Source: CNBC AFRICA
It is not a coincidence that philosophy was one of the five foundational fields of discipline—the others being divinity, history, medicine, economics, and law—key to the rise of Harvard University when that prestigious academic institution was established in 1636 and later accelerated structural transformation in the US.
By fostering the discovery of truth and the practice of that which is good for society, philosophy is the most important vector of personal development and can illuminate the path toward more cohesive and prosperous societies. Philosophy is the intellectual foundation of development par excellence; philosophy is also development at its best. To quote Victor Hugo, “Philosophy should be an energy; it should find its aim and its effect in the amelioration of mankind.”
Insufficient emphasis on philosophy and intellectual leadership that enhances the foundation of collective consciousness, strengthening the sense of nation-state and identity for convergence and unity of action in Africa, has caused policymaking across the region to be reduced to managing balance of payments crises, aggravated by the colonial development model of resource extraction, far removed from the desired projection into the future shaped by Africa’s history and foundational roots.
The consequences of that benign neglect, which has led to a one-dimensional approach to policymaking, have been significant. Unemployment rates have been at Great Depression-era levels across the region—over 30% in Nigeria and South Africa, the continent’s two largest economies. And in a region where three million new jobs are created annually, far below the 18 million needed to absorb new entries into the labour market every year, poverty has become widespread.
Yet when the colonial era in Africa first came to an end, the continent accounted for less than 15% of the world’s poor in 1970. Poverty was largely an Asian problem—with East and South Asia accounting for 80% of the world’s poor in 1970.
So widespread was Asia’s poverty that Gunnar Myrdal, the 1974 Nobel Laureate in Economics, predicted in his best-selling book, Asian Drama: An Inquiry into the Poverty of Nations, that Africa would have a brighter future than overpopulated Asia.
But unlike Africa, which went through a long cultural holocaust that dramatically shook its ideological and philosophical foundation, Asia largely preserved its philosophical and cultural heritage, as well as reflexive thinking. This strengthened the region’s agency and created favorable conditions for resurgence in the post-colonial world.
In the 21st century, Asian corporations and entrepreneurs have become the agents of an economic miracle, bridging cultural discontinuity, transforming Asian societies, strengthening national ownership of the development process for the benefit of Asian societies, and enhancing the reintegration of Asia into the world as a globally competitive force.
Bolstered by the resilience of its philosophical foundation, poverty is no longer largely an Asian problem; it has become an African problem. By the turn of the century, 75% of the world’s poor lived in Africa. The most recent estimates are probably higher, with the region home to 60% of the world’s extreme poor (those living on living on less than $2.15 per person per day), a share six times higher than was recorded 1990, despite accounting for only around 18% of the global population.
Unlike Asia, where corporations and businesses have had the dual mandate of meeting domestic demand and bolstering the reserve base through a successful export-diversification model in a symbiotic relationship between the state and corporations, industry in Africa has largely been dictated by the colonial development imperative of resource extraction.
Considering corporations and nation-states across Africa, the first questions to pose are: Who are we working for? And what is the philosophy that drives our collective action and binds us together? Thereafter, we must examine the type of business and development model that the continent needs at this critical juncture to transform its collective conscience and catalyze an African renaissance.
The simple answer is that such a business model will have to be first and foremost highly reflexive and integrative, as well as fully grounded in historical and philosophical realities and shaped by African aspirations. Only in that way can Africa’s business model be sustainable and find success in resolving the debilitating development paradox, wherein the world’s most resource-rich continent has been made to believe that it is the poorest.
Overview of business and society in pre-colonial Africa
In our modern world of globalization, where companies have a near monopoly of producing the goods and services that permit social development and welfare improvement, businesses and corporations have become even more important. They are the cornerstone of prosperity and sustainable development. Multinational corporations have become the vectors of global power projection and pre-eminence for the most successful societies and nations.
Reflecting on the interaction between business and society in Africa, a good starting point is perhaps to approach it from a historical perspective, going as far back as possible, including the pre-colonial era when Africa was the center of the world, with most scholars and business leaders coming to the continent for knowledge.
The continent was more generous and altruistic in the deployment of its knowledge and technology when African businesses and entrepreneurs were among the most successful in the world, illustrated by the extent to which their creations have stood the test of time.
These of course include the pyramids in Egypt and Sudan and the Benin Bronzes, which are scattered around European and American Museums, including Harvard’s Peabody Museum, and the ancient Obelisk of Axum that was returned to Ethiopia by Italy in 2005 nearly 70 years after it was looted.
Africa’s advances in medicine and agriculture were also significant, with one of the most illustrative examples of the latter exhibited in Washington DC’s National Museum of African American History and Culture—how rice accompanied African slaves during the Middle Passage to the New World including Brazil, the Caribbean, and the US. The success achieved by Africa then was the result of the innovation and creativity of African scientists, entrepreneurs, and businesses, all united by the same philosophy and collective drive for excellence.
These entrepreneurs and scientists, inspired by African philosophers, saw themselves first and foremost as problem solvers, as agents producing the artworks, goods, and services needed to improve the lives of their fellow citizens.
In that period of history, African businesses enjoyed a strong sense of agency. They created tangible benefits in the form of goods consumed by citizens and the state, as well as intangible benefits that elevated African nations to the global stage. Acting in harmony with social norms and ideology, businesses played a key role in the process of development in pre-colonial Africa, with the symbiotic relationship between business, society, and the state acting as a major catalyst of social transformation and global radiance.
That is not the case today for the sundry multinational companies operating throughout Africa, most of which have polluted their way to prosperity and left in their wake a sea of economic and environmental poverty.
Business and Society in Colonial Africa and the Stickiness of the Colonial Development Model of Resource Extraction in the Post-Colonial World
The slave trade and colonial institutions dramatically altered the symbiotic relationship between the state, society, and industry that provided the basis for harmonious growth in pre-colonial Africa, with significant intergenerational consequences at several levels, including philosophical and spiritual, institutional, and economic. In particular, the violation of Africa’s collective imagination and cultural heritage made it possible to destroy African institutions, creating a cultural discontinuity that has only intensified the debilitating effects of alienation over time.
More than any other region of the world, political and economic management in Africa has been underpinned by a highly extroverted model of institutional governance, by institutional models that are largely alien.
The colonial development model of resource extraction has exposed Africa to recurrent adverse commodity terms of trade shocks. These shocks have driven external liabilities and set the region on a never-ending cycle of external debt crises. After the Heavily Indebted Poor Countries (HIPC) initiative, the developing world is going through another cycle of debt crisis, with a growing number of countries (most of them in Africa) either at risk of or already in debt distress. Even though Africa accounts for less than 2% of global sovereign debt, the first set of countries to have defaulted on their external debt are all African (Chad, Ethiopia, Ghana, and Zambia).
In the absence of manufacturing industries—colonies were forbidden to establish industries under the colonial development model of resource extraction—Africa’s share of global trade has been decreasing even as its share of the world’s population continues to rise. It has fallen from around 5% in the 1960s to less than 3%, accelerated by the emergence of a new world where trade is largely driven by intermediate and manufactured goods with increasing technological content.
In addition to undermining the growth of African trade, the power of multinational companies, which are exploiting natural resources throughout Africa under the colonial development model of resource extraction, has created a disconnect between industry and society, adding environmental and security risks and other negative externalities to the deteriorating welfare equation.
Multinational companies operating in Africa are accountable to their stakeholders in their home countries and have maximized values for these stakeholders at Africa’s expense. They are not accountable to Africa, where their environmental crimes have systematically gone unpunished. While in their home countries, they are expected to adhere to both ‘corporate responsibility’ and ‘corporate social responsibility’, in Africa, the latter is the only requirement.
Even meeting that minimum requirement—“corporate social responsibility”—has been a problem, considering the negative externalities of decades of oil exploration in Nigeria and the Marikana massacre in South Africa, to name just two illustrative case studies. In Nigeria, oil exploitation by major oil companies (Shell, Chevron, and ENI) has generated huge value for their stakeholders and environmental disaster for the source country, turning the Niger Delta into one of the most polluted regions on the planet.
Corporate irresponsibility is pervasive and systemic across Africa, and its economic, social, and environmental costs have been wide-ranging. According to the European Space Agency, Lake Chad, once the major source of nourishment for the local population, has shrunk by around 90% since the 1960s, a consequence of accelerated deforestation and escalating climate change.
But the real challenge going forward is the stickiness of the debilitating colonial development model of resource extraction, which has persisted long after African countries won their independence. According to the latest State of Commodity Dependence report, published by the United Nations Conference on Trade and Development, more than 80% of African countries remain dependent on primary commodities.
The colonial development model has also persisted amid shifting geographical patterns of African trade eastward, characterized by the rise of Asia. Primary commodities and natural resources dominate China-Africa trade, comprising almost 90% of total African exports to China between 2000 and 2022.
This stickiness of the colonial development model amid shifting geographical patterns of trade raises serious challenges in the quest for a more prosperous and climate-resilient future for Africa. Over the years these challenges have been magnified by the absence of a superstructure that is necessary to level the philosophical and ideological playing field and enhance the emergence of Africans’ collective imagination.
Considering these legacy historical risks, which have been exacerbated by the exponential growth in demand for African resources, what would be the optimal relationship between industry and society to help foster a prosperous Africa in the 21st century and beyond?
Towards a Self-Actualizing Business Model for a Prosperous Future in Africa
Despite consistently strong GDP figures, Africa’s share of global trade and wealth has been decreasing steadily. In pursuit of economic security in Europe, more and more young Africans are dying in the Mediterranean, a consequence of the expanding chasm between growth estimates and actual welfare under the rent-seeking and colonial development model of resource extraction.
What does a developed and prosperous Africa look like in the collective imagination of Africans? What role will education play? And what type of education does Africa need at this critical juncture? Reconnecting with history and bridging the philosophical and cultural discontinuity between Africa’s past and present is fundamental to closing the gap between actual output and potential and setting the region on the path to lasting prosperity.
Interestingly, those most able to help bridge that discontinuity are African philosophers—those unabashedly committed to Afrocentric traditions—who will help in the production at scale of consequential leaders guided by a unified African ideology and philosophy in the political, military, corporate, and scientific worlds. The new political class will consistently strive to deploy Africa’s resources optimally and invest in a development model that delivers the continent’s own vision of success.
What sort of instruments and tactics should be adopted along that path?
1. In the immediate short term, strengthening the capacity of African states to hold multinational companies accountable and responsible, and leveraging the region’s huge resource endowment to strengthen African nations’ bargaining power is key.
2. Strengthening the partnership between African states and domestic industry is extremely important, irrespective of underpinning ideology. Businesses are the primary actors in the creation of wealth and are essential to building a desirable future.
3. Investing heavily in human capital and fostering interdisciplinarity in the promotion of scientific excellence. Human capital is the most important of all forms of capital—the one needed to build and maintain state-of-the-art digital and physical infrastructures, to successfully drive commodity-based industrialization, and to generate both tangible and intangible benefits to African societies and countries.
4. Creating the right conditions for the emergence of globally competitive African multinational companies that are primarily accountable to African stakeholders. This will help Africa to move away from the debilitating colonial development model of resource extraction and establish robust regional value chains (RVCs). This, in turn, will drive industrialization and accelerate the process of regional integration, mitigating risks associated with excessive dependency on imports.
The way the world responded to the Aids and COVID-19 crises—with global pharmaceutical companies more concerned about protecting their patents to reap huge profits than preserving African lives—should compel African leaders to support domestic businesses that will prioritize African lives in a new relationship between state and industry.
The African Continental Free Trade Area (AfCFTA) offers one means through which to capitalize on economies of scale to transcend the colonial development model of resource extraction and accelerate the development of RVCs and industrialization to boost extra- and intra-African trade, both of which remain very low.
Underpinning the AfCFTA are the rules of origin, which could act as a major catalyst for the rise of globally competitive African corporations and the growth of African trade. Preliminary estimates show that intra-African exports would increase by more than 81%, led by manufactured goods, especially if the implementation of the AfCFTA is accompanied by robust trade facilitation measures, understandable in a region where the consequences of non-tariff barriers—equivalent to an import tariff of 18%—have been just as costly for trade and endogenous growth as market fragmentation.
This rebalancing of African trade will further enhance the region’s resilience to global volatility and negative shocks. It will also strengthen the foundation of macroeconomic stability, setting Africa on a long-term path toward fiscal and debt sustainability.
5. The process of regional integration is critical and should be deepened by the re-emergence of an Afrocentric philosophy and ideology that levels the consciousness playing field and collective imagination to accelerate convergence. However, successfully changing Africa’s development paradigm—which has dominated state-business relations in the region, and more importantly, its engagement with the rest of the world—will require Africa to speak with one voice.
Working together, African nations can further leverage their political influence and economies of scale in a world where shifting geopolitical tectonic plates present risks but also huge opportunities for the continent.
The way forward
The stickiness of the colonial development of resource extraction, which remains the dominant force despite having failed to generate regional prosperity and, worse, exacerbated environmental crises, is a reflection of the state of alienation in Africa.
In his groundbreaking book Decolonizing the Mind, Ngũgĩ wa Thiong’o forewarned Africans, presciently pointing out that political decolonization will prove much easier than mental decolonization. More than six decades after Africa’s wave of independence, decolonizing citizens’ minds remains one of the most important intergenerational challenges facing the region.
Bolstering the process of social and ethical transformation, and supporting ongoing efforts to bridge cultural discontinuity to strengthen the collective imagination, shaping the minds that will transform contemporary African life is fundamental at this critical juncture. The education system must be reformed to meet these new development challenges.
Ensuring that individuals, corporations, and states collectively transcend centuries of systemic and entrenched alienation for the emergence of a new collective imagination that strengthens agency and fosters convergence for the emergence of a development vision that is authentically African remains one of the greatest challenges of our time. Decolonizing the minds to transcend the colonial development model of resource extraction is not only possible—it is the only option remaining in Africa after centuries in the wilderness.
To quote John Maynard Keynes, “The difficulty lies, not in the new ideas, but in escaping the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.”
Hippolyte Fofack, a former chief economist and director of research at the African Export-Import Bank, is a research associate at the Harvard University Center for African Studies, a distinguished fellow at the Global Federation of Competitiveness Councils, and a fellow at the African Academy of Sciences.
THE AUTHOR: Dr. Hippolyte Fofack, former Chief Economist and Director of Research at the African Export-Import Bank Contributor
