This week, Project Syndicate catches up with Brahima Coulibaly, a senior fellow and Vice President of Global Economy and Development at the Brookings Institution.
Project Syndicate: Last year, Ngozi Okonjo-Iweala and you described an agenda for making globalization more inclusive. You argued that African policymakers, for their part, should accelerate regional integration, overcome skills mismatches, bridge gaps digital infrastructure, and create a mechanism to manage the ownership and regulation of online data. How do you rate progress in these areas over the last year? As the COVID-19 crisis deepens suspicion of globalization in many parts of the world, how might this agenda – or strategies for advancing it – need to change?
BC: In recent decades, Africa’s share of world poverty has grown, highlighting an undeniable truth: the continent has been short-changed by globalization. The agenda we laid out aims to change this through medium- to long-term action shaped by increased awareness of the dynamics at work and sound policies. Over the last year or so, I have seen a greater recognition in African policy discussions of the importance of developing digital skills and infrastructure, and accelerating integration, in line with our recommendations.
The COVID-19 crisis could accelerate progress on both fronts. First, it has underscored the critical role of digital infrastructure in supporting resiliency. Second, it could bring about a reconfiguration of global supply chains aimed at reducing vulnerability. While that may include some reshoring of production, it could also focus on geographic diversification, which would create valuable opportunities for Africa to expand its footprint in global value chains – and reap more rewards from globalization.
PS: In a more recent PS commentary, with Okonjo-Iweala and other signatories, you emphasize the need, during the COVID-19 crisis, for African governments to help preserve private-sector jobs, bolster social safety nets, and “protect vulnerable populations.” What form should such protection take? With the United Nations predicting that the pandemic could push over 34 million people – more than half of them in Africa – into extreme poverty, should there be a place in governments’ fiscal-stimulus plans for, say, direct payments to residents?
Brahima Coulibaly: Mitigating the rise in poverty in Africa will require governments to bolster social safety nets and implement policies that help to preserve jobs. Direct payments are certainly one effective mechanism for strengthening social protection. In fact, several African countries, including Togo and Côte d’Ivoire, have already adopted this approach.
The key constraint here has been fiscal space – African countries simply don’t have enough of it. That is why it is so important to mobilize sufficient financial resources to these countries, including through the debt relief we call for in our piece.
PS: To free up the resources for such measures, you advocate a two-year moratorium on external-debt repayments, arguing that during this standstill, the International Monetary Fund and the World Bank should undertake “a comprehensive debt-sustainability assessment and consider further debt restructuring, where appropriate, to preserve or restore debt sustainability.” Beyond responding to the immediate imperatives of the pandemic, how might African countries translate international support during the crisis, especially a debt moratorium, into progress toward more sustainable finances in the longer term?
BC: The debt moratorium’s primary objective is to free up fiscal space, which countries can use to fight COVID-19 and limit the pandemic’s human and economic consequences. But it can also leave countries better off. The key is to design international support and domestic policies with an eye toward supporting economic diversification and broadening domestic revenues, which remain the most sustainable form of development financing.
PS: In 2017, you rejected the notion that Africa’s economic heyday was over, noting that many African countries had made “vast improvements to macroeconomic management, governance, and the business environment,” and entrepreneurship was on the rise. To what extent does the pandemic change this outlook?
BC: At that time, skepticism about the “Africa rising” narrative was growing, because the region had been hit hard by the 2014-15 commodity price shock. But, then as now, the continent’s economic success in the previous 1-2 decades had not been driven by commodity prices alone; several other factors, including the ones you highlight, also contributed.
The COVID-19 crisis is dealing a severe blow to economies all over the world. That includes Africa, which is expected to chalk up its worst economic indicators in almost three decades. Yet Africa’s economic contraction will still be smaller than that of every other region except developing Asia. If adequate resources are deployed swiftly, I am confident that Africa will emerge from this crisis with renewed economic dynamism.
BY THE WAY. . .
PS: Some predict that the COVID-19 crisis will accelerate investment in automation. That sounds like bad news for Africa, with its massive and rapidly growing cohort of young people and hopes to develop enough manufacturing jobs to employ them. How worried should African policymakers be?
BC: Achieving sustained, large-scale creation of productive jobs is vital to deliver opportunities to young people and drive Africa’s structural transformation, so creating them must remain at the top of African policy agendas. Policymakers should, of course, be paying attention to any developments that could complicate these efforts. That includes automation.
Whether the pandemic will accelerate investment in automation remains to be seen. But even if it does, there are solutions. Our research at the Africa Growth Initiative at Brookings suggests that large-scale job creation and structural transformation can be achieved by developing “industries without smokestacks” – sectors that have a lot in common with manufacturing, but are less exposed to automation.
Subscribe to Project Syndicate
Enjoy unlimited access to the ideas and opinions of the world's leading thinkers, including weekly long reads, book reviews, and interviews; The Year Ahead annual print magazine; the complete PS archive; and more – all for less than $2 a week.
PS: Assuming African countries do not receive sufficient international support to deal with the pandemic and its economic fallout, what is their best-case scenario, and how can they achieve it?
BC: The international support African has received so far, while significant, does not match the scale of the challenge ahead. If this does not change, I fear that even the “best-case scenario” will be bad.
Unless every country in the world wins the fight against COVID-19, nobody will – at least not for long. Without adequate resources, therefore, the health crisis will persist and the economic costs will continue to mount. Countries will face severe development setbacks, and poverty will rise sharply. Though every country will suffer, the share of the world’s poor living in Africa is likely to rise further. All of this will make achieving the Sustainable Development Goals much more difficult – and expensive.
PS: Which sectors currently have the greatest growth potential in Africa, and how can governments tap it?
BC: Africa is still in the early phases of its economic-development journey, and a young, fast-growing population. These two characteristics generate tremendous opportunities in many sectors, including infrastructure, technology, health care, housing, food and beverages, manufacturing, and agro-processing.
Of course, not all countries have the same endowments or comparative advantages, so each must focus on sectors that play to its strengths, while improving governance and the business climate, and investing in enabling infrastructure, particularly digital and power-delivery. Countries can take advantage of regional integration to scale up.
PS: Aside from the coronavirus, what are the biggest obstacles to growth facing the continent?
BC: The biggest obstacle to development for Africa has not been weak growth. On the contrary, regional GDP growth has been solid over the last two decades, with one-third of the continent’s economies growing by 5% or more annually. The problem is that this growth has been largely jobless. The solution is for policymakers to foster higher-productivity, labor-intensive sectors. Countries that depend on commodity (notably oil) exports will also need to diversify their economies, in order to bolster resilience.
We ask all our Say More contributors to tell our readers about a few books that have impressed them recently. Here are Coulibaly's picks:
by Kai-Fu Lee
Artificial Intelligence will be the most consequential technology of the twenty-first century. Lee – one of the world’s leading experts on the subject – walks the reader through AI’s genesis, evolution, and geopolitics.
by Robert Greene
This book sheds light on what shapes our behavior, whether consciously or not. Obviously, understanding what motivates members of our species – what angers, scares, and reassures them, for example – is extremely helpful in virtually any kind of interaction.
by By Célestin Monga and Justin Yifu Lin
In this compelling book, the former chief economists of the African Development Bank and the World Bank, respectively, challenge development-policy orthodoxy.
From the PS Archive
Coulibaly describes research suggesting that services could sustain the same growth rates as manufacturing, offering African an alternative path to development. Read more.
Coulibaly worries that labor-replacing technologies will derail progress toward sustainable industrialization in Africa. Read more.
Around the web
Coulibaly joins David Dollar, a senior fellow at Brookings, to discuss Africa’s prospects after the COVID-19 crisis – and the need for stronger action to guarantee that countries have the financial resources they need to fight the pandemic. Listen to the podcast.
Coulibaly – together with Okonjo-Iweala, Tidjane Thiam, Donald Kaberuka, Vera Songwe, Strive Masiyiwa, Louise Mushikiwabo, and Trevor Manuel – reiterates his call for stronger action to support African countries. Read the commentary.