The equations of Africa’s Frontier Integration

Written by: Djoudie Etoundi

Professor Vijay Mahajan wrote “Africa Rising How 900 Million African Consumers Offer More Than You Think” (Wharton School Publishing)The economic emergence of Africa has been so sudden that many observers still can’t quite wrap their heads around it. But you know something big is going on when the Boston Consulting Group and McKinsey publish almost simultaneously studies tracking the continent’s growth; or when Wal-Mart and the Carlyle Group announce expansion plans in the near future. In Africa, in contradistinction to rising Asia or the BRICS, the environment and the relationships of the actors to one another is not yet set. So an appropriate approach to analyze what this phenomenon means should focus on the unknown, and try to define working equation(s) from there. (My methodology is shamelessly taken from French strategist Alexandre Adler and philosopher Michel Serres; if you are going to plagiarize, take from the best…)

Let’s begin with what we do know, the constants:

Africa’s growth will be paid for by Asia through a double lane investment stream: A rule of Globalization 101 is that it breaks up production chains on the national level and reintegrates them on the international level, a process described by Dr Thomas PM Barnett as Frontier Integration (in reference to the old West in the United States). In Africa, Frontier Integration was accelerated by Chinese companies’ natural resources-for-infrastructure deals which boosted local growth (to reach double digits in 3 to 5 years’ time in countries like Ghana, Mozambique, and Angola). Meanwhile, base of the pyramid products (BPP) developed for Asia are being replicated on the continent to service both its rural poor and the now rising middle class, with Indian companies leading the way, like Bharti Airtel.

Africa’s Frontier Integration won’t be as export-centric as Asia’s has been. Thanks to growth rates set to reach double digits in many countries, Africans appetites for consumption will be one of its primary drivers.  Although accelerated by 10 to 15 years due to the ‘Chindia’ element, local growth actually increased in the 90s (around the time the Economist christened Africa the “Hopeless Continent”). A 2010 study paper by Maxim Pinkovskiy and Xavier Sala-i-Martin (professors at MIT and Columbia University, respectively) clearly makes this point.

Africa is quietly poised to take center stage in globalization over the next 20 years in the same way Asia did during the last 30. Given the weakened state of the traditional engines of global growth in the Old Core (US, EU, Developed West) following the financial and debt crises, the sorting out of which will require a decade at least, and as the potential replacement engines in the New Core (’Chindia’, BRIC, rising Asia) haven’t matured yet, Africa’s frontier integration is set to be the only game in town for investors looking for high rates of growth.

After the constants, the variables: what do we not know yet?

What about the markets?
Many African countries lack the basic economic scale, with populations too small to sustain individualized growth, while others are landlocked such as Uganda, Gabon, Ethiopia or Namibia. So for those countries that will not benefit from the continent’s demographic transition (estimated to be an aggregate 2 Billion by 2050), whatAfrica risingregional integration should be pursued to reach the proper scale?

What about the currency?
An especially acute concern for former French colonies: most still live with the ghost currency of the Franc-CFA, and their development is increasingly impaired by it. A French-linked currency made sense when 90% of exports went to France or the EU; it does not anymore when “Chindia” and rising Asia are set to become the predominant trade and financial partners. So will there be a proliferation of near-junk currencies in each country, or the birth of one or several African versions of the Euro, minus the excessive debt of course?
What about security?
Frontier integration is a process which produces violence because the preexisting power structure and corresponding relationships must be broken down and renegotiated to suit the active economic reordering. So what security architecture will emerge: Afro-Nato(s) or the dominance of new overlords from Asia or elsewhere to replace France and other EU countries?

What about freedom?
Most countries emerging economically do so as one-party states, most of the time autocratic ones (China, South Korea, Taiwan, Singapore, Spain, etc…). Much more rare are the democratic ones (India, Japan, Italy, Sweden). Will Africa follow one of those two paths or will it become characterized as the first mass economic advancement to happen in the context of increasing democracy in the body politic?

What about culture?
This facet is especially pivotal for me (In the end I think it’s all about the culture, the rest is just foreplay): Will Africa’s economic emergence lead to renewed investment in its own vast, rich heritage and traditions, or will it just substitute a Western centrism for an Asian one (ChinAfrica, IndiAfrica)? This could prove tricky: Globalization often increases nationalism as the economic development is perceived as vindicating local values and virtues.

And now for the actual equations, the relationships of all of the above to each other, which brings us into the domain of actual strategy: eg, choices. As mentioned before they are too fluid and complex to report in an accessible way. Nevertheless, by using intuition and past experience it’s possible to at least identify the broad outlines.

First the “China equation”: if African nations do not define a coherent strategy for themselves, connectivity with China’s current regime would turn Africa into a 1-billion man, lower-end of the production chain, duplicate of North Korea (The situation in Sudan and Zimbabwe are potential models for this outcome, although the fates of Ben Ali, Ghadaffi and Mubarak must be giving their leaders second thoughts). Ordinary people’s perceptions of China would go from that of partner to oppressor. Or, in a similar wrinkle, frontier integration could be hijacked by existing superpowers, with China , the US, or the BRICs, carving up the continent in spheres of client states, a soft repeat of the 1885 Vienna conference where European powers agreed to break up the existing African states to draw new borders that fitted their own interests.
Another equation that is already being felt all over the continent is the influence of radical Islam or “the rise of the Caliphates”, causing increased Christian/Muslim and Native/Arab strife in all the countries of the Sahel (Arab Tuaregs coordinated across frontiers by Al Qaeda agents in Mali, Niger, Mauritania and Sudan whose Al Qaeda and Iran friendly regime is killing both Black Christians in the South and Black Muslims in Darfur). Concurrently, the economic influence of Iran and Saudi Arabia on the continent is rising. They have genuine economic motivations of course as everyone wants a piece of the frontier integration action but Islamic fascists in both countries could propagate lasting instability. A nightmarish scenario for African growth and freedoms would be a definitive alliance between an arch-Nationalist China and radicalized Muslim states.

djoudi1Aside from the rivalries among actual or presumptive superpowers, the other main equation in the continent’s emergence is that formed the pivotal African countries. Nigeria’s sheer size anchors West Africa; South Africa’s developed yet unequal economy in tandem with the oil and mineral resources of Angola constitutes the Southern core of the continent; a Kenya-Ethiopia duo will lead the Horn if and when both get their act together; a community around former French colonies in Central Africa (and Cameroon specifically) is yet to be defined; and Congo-Kinshasa is fated to be the pivot of stability for all these poles if it gains its own. A special note should be made of Rwanda’s steady ambition and ingenuity in becoming the African Singapore, a feat marveled at and copied by others in the Great Lakes region and beyond.

But the most important equation of all, and the main source of hope for the continent, derives from the African peoples themselves. It’s counterintuitive but, Africa’s long cycle of civil wars, dictatorships, violent political rivalries and ethnic strife, has resulted in vibrant civil societies eager to affirm new venues for freedom and embrace opportunities for prosperity. That vitality is shining through as farmers sow crops to target new markets in Asia, as entrepreneurs embrace mobile technologies as platforms for creating goods, services and value for their peoples, and as NGOs and journalists use social networking to hold their governments accountable and tackle social problems. These individual farmers, entrepreneurs, journalists, tribal and community leaders are the ones driving Africa’s Frontier Integration. Deciphering the peculiar algebra of their choices will mean solving the Equation of Africa’s future.

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