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Ministers to Examine Strategies for Unleashing Africa's Economic Potential

African Union Economic Affairs Commissioner Maxwell Mkwazelamba (file photo)
African Union Economic Affairs Commissioner Maxwell Mkwazelamba (file photo)

More than 50 African ministers of finance and economic development are gathering in the Ethiopian capital, Addis Ababa to examine strategies for unleashing the continent's vast economic potential. A preliminary session revealed differences of opinion on the best path to growth.

The ministerial conference being held over the next week is based on the premise that Africa has the potential to become a pole of global growth. But experts say growth has been stymied in the past by persistent economic imbalances, driven partially by high levels of borrowing and debt.

Two senior economists briefing reporters Wednesday agreed that past policies aimed at fostering development have had mixed results. Particular criticism has been leveled at what has come to be known as the Washington Consensus.

The Washington Consensus is generally defined as a set of late 20th century policy prescriptions advocated by the World Bank and International Monetary Fund. Those prescriptions emphasized the efficiency of private enterprise and open markets.

Many African governments blame those market-oriented policies for the continent's economic stagnation in the 1970s and 80s.

Last year's ministerial conference was devoted to examining the state's role in development, and this conference will hear reports based on the results of that meeting.

Comments Wednesday by African Union Economic Affairs Commissioner Maxwell Mkwazelamba and United Nations Economic Commission for Africa Deputy Chief Abdallah Hamdok revealed that the issue is far from settled.

Hamdok argues that recent experience shows economies that have developed fastest have been those where the state has taken the dominant role. He calls it the “developmental state” model.

"If you look at South Korea experience, China experience, Malaysia, all these countries, at the heart of it was a developmental state, this took on board a state that has a mission for itself. This is bringing back the state into the core of the development proces," Hamdok said.

Hamdok says strategies emphasizing private sector growth had failed in much of Africa because markets were too weak.

"If you look at the structural adjustment program up to the 90s, the preaching was advocating the removal of the state from the development planning process; take the state and throw it away. I don't think we can afford that, particularly in the context of Africa. Where is this private sector that would lead the development process? It's there but it's in an infant stat," Hamdock said.

AU Economics Commissioner Mkwazelamba took issue with the statist model. He noted that last year's conference had agreed on the need for the state to play a role in directing resources. But he suggested the main body of opinion supports a dominant private sector approach.

"The ministers indeed discussed this matter and agreed that yes, there was a role for the state to play, but it did not mean completely abandoning the Washington Consensus. The private sector has a role to play. In certain cases the government simply has to come in. At the same time you need to let markets do their work but let governments play their facilitating role," Mkwazelamba said.

Commissioner Mkwazelamba said another key to unleashing Africa's economic potential will be ensuring opportunity for women. He said ministers will discuss the establishment of an African Fund to support women entrepreneurs in developing earning opportunities.

The meetings of economists and financial experts are to continue throughout the next week at the newly-inaugurated African Union conference center.