Increasingly, Africa is becoming a more significant player in the global economic and political landscape. Although the continent is not well represented in the Bretton Woods institutions, the ability of countries like South Africa to manage economic shocks has led to its status as a key economic player. China’s products and services have also contributed to the region’s information and communications technology (ICT) development.
South Africa’s capacity to respond to economic shocks remains top of the region.
Even though Africa is not a nation-state in the true sense, it is a global player in monetary and human capital. While the global economic slowdown will stifle growth, the continent is well-positioned to rebound from an expected post-recession lull in productivity.
The continent’s capacity to respond to economic shocks is perhaps the best in the region. However, it has been hampered by an overzealous government and a sluggish economy. The big question is whether South Africa’s resilience will survive the inevitable reduction of its resources.
The answer is yes, provided the government heeds the adage that the best way to win the war is to wage it. This should also be a motivating factor in the country’s efforts to attract and retain foreign investors.
Despite the challenges above, South Africa’s capacity to respond to economic shocks remains top-notch. This is exemplified by the World Economic Forum’s (WEF) recent release of a list of the continent’s top 30 mining companies, including the world’s largest miners and zinc producers.
Among the listed companies are miners Anglo American, Rio Tinto, and BHP Billiton.
The list includes small-time fliers like Goldfields, Mt Barkley, and Mt Sekupe. Some of the companies have been around since the 1920s, while others were born just this year.
The list is short, but still, a who’s who of the movers and shakers in the bauxite mining industry. The WEF’s list is not exhaustive, but it’s an exciting look at the region’s mining industry and an apt time to reassess the state of play.
The big question is whether the continent can regain its footing after a period of economic turmoil and whether it can do so with the right people in the right places at the right time.
Africa’s limited voice in the Bretton Woods institutions
Despite its growing population and abundant natural resources, Africa has been underrepresented in the international community. This article looks at the ever-changing trends of the international system and examines the role of Africa in the global political and diplomatic arena.
In the post-Cold War era, Africa’s little voice in the international community has steadily increased. This is because of the growth of nations in the global south. Although these countries are still considered periphery nations, their contribution to global affairs has become more significant.
However, while this growth in influence has benefited African nations, there are also challenges that Africa faces. Some of these include poverty, disease, and conflict. These issues have compounded development and made Africa more dependent on former colonial powers.
The fact that Africa is still seen as a peripheral continent exacerbates these problems. This perception is accentuated by the fact that it has been relatively late to participate in the global diplomatic game. Although African nations have realized the importance of multilateralism, they have been underrepresented in the international system.
The Bretton Woods institutions, known as the World Bank, were set up in July 1944 to rebuild the post-World War II economy. The institutions aim to promote international economic cooperation and safeguard the international financial system. Developing countries have criticized them.
The World Trade Organisation, the WTO, aims to enact revised trade rules and lower trade barriers. However, developing countries have pointed out that there are too many rules and regulations and that the organization is not delivering on its promises.
The G77 meeting of nations was also meant to press African concerns. However, while some gains have been seen, Africa still has not been able to achieve significant progress in global politics.
In terms of the role of Africa in the global system, the G20 expert group has produced recommendations for development finance and climate change. It is time for European leaders to show they will do their part to provide urgent finance to African nations and take a strong position on climate change. They should also champion a permanent seat for the African Union in the G20.
China’s products and services contribute to African ICT solutions.
China’s cooperation with Africa has taken significant steps in the past decade. These measures have helped deepen mutually beneficial cooperation and strengthen the friendship between China and African countries. China and Africa will jointly promote joint development in this new era and realize independent and sustainable development.
This will lead to a more balanced international relationship and contribute to the rise of developing countries.
China-Africa cooperation has always provided tangible benefits to people in China and Africa. China will continue to expand cooperation in investment, financing, and agricultural sectors.
This will help African countries translate their resource strengths into advantages in development. China will also support the United Nations in providing financial support for independent peacekeeping operations in Africa.
China has been an active participant in Africa’s information society. Through the Internet, Chinese companies have built relationships with African information societies and have gained experience in Africa’s information-based economy.
These experiences have strengthened China’s position in shaping the digital ecosystem in Africa. During the past decade, China’s ICT infrastructure investment has brought connectivity to areas with limited Internet access.
In particular, Chinese companies have built more than half of Africa’s wireless sites and high-speed mobile broadband networks. Chinese firms have also participated in submarine cable projects connecting Africa.
China and Africa have developed mutually beneficial cooperation in health, education, the environment, climate change, and industrialization. China and Africa have created a series of important documents through cooperation in these areas.
In addition, China has translated 200 outstanding Chinese audiovisual works for Africa. This has provided African countries with opportunities for people-to-people exchanges. Moreover, Chinese films have been screened in 10 African countries. In addition, China has provided more than 10,000 teachers in African countries with training.
China and Africa also conduct close exchanges between political parties. The National People’s Congress of China established mechanisms for regular exchanges between parliaments in Egypt, Kenya, and South Africa. In addition, China has established Luban Workshops in Djibouti and Egypt.
These workshops provide opportunities for China and Africa to explore and deepen mutually beneficial cooperation in technology, science, culture, and research.
Africans are the beneficiaries, but so are the next wave of investors.
During the past century, foreign direct investment (FDI) in Africa focused on extractive industries, mainly mining. Foreign direct investment has changed course since the start of the millennium, though. Instead, investors want to invest in services, retailing, and telecommunications. This has led to some of the world’s largest energy firms jostling for space in the East African region.
Throughout the last decade, governments in Tanzania, Mozambique, and Kenya have negotiated resource licenses for some of the world’s most significant oil and gas discoveries. Some of these projects are controversial, cost-prohibitive, and have harmful environmental impacts. Questionable tendering procedures propel others.
Turkey has actively participated in African diplomacy, and its AK Party has led the charge against the Western development model. But it operates in a crowded field that includes other global powers like Russia and China and Western and Indian states.
As African economies become more mature and stable, investors will have more confidence to develop projects.
However, as countries transition from democracy, the democratic institutions that govern these economies remain fragile. In the long run, tax administrations must be strengthened to accommodate the policy changes necessary to ensure an efficient tax system.
Tax competition is a policy challenge in a world liberalizing the capital movement. In developing countries, the base for income tax is difficult to calculate. The political power of the wealthiest segment of the population contributes to the income-to-consumption tax ratio. Still, the sophistication of tax administration enables industrial countries to raise twice as much tax revenue from personal income tax as from corporate income tax.
In comparison, most workers in developing countries work in agriculture or small, informal enterprises. They are paid in cash and often do not receive a fixed, regular wage.
Extractive industries once dominated FDI, but the past seven years have seen a reverse trend. In all but one year, the share of extractive industries in FDI has declined.