Good Governance, Sustainable Policies Can Make Africa Tackle Economic Crisis

By Atieno Ndomo*

Globalization can be defined as the phenomenon where events and developments in one place have far reaching effects in other parts of the world

The African continent, which hitherto has not proactively maximized on the benefits of globalization, now stands to bear a fair measure of the brunt of the prevailing crisis. Africa’s tragedy lies in its myopic leadership, crises of the nation state and numerous structural constraints.

Reports abound of job cuts. Some of the leading companies in the region have already executed job cuts. More of such self-preserving measures should be expected. Underlying all this is the absence of well-organized and autonomous workers’ unions to articulate and defend workers’ rights.

It is instructive that companies that are content conducting business and raking high profit are quick to send employees home as a first option at the earliest sign of economic troubles.

Perhaps, a mark of the hyped corporate social responsibility would see companies contending with lower profit margins spare jobs to avert worsening an already bad situation. Certainly, for future reference, it may be worth auditing and noting the actions of companies during hard times.

As an incentive, suitable rewards could be extended to those companies that display responsible behavior. Also, an effective strategy would see consumers exercise their right to boycott goods and services from companies that undertake massive staff lay offs.

Other commonly attributed effects of the recessionary context are: declining export earnings, reduced remittance flows, dwindling private sector and foreign direct investments and decreased multilateral and bilateral aid flows. These will have combined consequences on people’s lives in terms of access to the basic necessities of life.

A direct effect of reduced aid flows, for example, would be a negative impact on aid-resourced programs for health care provision, including HIV/Aids care and treatment and basic education.

Against the backdrop of the financial crisis, a resounding verdict on inadequacies and inappropriateness of the hitherto orthodox neo-liberal economic model echo an inevitable affirmation of the critical regulatory role of the State in reining in runaway individual and corporate interests.

Indeed, the return of State regulation is the definitive hallmark of the response to the market failure in the developed nations.

In stark contrast, Africa, with arguably the highest incidence of State failure and an overzealous adherence to the neo-liberal economic policies, is confronted by a confluence of State and market failure; effectively presenting a scenario of a continent held captive by vested interests.

In terms of the proposed remedial steps to redress the crisis, ‘one size fits all’ quick fix is necessary. Whereas huge injections of finances could be a fitting strategy for developed countries, under what circumstances would channeling of additional resources to thieving, despotic and illegitimate regimes be justified? Further impunity on corruption and entrenchment of autocracies are the most likely outcomes.

At the recently concluded G20 Summit, where Africa was barely represented (South Africa is the only member country), a one trillion dollar loan facility managed by the IMF was a key resolution. In the wide acclamations of this as a positive outcome, the well-known fundamental flaws of the IMF on the poorest nations remain intact.

Doubtless, a number of African countries will rush hat-in-hand to access finances from this facility, thereby deepening their indebtedness to multilateral institutions. The debt burden weighs heavier on the poor — as government spending priorities lean towards boosting the lavish lifestyles of the minority ruling elite.

The indebtedness of African countries is an irony, considering the estimated value of assets stashed outside of the continent in ‘safe havens’. Perhaps, one of the resolutions of the G20 meeting on reining in tax havens presents a silver lining that should rally action to demand return of continent’s stolen assets.

More than anything else, this economic crisis should make Africa chart an alternate economic policy course. And until its crisis of leadership is resolved, the continent will remain trapped in an elusive quest for self-determination.

*Atieno Ndomo is a social and economic policy analyst living in Nairobi, Kenya and works as a freelance consultant on social policy and development matters. She holds a postgraduate degree from the University of Manchester’s Institute for Development Policy and Management.

Image credit: HDPTCAR/ Flickr