Africa … Next China?
Celebrations are in order on the poorest continent. Never in the half-century since it won independence from the colonial powers has Africa been in such good shape. Its economy is flourishing. Most countries are at peace. Ever fewer children bear arms and record numbers go to school. Mobile phones are as ubiquitous as they are in India and, in the worst-affected countries, HIV infections have fallen by up to three-quarters. Life expectancy rose by a tenth in the past decade and foreign direct investment has tripled. Consumer spending will almost double in the next ten years; the number of countries with average incomes above $1,000 per person a year will grow from less than half of Africa's 55 states to three-quarters. − The Economist
Dominant Social Theme: This is one helluva continent. It has incredible promise and capitalism is going to save it.
Free-Market Analysis: We've written about this emerging trend before but it is such a startling one and contains such great import that it is worth noting again, and perhaps on a regular basis. This Economist article from our point of view is no accident. It conforms to other similar articles that are making the same point regularly.
Africa is a chosen continent. It has been chosen much as Japan and then China were chosen, to be the recipient of US debt and dollars. Much as the Japanese and Chinese governments agreed to buy US debt in return for US consumer purchases, so it seems to be Africa's turn.
We know this not from any announcement – for these things are never announced – but this is the way the world works in the modern era. The US has a debt problem; its government spends too much money and its domestic tax base is not big enough to support its larger globalist presence both from a governmental and military standpoint. Enter a third party …
Enter several of them, in fact, including Japan and China. The deal is struck and the currency flows. First the country buys up US debt and then US consumers buy up the country's products. The US gets funded and the country gets a huge dollar flow that can be used to build infrastructure, raise living standards and generally modernize. Here's more:
Africans deserve the credit. Western aid agencies, Chinese mining companies and UN peacekeepers have done their bit, but the continent's main saviours are its own people. They are embracing modern technology, voting in ever more elections and pressing their leaders to do better. A sense of hope abounds.
Africans rightly take pride in conferences packed with Western bankers keen to invest in their capital markets (see article). Within the next few months MasterCard will have issued South Africans with 10m debit cards. Even the continent's politicians are doing a bit better, especially in economic management and striking peace deals.
Average GDP growth is humming along, at about 6%. Governance is improving: our correspondent visited 23 countries to research this week's special report and was not once asked for a bribe − inconceivable only ten years ago.
The diminishment of corruption may be accurate, as the article points out, along with a "sense of hope" and better leaders. But if you look at the underlying trend it is fairly clear that what is being presented as progress is also the result of a deliberate policy.
Japan was portrayed in the Western press as an industrial phenomenon in the 1980s – and China like Africa was said to have modernized in the 1990s and thus its emergence as a world-class industrial power was no accident. Now Africa is seen to be on the same course.
We would submit that is the result of policies that emanate from the very top and have as much to do with supporting US debt and the dollar reserve currency as with any sudden surge of African industrial maturity.
There are many signs of what is to come for Africa. These range from the wars that are now convulsing the continent to the signs of emergent African Union that will be important if Africa is to fulfill its role in the coming years and decades. The idea will be to treat Africa as one emergent industrial corpus that is to be developed throughout in a uniform way.
For those who observe the above and grant its relevance, Africa will hold out much investment promise as US policy makers and industrialists get to work seeding Africa with infrastructure, factories and business-oriented urban developments. It is likely that countries like Kenya and perhaps South Africa (if it remains stable) are the proverbial "ground zero" for the next stage of Western debt/consumer swaps.
When it comes to Africa, the proof will emerge – or not – over the next few years. But if articles like this one in The Economist continue to emerge, then it we would suggest Africa is definitely in line to receive the kind of treatment that was put in place in Japan and then China.
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