Stiglitz urges coordinated strategy for Africa’s economic success

The Babacar Ndiaye Lecture Series, an international series introduced by the African Export-Import Bank (Afreximbank), debuted in Washington D.C. recently with Nobel Laureate Joseph Stiglitz asking that African countries to adopt a coordinated strategy that encompasses the agriculture, manufacturing, mining, and service sectors in order to attain the same success delivered by the old manufacturing export-led strategy.

Afreximbank launched the Babacar Ndiaye Lecture series to honour the late Dr. Babacar Ndiaye, President of the African Development Bank (AfDB) from 1985 to 1995, for his many important contributions to Africa’s economic development – in particular, his critical role in the creation of Afreximbank.

In addition to helping the AfDB to earn triple ‘A’ status, Dr. Ndiaye, who died in July 2017, was also behind the creation of several other continental institutions – including Shelter Afrique and the African Business Roundtable – and is credited with fostering the emergence of many young entrepreneurs who are helping to build Africa today.

In a wide-ranging presentation titled ‘From Manufacturing-Led Export Growth to a 21st Century Inclusive Growth Strategy for Africa’ at the Inaugural Babacar Ndiaye Lecture, Prof. Stiglitz – an economist and professor at Columbia University, New York, argued that while export-led growth was the basis for success of growth over the past half-century, the factors that enabled manufacturing to provide that growth-spurt will not be able to do so to the same extent in the future.

Another strategy that performs some of the essential roles that manufacturing export-led development did is therefore necessary, he said.

“Successful development policy will need to be explicitly more multi-pronged, addressing the separate ‘challenges’ that the manufacturing sector addressed simultaneously,” said Prof. Stiglitz.

According to him, governments will need to play an important role in the new structural transformation toward a modern economy. That economy will not, in general, be a manufacturing economy but a modern services economy, he noted – saying that in the next phase of Africa’s development, modern agriculture will be vital.

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Prof. Stiglitz highlighted the need for a robust agricultural sector to provide full employment, including by stimulating manufacturing and services; and said that countries should seek to add a learning dimension to agriculture and other sectors.

Modern agriculture can be very ‘advanced’ he noted, saying that there should be focus on non-labour-saving innovations, including better crop-mix and better fertilisers.

The focus on ‘learning’ should emphasise developing skills that are useful in a modern economy, and there should be a transformation of farming from traditional practices to modern farming.

Earlier, Dr. Benedict Oramah, President of Afreximbank, said that the Lecture Series is being launched to “recognise and immortalise the exceptional contributions of Dr. Babacar Ndiaye to Africa and, indeed, mankind.

“Dr. Babacar Ndiaye was a visionary, consummate leader, and a great institution builder who served the continent of Africa in an exemplary way throughout his well-documented and celebrated career,” said Dr. Oramah, who noted that he engineered a massive transformation of the AfDB and financial landscape of the continent. He strategically used the AfDB’s platform and convening power to address some of the key constraints to economic development facing the African continent, emerging as a prodigious builder of development finance institutions across the continent.

Dr. Oramah extolled Dr. Ndiaye’s vision in championing the creation of Afreximbank, and wondered what would have been the course of Africa today if the Bank had not been created.

“Which international bank would have been there to support the continent in the past two years of severe commodity crisis if Afreximbank was not there to disburse over US$9billion to certain banks and central banks? Which international bank would have ignored high compliance cost to be there for African economies that had lost correspondent banking relationships? How would Africa today be dreaming of expanding intra-African trade and export-manufacturing without an Afreximbank?” he asked.

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Dr. Oramah noted that since inception, Afreximbank had disbursed about US$50billion in support of African trade; attracted about US$60billion into strategic sectors of the African economy; expanded the continent’s industrial capacities through the financing of value addition across several industries, including cocoa, coffee, cotton and tea as well as a number of metals and minerals; and facilitated the development of critical trade and industrial infrastructure, among others.

In a goodwill message, Charles Boamah, Senior Vice President at the AfDB, commended Afreximbank for the initiative to honour Dr. Ndiaye and said that the former AfDB President charted a clear path to Africa’s economic development.

The AfDB has also honoured Dr. Ndiaye by holding a special memorial event in his honour, and by naming a major auditorium after him, added Mr. Boanah.

Also speaking, Dr. Donald Kaberuka – a former President of the AfDB, said Dr. Ndiaye’s defining characteristics included his deep belief in Africa and a conviction that Africa could achieve development through trade and investment rather than through aid.

He rejected artificial divisions imposed on Africa, instead preferring to see the continent as one unit and believing that Africa would develop best through continental integration, said Dr. Kaberuka.

The event attracted leaders of African and global banks, development finance institutions, the business community and political leaders attending the World Bank–IMF Annual Meetings, members of the diplomatic community, policymakers, academicians, African and non-African ministers of finance, economy and development, central bank governors, and CEOs of global and African corporates.

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