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Thursday, October 25, 2007

How rich Africa could beat poverty Print E-mail

Photo by: Frederick Onyango
An elderly woman and a young girl wait for relief food in Marsabit district in Kenya. African resources do not create new wealth in Africa because they are not processed on the continent, but are shipped to the industrialised countries in raw form.

October 26, 2007:
Africa is not a poor continent. Rather it is the people who are. The continent has the largest world deposits of diamonds, gold, coal, copper and manganese. It has large deposits of minerals, huge reserves of crude oil and natural gas and vast forests, fisheries and land for agriculture and cattle ranching.

Africans rank among the poorest in the world in the midst of plenty for three main reasons. First, since the early days of colonialism, there has been incessant plunder and exploitation of Africa’s resources by the developed world to the detriment of economic development in Africa.

Second, there is deliberate marginalisation of Africa in global financing, foreign direct investment and access to science and technological innovation that could have created new wealth for Africa.

In other words, African resources do not create new wealth or employment in Africa because they are not processed on the continent but are shipped to the industrialised countries in raw form.

And finally, most African governments have, so far, not taken concrete action to ensure that we change globalisation system in our favour.

We have not developed home grown strategies to deal with our specific situations. In most cases, we have depended on “surrogate economists” to advise us and ended up with wrong diagnoses, wrong prescriptions and hence wrong results.

Africa must agree on economic strategies and technological innovations that are tailored to respond to the challenges of poverty alleviation and help to bridge the “technology divide” between industrialised and developing nations.

These measures must prevent the existence of extreme poverty amidst abundant wealth; hunger and malnutrition amidst food surpluses; diseases and death amidst breakthroughs in medical and health sciences; and ignorance amidst phenomenal advancements in information and communications technology.

Malawi is responding to the challenge of poverty through a variety of measures including implementing its home grown strategies and taking full ownership of its economy and destiny.

During the past three years, Malawi has beaten all odds and introduced its own “Green Revolution”. It has implemented a successful agricultural subsidy programme that enabled the country to move from chronic food shortages, famine and malnutrition, to huge food surpluses.

As a result, Malawi has independently been rated among the 12 best managed countries in Africa.

The country has also moved from rampant corruption to a well-managed economy with a high rate of economic growth; and it has empowered the poor urban and rural communities through affordable loans and public works programmes.

Malawi is meeting the challenge of poverty eradication through the Malawi Growth and Development Strategy (MGDS) that aims to provide a new window of opportunity for the Government, the private sector and the donor community, to combine forces towards achieving sustainable economic growth and to alleviate poverty.

The Government has also decided to have a holistic policy framework that combines the management of consumption and public expenditure with a sound structure of production, manufacturing and income generation.

This not only takes care of the supply side of the economy through application of new technologies, but also changes the colonial economic framework under which we “produced what we did not consume and consumed what we did not produce”.

The Government has decided that to effectively reduce poverty, the Malawi economy must grow at a minimum annual rate of six per cent.

To achieve this, the MGDS has six key “priorities within priorities” that we know can pull the country out of the “poverty trap”.

The index has (1) agriculture and food security; (2) irrigation and water development; (3) transport and communications infrastructure; (4) energy and power development; (5) integrated rural development; and (6) management and prevention of HIV/Aids pandemic. We have also placed high priority on public health and education, especially science and technology.

We have given priority to investment in physical and social infrastructures such as roads, energy, telephone and communication networks, public health, education...to increase industrial production, manufacturing and trade.

As an integral part of this strategy, we have in place the Public Sector Investment Programme (PSIP) that aims to create a favourable and enabling environment for local enterprises to invest and create new wealth for FDI to flow into Malawi.

The new strategy has resulted in the growth of the Malawi economy from a mere two per cent in 2004 to a phenomenal 8.5 per cent in 2006.

To break the “vicious cycle of poverty,” Malawi will not take a posture of “business as usual” but has set up clear “performance criteria” in the national budget to evaluate its actions.

To enhance the performance of our economy, Malawi decided to shift from preparing “expenditure budgets”, to preparing “growth budgets” to provide the nation with a new economic vision, a sound policy for resources mobilisation, and the best practices in science and technology.

This will help transform Malawi from a predominantly importing and consuming economy to a manufacturing and exporting one. Nonetheless, the industrial nations must agree to change their mindset.

In this regard, let me draw your attention to the remarks made by the former British Prime Minister, Tony Blair, who in his report to the House of Commons on the Group of Eight Summit said “the wealthy nations of the world simply cannot any longer ask the developing world to stand on its own feet but shut out the very access to our markets necessary for them to do so”. The world is one and Africa is part of it.

Industrialised nations must work to enable African countries to participate effectively in global negotiations to benefit from technology, global finance, international trade and prosperity.

The continued ruthless plunder and exploitation of Africa’s minerals is no longer a viable option for a new world order. Equity, justice and fairness must be adhered to in all negotiations involving the rich and poor nations.

The more Africa can acquire technology for industrialisation and agro-processing, the more the continent will contribute positively to global prosperity.
An economically and politically stronger Africa is a better trading partner for the industrialised countries than a weaker one.

Wa Mutharika is President of the Republic of Malawi

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