Africa and its Emerging Partners (2011)
- Global transformation brings historic opportunities
- Africa must unite to bargain with "old" and "new" powers
Africa has gone through a remarkable decade of economic transformation. The continent is abuzz with talk of new investment, new cities, new airports, new refineries: The new African Lions.
Before, the talk was how many billions of dollars Africa needs. Now, leaders speak equally of Chinese yuan, Indian rupees, Brazilian reals, Korean won and Turkish lira – the currencies of the emerging economic powers drawn to Africa whose sustained growth played a key role helping the continent weather the global economic crisis of 2008-09.
The dramatic decade opened a new era of opportunity for the continent. Trade between Africa and its new partners is now worth USD 673.4 billion a year. And this year’s African Economic Outlook describes and analyses Africa’s surge in relations with their “emerging partners”, who are now on the top table of economic decision making alongside the “traditional partners” from Europe and North America. The study also looks at what can be expected in the future.
Drawing on milestone studies on Africa and South-South relations,1 this report provides a new insight into Africa’s expanding partnerships after the 2008-09 crisis dramatically shifted the centre of the world’s economic gravity away from OECD members towards the east and south. Africa is benefiting from investment, trade and aid, but also from the macroeconomic, political and strategic advantages that the rise of emerging countries has produced.
The African Economic Outlook’s traditional theme chapter casts new light on the diversity of Africa’s changing relations. China takes centre stage, but other emerging partners together make up a larger share of many of the dealings. Africa’s top five emerging partners are China, India and Brazil -- along with Korea and Turkey.
Europe and North America's trade share has quickly eroded, but they still account for more than half of Africa’s trade and foreign investment stock, and their economic health remains key to Africa’s growth performance. Nevertheless, Africa’s rebalancing act turns the page on 50 years of over-reliance on the West, a period sometimes dubbed the post-colonial era. Links with the traditional partners face profound changes.
Outlook experts give a cautiously positive verdict on concerns about the impact of the emerging partners on Africa’s development. Prospects are good for the transfer of technology and access to finance. There is no evidence to suggest that the new players are hindering Africa's industrialisation, debt sustainability or governance, but Africa needs a clear engagement strategy and all sides must show greater transparency.
To maximise development benefits from the new partnerships, African nations can draw lessons from their dealings with traditional partners and the successful experience of the rising economic powers. Vision and ownership turn global opportunities into sustained and shared growth. The economic independence that African economies are gaining from globalisation can be sustained if countries draw up their own development policies and co-ordinate them at regional and continental level to better negotiate with their traditional and emerging partners.
Defining Africa’s “emerging partners”
A strong case has been made against calling economies such as India or China “new partners”, as they have had long-lasting relations with Africa (Kragelund, forthcoming).
The notion of “emerging partners” used here tries to capture two characteristics:
- they are considered “emerging” economies in the global context;
- their economic relations with Africa have been marginal until the last decade but are rising fast and are expected to grow further.
For this study, “emerging partners” are economic partners of African countries which did not belong to the club of traditional “donors”, the OECD Development Assistance Committee (DAC), at the outset of the millennium. Korea is the only country to have joined the committee since then, in 2010, thereby aligning its development policy and practices with DAC norms and manifesting its intention to comply with its principles and guidelines. (*)
Of course, this category brings together partners at markedly different stages of engagement with African countries. One of the contributions of this report is to document, analyse and draw policy conclusions from this heterogeneity.
It also shows that any typology of Africa’s global economic relations is doomed to be short-lived, given the pace at which they change in nature and magnitude.
(*) As of March 2011, the 24 members of the DAC are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Korea, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, the United States and the European Commission. Eleven OECD countries are not DAC members: Chile, Czech Republic, Estonia, Hungary, Iceland, Israel, Mexico, Poland, Slovak Republic, Slovenia and Turkey. See www.oecd.org/dac.