After seeing the disarray among Western economies at the International Monetary Fund (IMF) and World Bank meetings in Tokyo, African officials may have recalled the advice coined by Rahm Emanuel, President Barack Obama’s former chief of staff: “You don’t ever want a crisis to go to waste.”
The idea is that bad times allow governments to make radical policy changes as they can catch vested interests off guard. For Africa, this could be the time to invest massively in local manufacturing and services, then consign the old trading post economies to history.
Emanuel was speaking at the height of the 2008 global financial crisis, but his adage may be more relevant still for Africa in 2012 as its trading partners in the West struggle with a double-dip recession. Even if the United States recovery continues apace, European economies look set to stay in the anaemic zone for several years.
That further increases the importance of Asia’s economic resilience for Africa. Yet there are clear limits too: Asia’s demand for export commodities depends critically on the West’s demand for the manufactures. That commercial chain reaction could stymie the better economic story in Africa.
Yet there are signs that this division of labour is at last beginning to break up. Asian markets are growing in size, muscle and independence. The big economies in East and South Asia have launched ambitious fiscal stimulus programmes and are cautiously switching resources from savings to consumption.
Also good on the African ground is the drive to use much of the continent’s oil and gas resources to run new power stations. Almost all the latest generation of energy producers – Ghana, Tanzania, Uganda and Mozambique – are calling on contractors and banks to find ways to finance and build electricity generation and transmission projects. Using its access to the Nile waters, Ethiopia is leading the way: with its 6,000MW Renaissance dam project, it will export electricity across the region.