Opportunities for Economic Development in Africa

Newswise — While the Africa Growth and Opportunity Act (AGOA) of 2000 opened the door to economic opportunities for African countries trading with the United States, a University of Arkansas professor argues that continued economic growth in the continent will require the equivalent of a Marshall Plan for Africa, which includes attention to health care and a knowledge-based revolution within the countries themselves.

Frederick Nafukho, assistant professor of business education and adult education, will present his paper at a conference held by the Council for the Development of Social Science Research in Africa on "Intellectuals, Nationalism and the Pan-African Ideal" in Dakar, Senegal, Dec.10-12.

There is an urgent need to invest in human resources in Africa. While trade liberalization may seem important for Africa, Nafukho says that without investing in human resources, Africa will remain disadvantaged in the world economy. The key to Africa's survival is investment in intellectual capital. Past experience has shown that while Africa has vast physical and natural resources, intangible assets such as knowledge and information determine wealth creation in the 21st century.

Humanitarian concern over continued problems with access to food and health care have led to several development models for Third World countries—none of which have proved successful. AGOA was designed to facilitate trade between sub-Saharan African countries and the United States based on the continent's ample resources in hopes of encouraging economic development. AGOA has eligibility provisions requiring companies that use its benefits to practice environmental conservation, promote democratic governance, observe fair labor laws and produce their goods within Africa.

Since AGOA's enactment in 2000, several African countries such as Nigeria, South Africa, Lesotho, Botswana, Senegal, Uganda and Kenya have taken advantage of its trade provisions and have reaped financial benefits from the agreement. For instance, Nigeria made $5.4 billion in 2002 and supplied the United States with 18 percent of its oil.

However, trade has its drawbacks. Trade between Africa and the United States was 15 percent lower in 2002 compared to 2001. Asian entrepreneurs have moved companies into African nations to take advantage of the trade benefits that AGOA offers. And under the trade agreement, in many cases, raw materials leave Africa to be used in manufacturing elsewhere, which takes those manufacturing jobs away from countries that could benefit from them.

"Trade is positive, but that alone is not sufficient," Nafukho said. "When Nigeria makes that $5.4 billion, it should be invested in health and education in order to benefit a majority of the population."

Nafukho said Africa needs to develop a plan akin to the Marshall Plan that helped Europe recover economically after World War II. Such a plan would involve visionary leadership within individual countries, along with help from the international community. African countries should develop such a plan among themselves with assistance from the international community.

Such a plan must address health care and education for all people, Nafukho said. The Human Development Index, used by the United Nations to assess a country's poverty level and economic health, looks at adult literacy, life expectancy and purchasing power—three indicators that are low for the majority of people in most African countries. Africa is currently at the epicenter of an HIV/AIDS pandemic that has wreaked havoc on its population. Health care needs must be addressed to improve the quality of life for all African citizens, Nafukho argues. Funds raised through trade may go only to a few elite citizens who become wealthy at the expense of the masses.

Further, funds also must be used to build the infrastructure to educate the general population, Nafukho said. Africans tend to be bigger users of knowledge than producers of knowledge, but this must change for the continent to move forward. To do this, leaders must build an infrastructure that will allow people access to education, which will lead to greater economic growth and more purchasing power.

Africa already has a rich field of commodities to draw from. One of the main components of cell phones and computers " the mineral coltan " comes from Africa, as does titanium, used to make artificial limbs. But to best use these resources for economic success, Africa needs a system to educate its workforce."You can have wonderful workers. But if you don't put in place a system that supports them, they will not succeed," Nafukho said.

Africa will need the support of the international community to encourage the development of this infrastructure, Nafukho said. The Marshall Plan's success in Europe shows that such support can help countries succeed economically.

"If the United States feels it has a role in shaping the destiny of the world, then here is a chance to do so," he said.