Globalisation has become the most important movement of our times. With the spread of information technology, it has become possible, for the first time in history, to regard the whole world as one big marketplace. For some, this will present unprecedented opportunities for growth and prosperity. For others, globalisation could mean economic enslavement. Where does Africa fit into all this? For some answers, we asked Editor Anver Versi and Associate Editors Tom Nevin and Milan Vesely to give their opinions.

Virtually from the Limpopo river to the Nile, Africa has been unanimous in its denunciation of globalisation. South of the Limpopo, South Africa finds itself wearing two hats.

Where does South Africa stand in this virtual pan-African indictment of the globalisation process?

It badly wants its place in the global village, seeing acceptance by western economies as the road to its own financial independence. Its problem is to court the well-heeled westerners, while at the same time being seen to share the anti-globalisation indignation of its African kith and kin. South Africa finds that a difficult tightrope on which to keep its balance. It is steaming full ahead into the information age, becoming a world leader in some sectors. Its IT companies are venturing deeper into Africa in an attempt to hasten its information coming of age.

Continent-wide, South Africa is being regarded with increasing suspicion and resentment, in spite of the billions of investment rands it is pouring into the rest of Africa. Since April 1994, South Africa has invested R71bn in Uganda and around R20bn in Kenya. Regionally local brands have taken a hammering, some manufacturers going under in the tide of investment rands. More than once South Africa has been accused of being Africa’s new imperialist superpower and economic colonialist. That hurts, say South Africa’s leaders, who claim to want to uplift Africa and assist it to take its place in the international economy. The leaders of most developing nations are unhappy at Western leaders for promoting he ideology of globalisation regardless of its negative effect on developing nations. The issue of globalisation was discussed at the recent Southern African International Dialogue Forum in the Mozambique capital of Maputo. The idea of the forum was to test ways of how to empower one another in the fight against the adverse effects of globalisation. Highly critical of the process was Malaysian Prime Minister, Mahathir Mohamad, who questioned whether ‘the glorious promises of globalisation’ would ever materialise. Instead, a reckless approach to the concept by developing countries could lead to a vicious cycle of financial instability, debt, recession and general economic erosion, he warned.Uganda’s President Yoweri Museveni, labelled globalisation as a new form of oppression.‘This unfair arrangement must be resisted. If this is not done peacefully, then it will be done by struggle,’ he warned. ‘The new world order is merely the same old oppression of developing nations by the West.
President Robert Mugabe of Zimbabwe said that Africa does not yet have the capacity to enter the global village, maintaining that ‘the continent is still grappling to put up basic necessities such as good roads, railways and transport.’

The triumph of capitalism?

The world still has a long way to go before it can call itself fully globalised. The so-called global economy takes in just a small, rich part of the planet and appears to play lip-service to the majority who sit in poverty and frustration, and watch the globe’s developed nations go spinning by.

The most vexing of the world’s economic problems is the fact that more than 10 years after the collapse of communism, most of the world, especially Africa, is not benefiting from what should have been the triumph of capitalism.

Does Peruvian economist Hernando de Soto have the answer? His new book ‘The Mystery of Capital - Why Capitalism Triumphs in the West and fails Everywhere Else’ claims that it’s not because of a lack of entrepreneurship, pointing to the fact that millions in the Third World must be nimble and resourceful in eking a living out of nothing. What most countries lack, he says, is the basic ingredient of capitalism - capital. This tends to lock the poor nations out of the globalisation process because they lack the ability to unlock the capital that already exists.

He describes most capital in the developing world as ‘dead’ and, as a result, it cannot perform its proper economic function.

De Soto contends that the ‘poor’ in much of the developing world are not poor at all. In Egypt, De Soto and his researchers found, assets held by the poor were 55 times the amount of direct foreign investment received by that country. He estimates that world-wide, the accumulated capital of the poor is worth some $9 trillion, more than the USA’s GDP!

Unlocking assets

The problem is in unlocking the assets of the poor. Until that can be done, they are effectively useless. These assets take the shape of property built on land where legal ownership has not been established, the parallel economy, unincorporated businesses and obscure operations being run without proper documentation. Such assets cannot readily be turned into capital, nor can they be used as a share against an investment. Without adequate property rights for the assets they own, the poor are stuck in poverty.

Giving the poor property rights is an immensely complicated business because claims and counterclaims can take years to sort out. But it worked in Britain and also in America. Can it be a solution to the failure of capitalism in most of the world? Possibly, but not overnight.

Globalising against poverty

The World Bank president, James D. Wolfensohn, has appealed to most-developed nation leaders to harness the power of globalisation to fight poverty and disease world-wide. Wolfensohn considers the primary challenge confronting the international community is to use the forces of the global economy to tackle poverty in the poorest countries in the world, many of them in Africa.

‘There’s much to be done if we are to ensure that all countries are included in the world economy, and that the poorest countries benefit from the process of globalisation,’ says Wolfensohn.

‘A world in which the rich get richer while the poorest countries are left out can never be secure and stable. Despite a relatively benign short-term economic outlook, without further action, the international development goals we have set for ourselves will not be met. Business as usual will not do. It will take more efforts by developing countries themselves, and also by the advanced countries through increased aid, debt relief, sharing of experience and access to markets.’

Wolfensohn added ‘We need speed and flexibility in delivering debt relief and other assistance as quickly as possible to countries able to use it effectively’

Where to from here?

On the basis of the enhanced Heavily Indebted Poor Countries (HIPC), nine nations have been approved for substantial debt relief. These countries - Benin, Bolivia, Burkina Faso, Honduras, Mauritania, Mozambique, Senegal, Tanzania and Uganda - will receive relief amounting to more than $15bn. Of this total, the World Bank will contribute some $2.5bn.

Already cries have been heard from those countries not included in the HIPC list. They consider their need as just as great. But, problems exist. According to Wolfensohn, difficult decisions lie ahead in expanding the list of countries eligible for debt relief since many of them are still beset by conflict and have serious governance problems. Indications are that the best they can expect is to be included in the longer term objective.

Beyond debt relief

Over and above debt relief, the world is being urged to work with all low-income countries to help them design and implement high-quality reform programmes, with the stronger institutions and governance needed for sustained development and poverty. In other words, in order to qualify for debt relief status, governments must get their house in order and behave according to the World Bank code.

Most would argue that there’s nothing wrong with that, except the starving people caught in the middle - between their government who won’t play ball, and Bretton Woods institutions who won’t help until they do.

Bridging the Digital Divide

Another urgently needed global initiative is the bridging of the digital divide between rich and poor countries so that everyone has access to the power of new technology and its ability to transform personal and national livelihoods.

‘Too many in developing countries have yet to cross the divide, which is widening and worsening,’ says Wolfensohn.

‘It is essential that we assist developing countries in establishing a structural internal framework in which information technology can flourish.

‘We must work with them as they establish laws and regulations, as they establish a competitive framework and as they assure the lowest cost of access to educational institutions, research institutions and poor communities in urban and rural areas.

‘Beyond the internal organisation it is necessary to establish international linkages using radio satellites and land lines and to ensure that they have available mechanisms both to access information, to translate it into local languages, and to make it accessible and usable within the country.’

Until that happens, and until African countries can mobilise and free the capital at its disposal, its role will be limited in the global village. Simply providing raw commodities to the rich, developed world is not an option if Africa is to escape from the bondage of poverty and fully realise its great potential.

Back to the top
Contents