The outbreak of the COVID-19 pandemic highlighted the need to reconsider the existing economic model informed by capitalist logic of exploitation and profiteering. In many cases, the desire for profit trumps the consideration of well-being and the environment.
In many African countries, the use of minerals without refining, or adding value contributed to mass poverty. It harms human health and the ability to cope with the outbreak of a COVID-19 pandemic.
What has emerged emphatically from dealing with COVID-19 is the urgent need to think about the well-being of the many, rather than about profits and consumerism. An economy of welfare takes into account the workers, women and other vulnerable groups in society.
Capitalism, which glorifies profit maximization, must make way for social capitalism. It will provide wages for workers and care for the environment will be given higher priority. Failure to reconsider the current model will emphasize poverty and inequality. This in turn will make people vulnerable to global shocks that could stem from future pandemics.
Africa remains more than any region in the world epicenter of poverty. This is while companies are using their resources and political elites are misappropriating their wealth. The COVID-19 pandemic has urgently made it necessary to move away from the economy of exploitation to one of welfare, which puts people first.
The continued entanglement of African countries in the global capital path and the tendency towards large-scale congestion are hampering the ability of many to cope with the pandemic. This reality has led to research that has culminated in the Palgrave Handbook of African Political Economy edited by Samuel Ojo Oloruntoba and Toyin Falola.
The textbook illustrates a lively debate on how the past imports into the present and shapes the political economy of African countries. And it looks at how it can be changed in a way that values lives, not just profit.
The different chapters cover different aspects of the political economy in Africa – in the past and in the present. Conclusions are not the same. But a central argument is the need for structural transformation of economies through value addition to natural resources such as minerals and metals, oil and gas. It also emphasizes the importance of independence, regional integration and a more nuanced involvement with the state.
It must go beyond the creation of the enabling environment for productive enterprises. It must also ensure dissemination in ways that promote inclusive development.
Visit historical ideas
The project enabled a new generation of scholars to revisit the historical ideas of a series of writers. This included Frantz Fanon, Samir Amin, Walter Rodney, Kwame Nkrumah, Thandika Mkandawire, Claude Ake, Bade Onimode and Amilcar Cabral. The scholars explain the problematic way in which Africa was brought into the global circle of power and capitalist economy. It is combined with the thoughts of a younger generation of scholars.
Ndlovu-Gatsheni set out four moments from the global capital.
These are:
- the kidnapping and commodification of black people by slavery,
- the plantation economies where black labor has been exploited,
- colonies where Africans have been reduced to providers of cheap labor, and
- the current neo-colonial moment where Africans are suffering as a result of debt slavery initiated by the current global financial empire, supported by the IMF and other financial institutions.
The COVID-19 pandemic hit an Africa that was already structurally fragile and vulnerable. This is because of its insignificant position within the global capitalist economy. Closing measures have had a severe impact due to the informal nature of the economies of the continent.
Some states have introduced massive stimulus packages to the private sector to revamp their economies hit by the locks.
Nevertheless, the IMF predicts that the African economy will shrink by -3.2% in 2020. Growth is now expected to collapse in many countries, especially in countries that depend on tourism and resources, such as oil and mineral exports. The growth in more diversified economies that do not have resources is expected to a “almost standing still”.
What is going to be done?
COVID-19 exposed the inherent contradictions in the political economy of Africa. The lack of universal basic income in most countries has weakened household income and well-being. As Akinola Adeoye argues in his textbook chapter, the market-oriented reforms imposed on Africa by the Bretton Woods institutions in the 1980s weakened the ability of its states to revalue resources.
For his part, Oloruntoba emphasizes the external and withdrawing nature of economies. This has led to the loss of revenue in the form of illegal financial flows from the continent, affecting the ability of states to mobilize resources.
The management of African economies after Covid-19 must go beyond sporadic interventions and stimulus packages as seen during the pandemic.
It has to go into what Mariana Mazzucato call market formation. This means that the state becomes active in controlling the supply side of the economy (investments) and the demand side (government as buyer) so that benefit citizens.
In other words, the state must go beyond correcting market failures to the formation of motives and behaviors in the market.
The synergy that the state formed during the pandemic with the private sector must be sustained in ways that can lead to massive investment in innovation, job-creating infrastructure and social sectors such as education and health.
The political elite of Africa must also be held accountable by both civil society and the private sector for reducing rents. This will ensure that resources are used judiciously to bridge the gap between rich and poor.
Sabelo Ndlovu-Gatsheni, Professor and Chair of Epistemologies of the Global South, University of Bareuth, Germany, University of South Africa and Samuel Ojo Oloruntoba, Visiting Professor Institute for African Studies, Carleton IUniversity, Carleton University