Expert advice to Africa: be like China

Africa needs to follow China’s example by achieving an economic growth rate of 10 per cent. “Africa needs to turn Chinese”, says Anders Borg, Chair of the World Economic Forum’s Global Financial System Initiative. Borg is a former Minister for Finance in the Swedish Government.

The top 10 performing African countries have a combined growth rate that averaged 7.6 per cent over the past decade. If Nigeria, Ethiopia, the Democratic Republic of the Congo, Tanzania, Kenya, Uganda, Ghana, Mozambique, Angola and Zambia can lead Africa on a 10 per cent growth path, “there will be another China in the global economy”, Anders Borg claims on weforum.org. Africa can follow China’s example – 10% annual growth – by following in China’s footsteps.

First: let market forces work in the agricultural sector. China’s household responsibility system – which gave households relative autonomy over land and crops – and subsequent reforms led to 15% annual growth in agriculture over the years that followed. When the same happens in Africa, with the deregulation of coffee in Rwanda an obvious example, the results will come.

Second: an artificially weak currency is essential for an export-led growth model and only export orientation can bring about 10% growth. “Keep them weak and use this as an opportunity to carry out structural reforms and remove barriers to trade.”

Third: achieve high savings rates. Fourth: be open to technology. Anders Berg: “Technological innovations are slow and costly. The good news, however, is that you don’t need to innovate; you can just copy at very low cost. Very few advanced countries wish to give up their technology for free. What they are ready to do, however, is pump FDI into production facilities in low-cost countries. When enough competitors have invested in low-cost production, firms might even feel compelled to transfer their state-of-the-art technology to stay in the game.”

Further reading on agenda.weforum.org

Image by Wikimedia

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