Will Africa Leave the World Bank Behind?

Posted on 10/12/13
By Nicholas Norbrook | Via The Africa Report
April 16, 2013 - Washington DC., In and around World Bank headquarters prior to the official start of the 2013 World Bank:IMF Spring Meetings. (Photo- Simone D. McCourte, World Bank)
April 16, 2013 – Washington DC., In and around World Bank headquarters prior to the official start of the 2013 World Bank:IMF Spring Meetings. (Photo- Simone D. McCourte, World Bank)

Governments across the continent are looking for new development models after the policies of privatization and liberalization seem to have run their course.

The arrival of Jim Yong Kim as president of the World Bank bearing promises of a cultural revolution comes at a critical time for Africa’s prospects.

Africa is now the world’s fastest-growing continent, but questions about policy – the failure to develop viable industries and reduce worsening youth unemployment and widening inequality – remain the subject of fierce debate.

That argument pits advocates of a more state-led development strategy, which has produced impressive results in East and South Asia, against the veteran advocates of market economics and liberalization – the old ‘Washington consensus’ pushed by the World Bank and the International Monetary Fund in the 1980s.

The terms of the debate are shifting, it seems. World Bank vice-president for Africa Makhtar Diop told The Africa Report in 2012: “If you look at the structure of the economies in Africa 10 years ago and today, there hasn’t been much change.” Africa remains a producer of raw materials and an importer of finished goods.

So what can change the structure of African economies? Has the World Bank been helping or hindering African chances of following Asia’s great industrial leaps? Some African leaders have already made up their minds. Taking Asia as inspiration, and increasingly using Asian finance as development capital, they have junked important elements of the ‘Washington consensus’ in favor of a strong developmental state.

Ethiopia’s late Premier Meles Zenawi, a theoretician of the need to reclaim the state, was most explicit in his rejection of complete faith in the market: “Developing countries face formidable market failures and institutional inadequacies \[…] which can adequately be addressed only by an activist state.”

For African leaders, surveying the past 50 years of development as counseled by the West, the question is clear: Why should India, China and South Korea have succeeded when they ignored the privatization and liberalization dictums of the ‘Washington consensus’?

The clash of ideas

This contest of ideas is far from academic. Hundreds of millions of lives and billions of dollars are at stake. If African economies can use new ideas and technology to consolidate growth and make it self-sustaining, the next two decades in Africa could be as transformational as the last two in Asia.

Some African governments have already made their choice alongside Ethiopia. Both the Moroccan and the Rwandan government have strong investment arms. Rwanda’s Crystal Ventures has helped companies break into the roadbuilding trade, for example, and has spun off profitable businesses in the construction, food processing and security sectors.

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