18 Dec Structural Transformation and Economic Development in Africa
By Peter Lawrence and Yao Graham
Structural Transformation and Economic Development in Africa was the title of a three-day consultative meeting held in Accra in July 2015 which brought together trades unionists, civil society organisation activists and academic researchers from across the continent and beyond to frame a new agenda for the structural transformation of African economies. The meeting was jointly organised by Third World Network-Africa and the International Trades Union Confederation (Africa) in collaboration with ROAPE. Participants came from over 20 different African countries covering all the regions of the continent, from Trade Unions (TUs), universities, colleges, civil society and international organisations. They were joined by a smaller number of a similar group of people from outside Africa. It was a unique opportunity for linking researchers and practitioners in a discussion of the issues involved in developing strategies for effecting changes in economic structure. The main focus was on strategies that would generate employment, especially in the growing urban agglomerations across the continent, in the face of the dominant neo-liberal paradigm, increasingly seen as having failed to generate structural change and economic development. This report offers a flavour of the issues discussed, though it cannot reflect that lively debate conducted, thanks to simultaneous translation, in both English and French, to enable the widest participation from all over Africa.
The concept note outlining the purpose and background to the meeting noted that it was taking place at a time of global economic and financial crisis when Africa faced the ‘inter-related challenges’ of creating jobs, transforming its ‘primary commodity export-dependent political economy’ and generating social and economic development which fulfilled ‘the needs and aspirations of Africa’s working peoples’. The meeting therefore had two objectives. The first was to construct ‘a more concrete alternative economic development policy narrative, building on existing trade union critiques of, and alternative perspectives on, decades of neo-liberal economic policy in Africa.’ The second was to put together a set of ‘issues and perspectives’ for a ‘five-year agenda for policy research and advocacy’ by both ITUC-Africa and the trades union movement on the continent. Taken together these objectives are part of a longer term project to support TUs across Africa in playing a greater role in constructing, and campaigning for, alternative strategies which challenge the neo-liberal paradigm and lead to structural transformation and employment generation.
On the first day, we had a series of presentations (by Jomo Sundaram, Kodjo Evlo, W.Baah-Boateng, Adebayo Olukoshi and Praveen Jha) providing some historical and contemporary context. The presentations showed how African economies have fallen behind other country groups and remain dependent on primary product exports over a period when prices of these commodities have been falling leading to a considerable fall in Africa’s terms of trade and share of world exports. In contrast inter-African trade has been rising as has its trade with Asia. Within this primary product export dependence, minerals have played an increasingly important role. While there has been greater diversification in the exports of developed countries, African exports have further concentrated in fewer products. The liberalisation of world trade has not helped African agriculture as exports have declined and Africa is now a net importer of food as, despite the ideology of liberalization, developed countries’ agriculture continues to be heavily subsidised. The liberalisation of trade, forced on Africa through ‘structural adjustment’ programmes, has had equally negative effects on the continent’s attempts to industrialise. And despite the pressure to liberalise, this had not stopped the ‘tariff bias’ against countries such as those of Africa which find still high barriers against exporting to developed countries compared with the tariffs between the countries.
“The liberalisation of world trade has not helped African agriculture as exports have declined and Africa is now a net importer of food as, despite the ideology of liberalization, developed countries’ agriculture continues to be heavily subsidised…”
The pressure for financial liberalisation has not had the results predicted for it by the neo-liberal strategists. There are few emerging capital markets on the continent, net capital flows into Africa have been negative, and African economies are given high risk ratings which means that returns have to be very high to justify those perceived risks of investment. The emphasis on independent central banks having the sole task of targeting inflation rather than employment and growth, has been accompanied by the decline in development finance and its institutions in favour of private foreign investment. This is largely concentrated in minerals and therefore in a few countries is still only 2% of total world foreign direct investment for Africa. Such investment tends to go with and augment the economic cycles rather than counter them. Foreign aid has not reached the amounts promised at the 2005 Gleneagles G8 meeting and once debt service is deducted, aid flows have been relatively small. Remittances have been a growing source of hard currency inflows but against that has to be put the flight of capital as private African wealth is invested outside Africa
The various structural adjustment programmes (SAPs) have helped undermine the State in Africa and therefore reduced the possibilities for the emergence of a ‘developmental state’, credited with much of the success of the East Asian economies. Marketization, de-regulation, tax reduction and the handing over of economic management to the Central Banks has reduced the capacity of the State to intervene and shape economic development and conduct demand management economic policies. More recent years have seen African economies growing on average at around 5% per annum in the early 2000s, though the recession in developed countries following the financial crisis of 2007-8 saw a slowdown in African growth rates and a fall in commodity prices. Growth has been accompanied by increasing inequality with the top 10% having 30- 40% of total income while the bottom 20% have between 5 and 10% of the total. In real terms per capita income is less than it was during the 1970s generating an increase in poverty rather than the reduction which was supposed to take place, especially after the introduction of SAPs.
SAPs are but one of the reasons for Africa’s position and trajectory. African governments’ development policies have lacked a long term strategic vision and been influenced by ideologies not applicable to the continent’s realities. While the 1960s and early 1970s saw some relatively high growth rates, the 20 years following the first oil crisis of 1973-4 was a period of economic decline, often with negative growth. Only in the last 15-20 years have we observed a return to high growth rates, although these are uneven and have begun to decline again in recent years. Overall, Africa’s share of world GDP and trade, always low, has fallen further to around 2% and 4% respectively. High inflation and the growth of parallel foreign exchange markets, fiscal and balance of payments crises and unsustainable debt levels characterised the period of decline. One contribution summarised the causes of decline as related to poor and inconsistent development policies, insufficient capital accumulation, weak productivity growth, limited structural transformation, weak or non-functioning institutions, poor infrastructure, poor market systems, poor governance, an unstable political environment or, generally, an unstable socioeconomic environment and an unstable international economic environment.
“Africa’s share of world GDP and trade, always low, has fallen further to around 2% and 4% respectively. High inflation and the growth of parallel foreign exchange markets, fiscal and balance of payments crises and unsustainable debt levels characterised the period of decline…”
After independence African governments engaged in development policies that were based on growth models that emphasised the importance of investment, especially in the manufacturing sector, in order to shift the economy away from dependence on primary commodity exports in the context where it was believed that there was a long term tendency for the terms of trade to move against primary commodities in favour of manufacturing exports. In the absence of a strong private sector, there was the need for the State to play an important role in mobilising capital for investment in the economy. Yet the nature of the state itself needs interrogation. The issue of SAPs should not be separated from the social and economic context in which a new power alliance developed between finance ministries and the IFIs such that finance ministers were effectively in charge of government and were responsible to the IFIs rather than their own democratic institutions. They then presided over the dismantling and retrenching of the state, such that capital now cannot do without the state but requires a state that subsidises rather than regulates capital. And with the global process of financialisation, capital itself is dominated by financial corporates, which again ally with finance ministries and the IFIs.
Some of the liberalisation policies implemented through (SAPs) have worked in their own terms, such as the removal or moderation of price and foreign exchange controls, the latter addressing the problem of exchange rate overvaluation. The restoration of more sustainable fiscal and external balances has also been relatively successful while other policies have resulted in public enterprise reforms and restructuring. While the World Bank has tried to show that those countries which carried out more SAP policies have done better than those which did not, much of the serious research in this area has at best shown that the effects of SAP adoption have had little or no relationship with growth, while there is research which has shown the relationship to be negative. Following SAPs there has been a tendency for GDP growth to outstrip employment growth and for shares of employment in services to increase while shares of employment in agriculture fall, with their being very little change over time in the share of employment in manufacturing.
The current phase of global capitalism has seen the the rise of finance capital as the most important factor of production, the demise of the developmental state and the weakening of labour as a class. Structural transformation has to be about a rise in the contribution of the non-agricultural sector that is not at the expense of the agricultural sector, and a transition from low-productivity to high productivity. The best countries in terms of growth in the last two decades (India and China) have seen worsening of labour markets and livelihoods amidst a period of jobless growth. Trade unions have to collaborate with other social groups, and widen the scope of its own activities within its own countries. In particular, it was stressed that it was important for TUs to engage with the informal sector, which accounts for the largest fraction of the working population.
The discussion following the presentations emphasised the importance of being clear and specific about the Structural Transformation (ST) – an oppositional/alternative response to SAPs – that Africa needs. This means making fundamental changes to the structure of production in African economies in African rather than western international agency terms. New phrases like “Africa rising” among others are just fads that are unlikely to lead to any transformation. A related issue of why import substitution and export promotion has not worked in Africa was also discussed. It was noted that there is no universal strategy that works. Even though there are commonalities, it is important to look at concrete national situations and specificities. At present, there is a lack of critical discourse on this. It is important for Trade Unions (TUs) to use their mass mobilization activities to mobilize the new generation of Africa youth to take up the challenge of critical discourse for the appropriate paradigm and policies for the continent’s transformation.
Clarification was sought on the characteristics of Africa’s recent growth. Some countries have relied on intensive extraction of different kinds of natural resources while others had used financial innovations like the M-Pesa in Kenya. Discussion around the SAPs argued for critical thinking not just of SAPs in their context, but also of policies that were simply a rehash of previous policies with the SAP label. It is important to investigate the issues behind the failure of institutions to inform specific policy alternatives to SAPs. It was noted that in the 1980s, the labour movement was a strong voice against SAPs and came with up well debated positions. It is important to revisit these positions and refine the arguments.
The issue of the characteristics of successful cases of structural transformation came up for discussion. Fundamental considerations such as whether and what role globalization and financial liberalization will play in such transformation should be investigated. The role of MNCs in the current crises was highlighted as an issue that needs careful research and analysis to inform our transformation strategy going forward
The current paradigm has placed the economic structure first and left the society behind and this has led to social unrest. The SAPs have destroyed both the quality and quantity of jobs while creating a high number of insecure jobs. The labour movement has not been strong in fighting agriculture and land issues. The current conversation on exploitation of resources that lead to environmental degradation takes place between governments and MNCs. TUs have been fatally wounded by SAPs: numbers have shrunk and unions have become polarized. However, they remain the most credible representatives of the people. Another issue that came out during the discussion is whether, given the continent’s economic history, there is any potential role for international trade and finance. It was stressed that core finance has to be national because international finance will not be appropriate. Finally, it was widely agreed that quantitative/macroeconomic measures, complemented with qualitative measures of livelihoods, should be used in measuring progress in structural transformation.
The next part of the meeting moved on to the question of structural transformation and employment generation and the policies required (this session was led by Peter Lawrence). Originally it was thought that manufacturing would provide the key to such transformation by maximising linkages within and between sectors, generating more employment and a bigger market for the output of the final consumer goods sector. However, manufacturing in Africa has been limited to the production of last stage consumer goods or the first stage processing of minerals. A strong capital goods sector producing machines to make both capital and consumer goods and to make manufactured goods for export, has not developed to effect structural change. While the economic and technical issues relating to manufacturing are well understood, the key question has been why African economies have not developed strong manufacturing sectors, which was to be the agents of change. The absence of a capitalist class has meant the need for a developmental state, but states in Africa have rather been rent-seeking and bureaucratic than concerned with accumulation for development. It is unlikely, but possible, that an accumulating capitalist class will develop out of the small and medium enterprise sector so it will be with the state where the burden of agency will fall.
“A strong capital goods sector producing machines to make both capital and consumer goods and to make manufactured goods for export, has not developed to effect structural change…”
The limited, and largely capital intensive, manufacturing that has developed, has not created as much employment as it originally did in the developed countries. The median share of employment in industry across African countries is 7%, while the median share of industry in GDP is 21%. Hence the importance for structural change and employment generation is increasingly accorded to the service sector and to investment to transform agriculture. The question of why manufacturing has not developed is explained by neo-liberals in the adoption of import substitution strategies of industrialisation, the high costs of ‘doing business’, uncompetitive wages and low skill levels, the low level of development of the banking system thus causing credit and investment constraints, lack of export orientation, excessive public ownership and slow rates of privatisation. Indeed the resistance to SAPs and therefore the delays in liberalising African economies have been a major factor in slowing transformation. Critics of this view point out that structural adjustment programmes effectively deindustrialised African economies and lost the experience gained over two decades of initial industrialisation. A programme which rehabilitated and protected African manufacturing in the same way as had happened in early industrialisation in Asia would have been more effective than liberal market-led programmes which put enterprises out of business.
The availability of a large urban and better educated labour force suggests African economies are ripe for manufacturing development. A strategy based on the processing of domestic resources in agriculture and mining generating a capital goods sector which can make producer goods and an active science and technology and research and development policy to adapt imported technologies to local needs provides a convincing way forward to produce basic goods for mass consumption. However, simply reproducing the industrialization path trodden by the now industrialized (or post-industrialized?) economies may not be the way forward. Identifying economic activities of the future, as advanced capitalism itself changes with new forms of social organisation, the growth of non-marketised networking activities, the growth of self-employment and the shrinkage of the traditional industrial wage labour force. The increasing preponderance of low wage jobs in the service sector also reduces the potential for the growth of markets which may also subvert an industrialisation strategy based on a mass consumption market.
In the discussion it was stressed that the nature of transformation needed is different from the superficial transformation being discussed by some African leaders as they simply represent a rehash of the neo-liberal ideas borrowed from the West. Rather the structural transformation should place a premium on higher value manufacturing, value addition in agriculture and progress in the higher end services rather than just buying and selling. A related issue was the first steps of this structural transformation. It was noted that in general, this depends on the specific state and issues. For most countries, the important first step is to have an agency in place with the powers to drive the necessary changes. For those with such an agency, perhaps the most important first element is infrastructure. From there on, much depends on the strategy determined.
Sometimes the issues become confusing as some countries are successful because they have paid lip service to SAPs, but followed different policies. Even the World Bank didn’t always follow the neo-liberal model, largely because even orthodox economics was discovering market failure. Stretching this issue further to touch on the future of capitalism, it was pointed out that there were subtle forms of recolonization of Africa through adoption of policies made abroad without realization of the implications. It is therefore important for trade unions to take these up through education and mass conscientisation of the working masses to enhance the mobilization against capitalism and neo-liberalism.
On the prospects of transformation outside of existing linkages the case of the boom in Chinese mineral consumption came to the fore. It was noted that while this has intensified commodity dependence, it could be turned into a strategy for transformation. There is a difference between Chinese demand for minerals and the West’s demand based on the purpose of the demand. Chinese may demand raw materials for production which is used to drive transformation. On the other hand, most of the demand from the West could be seen as being for speculative purposes.
The meeting went on to address specific policy issues around the various economic sectors. Starting with the agricultural sector (Sam and Qondsile Moyo, Jomo Sundaram), its dominant features are food insecurity and malnutrition, low productivity of both food crops and livestock together with an unstable domestic supply, fluctuating and uncertain world food prices and supplies, food aid dependence, low wages and family farm incomes, continuing dependence on agricultural raw materials exports accompanied by poor terms of trade, African countries as net food importers and limited inter-sectorial linkages and diversification of industry with a shift towards a low wage informal sector.
Policy focus has been on low agricultural productivity usually explained by the small scale family farming structure and its resistance to innovation. Therefore we have seen the promotion of larger scale farming with economies of scale in production and marketing. This is especially exemplified by the large scale land grabs by foreign capital, enabled by a less interventionist state. There is a growing labour reserve as well as a growing domestic middle class market for higher value food crops. However priority is not given to increasing domestic food production to meet this rise in demand, nor to generating higher levels of employment and income which would increase such food demands even further.
Instead the IFIs support policies which centre on specialisation in improving the ability of African farmers to specialize in competitive traditional and non-traditional export crops with the consequence that food grain production is limited and so grains are imported using the orthodox economic argument of comparative advantage, especially reinforced by the required currency devaluations. Policies which previously supported agriculture to ensure domestic self-sufficiency, supported prices and marketing and subsidised inputs, have been stopped. Domestic production of agricultural inputs as part of import substitution strategies, were either privatised or closed down and substituted by imports. Rural livelihoods have deteriorated as social welfare transfers have been replaced by narrow poverty and livelihoods strategies thus reducing effective demand for food. Increasing inequalities have developed as large scale commercial farms and more successful family farms have been absorbed into agribusiness contracts. There are continuing social issues which affect agricultural output and enable gender inequalities such as customarily and statutorily defined patriarchal relations, women’s access to land depending on male family members and clan authorities, and gender discrimination in decision-making, access to assets, credit and technical support constraining productivity.
“Policies which previously supported agriculture to ensure domestic self-sufficiency, supported prices and marketing and subsidised inputs, have been stopped while domestic production of agricultural inputs as part of import substitution strategies, were either privatised or closed down and substituted by imports…”
Yet there are over one million family farms in sub-Saharan Africa with arable land of between 0.1 and three hectares engaging 75% of the population in farm and related non-farm activity contributing 80% of the food produced and distributed. 25% of the population is undernourished and in extreme poverty as a result of food insecurity derived from unpredictable and low output. Family farms face labour constraints, generational and gender inequities, with consequent inequalities in income. Diversification of labour activity employs underused labour and spreads risk as does rural out-migration to low informal sector wage employment and unemployment. Current policy undervalues family farm labour and employment but actual and potential employment capabilities are high as is the impact on poverty – research showed that every 1% growth in per capita agricultural output leads to a 1.61% growth in incomes of poorest 20% much greater than for manufacturing and services and every 1% increase in agricultural labour productivity reduced the number of poor by 0.6-1.2%. Emphasising the role of the agricultural sector would reduce rural poverty and also urban poverty by reducing rural-urban migration.
Policies are required to change this situation and begin a process of agricultural sector transformation, mobilising the potential of family farm agriculture and therefore supporting demand for farm inputs and implements produced locally. Such policies would move away from the land-extensive family farm production towards a more intensive agro-ecological sustainable land utilization system, prioritizing food sovereignty. They would include supporting agricultural markets and agro-industries through subsidies and protection and more generally allocating a greater share of investment resources to family farming. Transformative investments would be directed to productivity-enhancing technologies, irrigation, accessible markets, rural infrastructure, social welfare and the encouragement of small and medium sized enterprise in rural areas largely related to agricultural production. A strategy of developing regional cooperation towards collective food sovereignty would help an overall strategy of food self-sufficiency and limit the necessity for food imports.
In the discussion, there was some emphasis on the role of TUs in acquainting themselves with the realities on the ground through research and interaction with various segments of society and in pushing for policies on social protection and its finance. The important role of land tenure and ownership was seen as crucial point. At present land is mostly owned by big corporations, tribal lords and governments. The state has become a conduit in transferring land from peasants to corporations. Land for productive purposes should be taken seriously. Contracting arrangements between big corporations is leading to takeover of agricultural production. The retreat of the state has limited the capacity of African peasants and farmers to respond to anything. We should be thinking about different ownership arrangements conducive for the transformation we have in mind.
Another important issue is the disappearance of rural development studies and labour studies from academic units within our universities. Agrarian studies have been killed by neoliberal agenda. How can we put rural studies and labour studies on the research agenda? The discussions also touched on the effect of climate change. New studies are revealing things that we did not even know. The task of adaptation is important and it is crucial to have a unified view.
Presentations on the industrial sector centred on two issues, the first on the specific case of the mineral sector and employment (by Yao Graham), and the second on the role of TUs in pressing for industrialisation (by Trywell Kalusopa). For the mineral sector the issue of the proportion of the value chain captured by the mineral economies is central to the development of domestic industry and the generation of employment. SAPs had reduced mining labour forces as privatised companies shed jobs. They also prioritized production for export rather than increasing the share of the value chain through further industrialisation. This seemed to pay off as after 2000 commodity prices sharply increased, especially after the second Iraq war. The resulting increased mining activity has generated more jobs while at the same time forcing people off the land. However an increasing proportion of these jobs are casual and therefore precarious. Research suggests that employment generated by manufacturing creates many times more jobs than does mining, although the mining industry emphasises the jobs created indirectly from mining investment. Miners themselves are relatively well paid but ancillary jobs are not, while there is wage discrimination in favour of expatriate workers and that has been the subject of protests organised by TUs.
Mining corporations emphasise the benefits to tax revenues from mining, although research shows that while mining companies have seen very large increases in profits during the price boom, government revenues have not increased even proportionally as tax regimes tend to be regressive with companies paying lower tax rates as profits rise with the result that the tax revenue gains are overshadowed by the repatriation of profits. Competition between countries anxious for mining DFI (Direct Foreign Investment) generates a race to the bottom in which the gains from mining to the producer countries are reduced. Policy therefore must be directed to developing a knowledge-driven pan-African mining sector which acts as a catalyst for wider industrial and manufacturing development with forward linkages into mineral beneficiation and manufacturing, backward linkages into mining capital goods, consumables and service industries and ‘side-stream’ linkages into infrastructure and skills and technology development. Mutually beneficial partnerships between the state, the private sector, civil society, local communities and other stakeholders would mobilise for this strategy. The issues surrounding the nature and capacity of the state and the political leadership are clearly central to the success of such coherent strategies, however well thought out they are at the technical level.
“Policy therefore must be directed to developing a knowledge-driven pan-African mining sector which acts as a catalyst for wider industrial and manufacturing development with forward linkages into mineral beneficiation and manufacturing…”
One of the challenges for TUs in an age of increasing global integration in production, is to ensure that working people regain some control over the state, control that has been effectively ceded to a combination of corporate and IFIs mediated by domestic elites. The trades union response needs to continue to challenge the prevailing development orthodoxy especially by forming strategic alliances with other actors of civil society and faith-based organisations, enhance the exploitation of existing policy space through regional TUs, use continental and international TUs to deal with supply chains and outsourcing, advocate inclusive development imperatives that are pro-poor and employment rich, increase policy space for a developmental state and explore how such a state could enhance structural transformation and what are the key institutional relationships to the success of developmental states.
Trade Unions need to mobilise and campaign for a people-led industrial strategy which involves production primarily based on domestic demand and human needs and the use of local resources and domestic savings with a “horizontal” integration of agriculture and industry. They need to develop a strategic, selective de-linking from neo-liberal globalisation and the preparation for a negotiated re-linking to a fundamentally different global production and distribution system centring on South-South cooperation. Also proposed was an industrial policy on science and technology based on harnessing the collective knowledge and wisdom of the people, the forging of strategic alliances and networks with progressive forces at national, regional and global levels, redistribution of wealth and opportunities from the formal to the non-formal sectors of the economy, women’s rights as the basis for a healthy and productive society, an education system that addresses the needs for sustainable human development by improving technical, managerial, research and development skills and the promotion and redefinition of an ethical developmental state.
Further research is necessary to highlight and critique the role of private sector and multinationals in industrial policy, to examine the emerging issues around regional industrial policy in the context of regional integration and national policy imperatives and to audit trade union responses to industrial policies at national, continental and global levels.
In the discussion, a question was posed that given capital-intensity in mining, whether it was surprising that growth in the mining sector was not creating sufficient jobs. It was argued that mining needs not be capital intensive and this depends on what the policy-makers seek to promote. Artisanal and Small-Scale Mining is labour intensive but may not be suitable for some other purposes of transformation. For instance, getting into the last two stages of the mineral value chain requires capital-intensive technology that may not create so many jobs. But linkages with other sectors of the economy might lead to the adoption of such technologies in sectors that create more jobs. The discussion also touched on the issue of the so-called “resource curse” which is directly linked to the strategy of the SAP that emphasizes revenue generation from minerals rather than linkages and transformation. The strategies for structural transformation being proposed deal with the resource curse. Further discussion focused on the need to improve science education for effective R&D that will help adapt existing technologies/innovations in African context. The importance of intellectual property (IP) was raised and the extent to which globalization has restricted the policy space for IP. Examples of success stories only recently joined the WTO so the changing trade regimes are important. But there are new emerging powers even within this context. IP should be situated in the global trading environment. Further contributions raised the importance of linking the discussion on mining to what was happening at the AU and the African Mining Vision and also raised the question of the role of TUs in raising class consciousness and of thinking how to link activities of unions to broader society
Turning to macroeconomic and financial issues (led by Manuel Montes and Kwabena Otoo), it was noted that the liberalization policies have not resulted in an increase in net inflows of finance into developing countries, and Africa is at the extreme as a net investor into developed countries. Financial flows are dominated by portfolio flows and are generally unstable. Then there are the issues of how these flows are used and the institutions that can direct them to development-oriented productive investment. Up to the 2000s, fixed capital investment declined as a proportion of GDP, only starting to rise after 2000 and then rising much faster in the higher income African states than in the lower-income. Macroeconomic liberalisation has resulted in countries having international treaty obligations largely through the IFIs which reduce the policy space available for mobilising financial resources for development.Such factors as the requirement to maintain an open economy for financial flows, to limit capital controls and to reduce tariffs inhibit possibilities for financing development and offering some protection to nascent industries. Illicit financial flows on the one hand and the rise of the vulture funds threatening the gains made from debt write-offs both undermine attempts to put financing onto a stronger footing. The diminished role of the state in managing demand and income distribution has added to the difficulties of financing development. Limits on taxation of those better placed to pay more, and tight monetary and fiscal policy which only has the exchange rate as a policy tool contribute to the practice of an ideology that promotes the private sector as the most efficient agent of growth and development.
The orthodox approach is to see the key macroeconomic objectives as GDP growth, reducing inflation to single digits, a balanced budget, a zero or positive balance of payments, and a stable exchange rate. Inflation targeting has become the single mantra of Africa central banks on the assumption that everything else will follow, although central banks in the West have a dual mandate of price stability and maximizing employment. Achieving these objectives involves monetary tightening, fiscal discipline, deficit reduction, monetary policy, and taxation on consumption. However, the key issue of employment has completely disappeared from the macroeconomic targets.
The discussion noted that neo-liberal policies of monetarism work for only a small class, not the majority of the people, that banking laws needed reform to remove the singular focus on inflation targeting. The dual mandate of full employment and inflation should be reinstated. Governments should focus more on domestic resource mobilization than raising funds through international bond issues and risking excessive indebtedness. Finance capital dominates and imposes neo-liberal macroeconomic policy. This needs to be challenged and means that TUs especially need to be strengthened so they can have a greater influence on policy. This is especially the case with finance for the poor where government action rather than micro-finance is the key to greater financial inclusion and where TUs can push for pension provision and pension funds to play a key role in financing development.
Moving on to the question of social policy (introduced by Dodzi Tsikata), it was clear that discussion of this aspect of development was taking place against the background of the failure of agrarian transitions and structural transformation. This has been characterized by four decades of jobless growth, the growing informalisation and insecurity of work, widening inequalities, weakening social cohesion and solidarity, weakening bargaining power of organised labour, severe social insecurity and global financial, food and energy crises.
There is no inevitably positive relationship between social development and economic growth. The AU Social Policy Framework for Africa has put social policy back on the agenda. Policies are required to manage the distribution of income, regulate markets, enable people to fulfill their potential through education and health, and women to manage the opportunities of pursuing careers and reproduction. Improving the quality of life in terms of health, the environment, and social security; securing incomes, employment and housing that can improve material living conditions and sustaining these elements by nurturing natural, economic, human and social capital are the major social policy issues.
“Policies are required to manage the distribution of income, regulate markets, enable people to fulfill their potential through education and health, and women to manage the opportunities of pursuing careers and reproduction…”
Policy needs to be concerned with moving away from the colonial (and neo-colonial) paternalism of the ‘civilising mission’ to maintain people’s welfare towards the developmental state involving rapid economic development and the defeat of the trinity of ignorance, poverty and disease. Characteristic of this approach is a social contract with the population as a basis for social integration, developing strong links between economic and social policies, broad based policies in education, health and formal employment backed in some cases by legislation, social security laws for formal sector workers; and state pensions.
So far we have seen the relegation of social policy and its separation from economic policy. Economic policies did not have employment as a goal and governments no longer collected employment statistics and other social indicator statistics but left this to the World Bank and the UN. Given the neo-liberal framing of policy we have seen market based social policy instruments being given prominence, the influence of global and regional institutions and a less proactive role of national states. The focus has been on targeting the poor, especially the deserving poor rather than looking at the related issues of poverty and inequality. Popular means of effecting such social policy have been cash transfers, health insurance, micro-finance, school feeding and the capping of school fees, the reform of social security systems and the millennium development goals. The critique of this approach has centred on its narrow vision of social policy, the disconnect between economic and social policy, the sole focus on poverty and vulnerability; and the preference for means testing and targeting. Declared as affordable, these benefits are meagre when measured against the scale of the problems being faced by poor people.
The policy goals themselves are relatively minimal, they pay little attention to employment or inequality, the concentration on poverty-centred policies runs counter to the lack of evidence that such policies reduce poverty. Policies that are not universal upset the middle classes while stigmatising the poor.
One important development in social policy has been the AU’s Social Policy Framework for Africa which was developed to add to regional and continental policy initiatives such as PRSPs and NEPAD and fill any gaps between these programmes and the social issues they did not address. The framework places the state at the centre of social policy and emphasises how social policy can be an instrument for improving livelihoods, especially by ensuring that its different elements, e.g. health and education, are mutually reinforcing and so rather than concentrating on any one aspect of social policy, to see it as an interrelated whole. The point is to ensure that economic development is a means to enabling a greater level of social development which will in turn impact on future economic development.
Placing employment at the centre of policies, coordinating related but different agencies is essential to ensure rapid implementation and generate maximum effect and importantly, adopting policy measures to ease the burden of the multiple roles played by women by enabling them to arrange their working hours in a manner that allows then to participate in paid employment and achieve a work-family life balance. The role of TUs and social movements is to provide leadership in rethinking and reconstructing national and pan-African social policy, and to address the situation of agrarian and urban informal sector workers and in this way to renew the link between social policy and employment.
“The role of TUs and social movements is to provide leadership in rethinking and reconstructing national and pan-African social policy, and to address the situation of agrarian and urban informal sector workers…”
Finally, it is critical to reject the idea that implementing such a social policy is a luxury that cannot be afforded until there is economic growth or a particular level of per capita income. Instead, the relationship between economic growth and the social policy package considered here can be seen as mutually reinforcing. The provision of basic social security should be seen as an investment in development leading to increased demand and expanded domestic markets and a healthier and more productive labour force. A progressive, redistributive personal and corporate income tax is the key to financing social policy but requires the political will to implement alongside the necessary rationalization and reallocation of state expenditures.
Participants agreed with the need for a broader socioeconomic development rather than separate economic policy from social policy and political development. There was an extensive discussion of how to finance social policy on the continent. An integrated approach which includes self-financing was considered an option because it has economic capacity for self-financing and reduces dependence on donor funding. As highlighted by the presentation, social policy should also be seen as an investment not as charity.
The gender dimension of poverty was raised as a key issue. An issue was raised that the presentations did not highlight the fact that poverty has a “feminine face”. In response, Dzodzi Tsikata indicated that it was deliberate and that an excessive focus on gendered poverty ignores the multifaceted nature of poverty. As she had stressed during the presentation, a sound social policy requires a broader vision that addresses all aspects of social transformation not just social protection. Further research needed to cover informal social protection systems, the uses of social security funds, and social protection in the informal sector.
The next session (presented by Kouglo Lawson Body, Pascal Mihyo and Muddy Guiro) was concerned with the state and its role in structural transformation, defined as a change in structures and methods that can initiate genuine development. The state urgently needs to address inadequate infrastructure and build institutions that prevent political conflict and mobilise resources. It needs to act to ensure the achievement of social justice, poverty and inequality reduction, and to think through its relationships with regional and sub-regional as well as international organizations. The role of TUs in achieving these objectives is to engage with the state with well-researched and coherent strategic alternative policies. They should also analyse and interrogate visions and plans to ensure they contain the key elements of structural transformation and should closely monitor the implementation to achieve structural transformation. In addition, TUs should expand strategic alliances to other social groups in society.
A research program on these issues would try to identify formal and informal institutions of state needed to effect structural transformation and interrogate current conceptions of the developmental state; to examine and review constitutions and institutional frameworks under which these organs of state are constituted and operate especially their public accountability and how it can be strengthened both vertically and horizontally. The deconstruction of the inherited democracy module to find ways to combat the tyranny of minority and majority, the diminishing of the commercialisation of politics and the creation of a transformational leadership which serves rather than oppresses are necessary steps forward. Youth support systems through reforming education to train people to be innovative and solve problems not manage them and the creation of supportive family systems are further steps forward.
The people should be the centre of structural transformation. While the economic structure should emphasize industrial production and the transformation of agriculture (including development of cottage industries), structural transformation should also mean greater equity in income and wealth and access to resources and services. The state should remove the numerous constraints to production by adopting policies that are more inclusive and take into consideration social context. The state will need to focus on mobilising additional revenue from natural resources and MNCs especially in the areas of telecommunications and other public services. Also, there should be reforms targeted at the lifestyle of members of government in order to cut profligate spending. TUs need strong well-informed leaders who can form strategic partnerships and unite various social groups.
In a wide ranging discussion, it was noted that the network of international organisations and powerful supranational states is taking away policy space because of obligations they imposed on states. Some have also become a conduit for planting ideas of foreign entities that filter to the local level. It is therefore important to decentralise and for clear delineation issues that should be handled at the various levels (regional/sub-regional, national, community). Agencies such as the ITUC should take up research to understand how these mechanisms affect the transformation agenda.
Related to the above, some were of the view that the current African state is an oppressor of its people but weak in the international arena. The state has become too personalised by some leaders to appropriate resources for personal benefit. There is therefore the need to build the capacity of the state and build a strong bureaucracy. TUs are also becoming too personalised and this needs to be corrected before they can help rebuild the state. The TUs need to do a self-assessment of its performance and move away from being a reactive entity to be proactive and make recommendations to the state. Finally, TUs should broaden the scope of collective bargaining to seek involvement in the initial stages of formulation of policies.
It was also suggested that the state strengthens its domestic resource mobilization drive through improved taxation. However, TUs and civil society should be actively involved in this resource mobilisation.
Lastly, it was suggested that states take the issue of energy very seriously. Indigenous solutions to the energy problems are needed because there is too much universalism. We can learn from others but these lessons must be contextualized. TUs should play an active role in the discussion of the energy policy/strategy and energy alternative.
The meeting then turned to discussion of the political issues surrounding gender, class (presented by Britwum) and the mobilisation of progressive forces to effect structural change (presented by Moodley). Gender relations are dominated by a system of interrelated social structures and practices in which men dominate. Explanations that such domination is justified by women’s biological and personal characteristics are no longer tenable. Gender regimes are structured around household production, paid work, violence against women, and sexuality. Economic decline and reforms have forced a regrouping around pooled household resources exploiting women’s survival skills. The loss of male formal sector jobs has intensified the reliance of households on women’s incomes. Women’s non-household labour is concentrated in the service sector, the urban informal retail and commercial sector, and in agriculture producing subsistence food crops and processing a selling food. Totally invisible is women’s unpaid reproductive work and care in the household.
The household is an economic unit for production, reproduction and consumption in which women bear unequal burden for housework, and rationalised by the male-centred ‘breadwinner’ of classic capitalism. Women have to combine productive work with reproduction, while male household members are freed for productive work and leisure. Employers as owners of capital do not have to make any investment in the reproduction of labour, for which women bear responsibility. Women as a heterogeneous group do not carry an equal burden of domestic work and while increased male involvement is good for altering existing sexual stereotypes, there is a long way to go.
The case of TUs is a good example of the distance still to travel. Women are in a minority membership of TUs around the world, though this does vary across unions and in some African unions, women are in the majority, though in a small minority in union leadership roles with a much greater participation in subordinate roles. There are many ways in which these gender deficits can be overcome including having separate and autonomous women’s groups, separate events, special representation, quotas, access to capacity building programmes with organised family support, and building greater equality in women’s involvement into the constitutions of the unions.
The conditions for success require women to have greater levels of decision making powers, the right balance of autonomy and integration within the organisations, adequate union resources, the channeling of the energies generated in separate spaces into mainstream structures, making a strong connection between women workers’ needs and union policy and the presence of a sufficient core of women activists with the required consciousness
Finally some issues in setting a trades union gender transformation research agenda were highlighted: unions structures and breaking patriarchal norms and standards and understanding unions’ role in maintaining patriarchy; bringing care, subsistence and informal economy into the political economy of production; sexuality and its commercialisation and its relation to notions of masculinity; the connection between productive and reproductive resources; distilling class from gender needs; and, women’s power under patriarchy.
A constant theme throughout the meeting was the importance of unions joining with community and other progressive organisations in the very important task of mobilising those workers who fell outside the traditional private and public sector activities. The need to expand union activity into the informal sector and organise those workers around their struggles to make a living was constantly stressed. Similarly, the question of the role of the state was a regular feature of the discussions and that raised the issue of what kind of state was being called on to act and in whose interests would a transformational state be directed. This then also raised the central issue of the relationship between system, people and policies.
“there is the need for unions to join with community and other progressive organisations in the very important task of mobilising those workers who fell outside the traditional private and public sector activities…”
In the discussion it was pointed out that the cultural dimensions of the gender relations, including the role of ethnicity in social relations and how this affects women, are important and should not be ignored. In terms of incorporating women in union activities, it was suggested that there is much on paper that needs to be translated into practice. Alliances with academics could expand the range of studies relevant to unions. Gender issues should be mainstreamed into the activities of unions rather treating them as side issues. There is the need for a deep analysis of the structure of how trade unions are organized. TUs should take up the issue of violence against women. Thinking about gender locations in employment would be a way to analyse the position of women and forms of discrimination in the workplace that keeps them stuck in particular jobs.
In terms of TU activities, they should not be limited to organising salaried workers but workers in general. It is important to formalise the informal economy and recognise domestic production and see the household as a production unit. This means making the informal economy an integral part of the union membership.
For the last session, the workshop was divided into five groups to come up with ideas which addressed the following areas:
1) industrialization strategy and industrial policy,
2) agrarian policy,
3) macroeconomic, finance and investment policy,
4) employment, livelihoods and social policy,
5) trade unions, workers and political agency.
Groups 1 to 4 were tasked with making deliberations on the following thematic areas and to come up specific suggestions and recommendations:
- What are the systemic challenges that need to be addressed in order for African countries to transform their economies from primary commodity export dependency?
- In the specific area/sector given above, what policies or types of policies are needed to address these systemic issues?
- What issues need further understanding for the purposes of a research and advocacy agenda?
- How do existing gender relations shape the systemic challenges identified
Group 5 was tasked with addressing the following:
- What should trade unions do to influence development policy?
- How effective have they been in influencing development policy? What factors account for the effectiveness or otherwise?
- What areas of trade union work should be strengthened for better effectiveness?
After two hours of deliberations, the groups came up with the following reports.
Group 1 on Industrialization Strategy and Industrial Policy argued that for effective industrial development there is the need to build local and regional value chains not only for import substitution but to develop strong linkages with all sectors of the economy.
There is the need for industrial and agriculture linkages in production, marketing and finance, relations with global markets that support Africa’s industrialization, and diversification from primary commodity dependence. This requires the development of local SME enterprises, strengthening the role of the state, R&D. strong institutions, state guarantees for SMEs on procurement and trade, energy development as an industrial input, world class infrastructure.
The policies needed to pursue these objectives would involve education and training in STEM subjects (science, technology, engineering and mathematics); finance policy that supports local enterprises industrial development with start-up capital; policies which address issues of women in the informal sector and their weak representation in business associations; petty commodity trading-domestic resource mobilization and pensions; trade policies that support industrial development and promotes trade in the regions; energy policy that supports industrial development – for example, industrial zones for incubation of enterprise development; a possible common regional policy that supports industrial policy but pays attention to energy; government procurement from affirmative action-women enterprises; and, a policy of promoting a capital goods industry.
The following areas for research and development were identified as follows:
- Local and regional value chains and their impact on regional integration
- The direction of energy policy in Africa
- The trend and potential of petty commodity producers and SMEs
- The role of the state in breaking with the enclave economy
- Jobs, climate change and industrial development
- Comparative studies on late industrialisation
- Institutional reforms
- Taking advantage of the existing spaces at the regional and continental levels e.g. the Africa Mining Vision Process , Boosting Intra Africa Trade Continental Free Trade Area
- The role of the diaspora skills for industrial development
- OECD guidelines
- Creation of a database of the community of scholars that are interested in the industrial development in Africa
Group 2 on Agrarian Policy raised the problem of contractionary and deflationary macroeconomic policies that depress demand for agriculture produce, increase interest rates and limit financing for agriculture.This would require macroeconomic policies that stimulate aggregate demand. The current international trade regime inhibits the transformation of agriculture and promotes the export of raw materials and foods through dumping and subsidies in advanced countries. Therefore African nations need to de-link and adopt trade policies that promote domestic production by protecting themselves. The weak land tenure system and poor support to small holder farmers requires legal reforms to enhance investment into small holders farming and enhance access to land, especially by women.
The absence of support to improve investment by farmers in land fertility, irrigation, seeds, energy, storage facilities and extension services needs new policies to increase investment in agriculture in these areas, including enhancing linkages with agro-industries. Trade unions should focus on agriculture and mobilise masses for reforms in rural and urban areas and across various sectors; they should also expand their alliance building.
The institutionalised extraction of surpluses from producers by MNCS, intermediary merchants, foreign contract farming and dominant agri-business requires the re-configuration of agriculture markets through various forms of support including strengthening domestic actors like small and medium scale farmers, agricultural marketing and services and through trade protection. The underdeveloped agro-industries reflect the weak link between agriculture and this will require protection of markets for industries and investment incentives for domestic producers.
On gender, policies are needed that encourage women to get the finance to invest in agriculture, get the support of the extension services, and access childcare.
There is a role for academics and the TUs to mobilise existing analytical capacities on the continent and to build more capacity to investigate these issues further.
Group 3 on Macroeconomic, Finance and Investment Policy identified the challenges as a monetary policy that focuses only on inflation, a fiscal policy that grants too many concessions to foreign mining companies and other large corporations, and fails to tax appropriately, the weak enforcement of tax laws, excessive discretion in the conduct of monetary policy, investment policy that exclusively focuses on foreign investment to the detriment of local investment, over liberalisation of capital accounts, dominance of global finance capital that saddles countries with huge debt, and a gender bias that limits women’s access to finance.
To deal with these issues, the group proposed tax reforms that remove unnecessary concession for MNCs, less discretion in the conduct of monetary policy and the focus on inflation, the reform of monetary policy making processes to replace inflation targeting with growth targeting and new investment laws that give more incentives for domestic investment. The group proposed that areas for research should include an understanding of the optimal level of inflation, an analysis of the political economy constraints to structural transformation, and of how to devolve power from the centre.
The Group that focused on Employment, livelihoods and social policy identified as challenges the current global architecture that constrain policy space, the footloose nature of global finance capital and the urgent need to regulate the movement of funds, illicit financial flows, reduced policy space due to multitude of international obligations, the concentration of women in the informal sector, the absence of the social protection, and the weak capacity of the state and lack of political will in governments to undertake.
The proposed policies for addressing these challenges include renegotiation of contracts with foreign companies, state policies that generate employment from export of primary products, building agro-processing industries to process agricultural products and generate additional employment, addressing the mismatch between education/training and the needs of industry, and regulating the movements of international capital. Suggested areas of research included the impact of government policy on employment.
The fifth group on Trade unions, workers and political agency discussed what trades unions should do to influence development policy at all four levels of policy making: local, national, regional and continental. The suggestions were to broaden the definitions of work and worker and therefore our constituencies and field of action; to build a bigger, more inclusive, more comprehensive movement; to reframe the issues and language used. This has implications in the area of research – new topics, new sources of data/information. Then there is the need to deepen existing alliances and building new ones (academia, research institutes, civil society organizations, local authorities – traditional governments – students, women’s organisations, human rights organisations, environmental organisations, etc). Further we need to sharpen advocacy, connecting with the streets and finally to extend work to look seriously at social security issues, issues which affect workers more directly.
Then the group asked these questions: how effective have trade unions been in influencing development policy and what factors account for their effectiveness or otherwise? The consensus was that TUs have not been effective. Some reasons for this are the loss of consciousness of what unions must do and their reason for doing these; the loss of independent consciousness, of ideology, and the fragmentation of the labour movement; the influence of neo-liberalism on how TUs think, speak and act, the informalisation of work and workplaces and the reorganisation of capitalist production – more fragmented, more individualised, and more dispersed. To improve effectiveness, TU need to be more creative, proactive, adaptive and innovative. They should adopt new forms of engagement and organisation (e.g. mobile technology) and free themselves from illusions in neo-liberalism.
Answering the question of what areas of trade union work should be strengthened for better effectiveness, the group noted that TUs’ work focuses on education, organisation, negotiation, research, communication, campaigns, advocacy, administration, leadership training and production of cadres. The areas that need strengthening are research and education; using research to train cadres and raise their consciousness; mobilisation of resources – harness what we have; mobilise more by building alliances that will add/bring more resources to the table; using technology to adopt new ways of organisation; and building the capacity for gender-based analysis in research and engagement.
In the general discussion that followed the presentation of the reports, a few issues were highlighted. It was stressed that TUs should focus on crafting a broader social policy with social protection situated in it, which will also help TUs with challenge of membership mobilisation. The issue of pensions as a source of mobilisation for investment featured prominently in the discussions at the meeting and it is important to pursue additional research in this area.
It was noted that TUs should be heavily involved in dealing with MNCs but helping countries deal with the signing of binding unbalanced agreements with these MNCs. Finally, the need for additional investment in data collection and research was also highlighted.
A closing plenary included Yao Graham of TWN-Africa, Akwasi Adu-Amankwah of the ITUC-Africa and Peter Lawrence of ROAPE, reflected on the meeting. Bringing together academics from universities and national and international organisations together with activists from TUs and other bodies with representation from Anglophone and Francophone countries on the continent supported by ‘resource persons’ from around the world, was a major achievement and an important impetus to trades union and other activists in their own countries and regions to collaborate with academics and other intellectual resources, to counteract the neo-liberal hegemony of local ruling classes and global capital. It was equally important that ROAPE was able to support TWN-Africa and ITUC-Africa in this initiative, especially as it was founded to provide a forum for those in Africa who sought to understand and change their social formation so as to fulfill the potential of the continent and its people through the very structural transformation that was the subject of the Accra meeting.
The account of the presentations is based on notes and the PowerPoint presentations of the speakers (for full details on the panels, presentations and PowerPoint slides please visit Third World Network). Our thanks to Patrick Opoku Asuming and Prince Baah Takyi of the University of Ghana, for their report on the meeting which enabled us to include accounts of other presentations, comments of the discussants and last but not least, contributions from the floor.
Peter Lawrence is Emeritus Professor at the Faculty of Humanities and Social Sciences at Keele University and has taught in Tanzania, Uganda, and Canada and spent periods of research in Tanzania, Hungary, Spain and India. He is a founding member of ROAPE.
Yao Graham is the coordinator of Third World Network in Ghana and a member of ROAPE. He has worked for years on questions of African and international development and processes. He holds a PhD in Law from Warwick University, Coventry, UK.