD and it soon became a centre of economic innovation, specialising in salt and maritime trade.
Venice and the Dutch Republic had industrial sectors and manufactured woolen cloth.
The most important source of their raw material was England. Due to a lack of manufacturing power, England was content with exporting raw wool that made Venice and the Dutch Republic rich.
The city-state of Delft in the Dutch Republic of the 1400s specialised in military equipment.
This included naval instruments and binoculars, as well as ship-building (Sombart, 1913).
What Africa needs to bear in mind is that England exported raw materials and lamented that if they intended to grow they must emulate those who had grown.
Daniel Defoe’s 1728 book “A Plan of English Commerce” says that the English Tudor Plan of 1485-1603, introduced by King Henry Vll, reduced poverty by making raw materials more expensive to export to Venice and the Dutch Republic.
England created two institutions that promoted its manufacturing ambitions.
The first was the protection of new knowledge through patents. Patents in this sense refers to the economic practice that the patentee (England) had an exclusive right to prevent other manufactures from making, using, selling or distrusting the patented invention without permission.
The second institution was the transfer of the same knowledge into new geographical areas through tariffs protection.
In order for England to consolidate its novice manufacturing agenda, the two methods initially instigated what would be understood as “imperfect competition”.
Africa is reminded to remember that British Prime Minister Robert Walpole in 1721 told Parliament that it was wise to promote manufacturing and import raw materials.
Thirdly, Friedrich List (1789-1846), a German economist, in 1841 observed that “the ladder was kicked away” for other countries not to emulate and copy from rich countries as England had done and France had also emulated.
List says when anyone climbs to the top, they kick away the ladder so that they alone can determine how things progress from there.
Rich nations preached “free trade” to other countries because they knew that they had developed because of protectionist policies.
The ladder was kicked away and we followed free trade and yet no country in Europe developed without blatant protectionism.
In present negotiations, the European Union reminds the African-Caribbean-Pacific (ACP) bloc to go for free trade in the Economic Partnership Agreements.
Through this forum, ACP countries are reminded to remember that they should first supply raw materials to Europe before they can expect any assistance.
The first Secretary of the US Treasury, Alexander Hamilton, put it thus: “Do not do as the English tell you to do, do as the English do.”
Africa should remember this.
So what should Africa do?
The Oxford Dictionary defines emulation as the “endeavour to equal or surpass others in any achievement, or desire or ambition to equal or excel”.
Reinert argues that emulation in modern times refers to catching up forging ahead with the spirit of competition. Africa should recognise that it faces serious poverty issues due to its stunted indstrialisation. This lack of indstrialisation process is not because of absence of skills alone, but due to the absence of the political will of African leaders to act on the problem.