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[email protected] New York, NY, USA

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THE NEW GAME:
�WILL AFRICA EVER CATCH UP IN A FAST CHANGING GLOBAL ECONOMY?

�New Players.

very so often you hear phrases like � �China rising�, �technology outsourcing�, �new economic powers� etc. These are the issues that characterize the new millennium we live in and the questions that will undoubtedly shape our future.

In the last decade or so, we have seen an emergence of new economic centers of influence in Asia, namely China and India. Fueling speculations on whether the game is over for the US as the dominant economic power. These changes should come as no surprise to any keen observer of geopolitics; painstaking and sustained structural reform has resulted in impressive but consistent double-digit growth rate for China and India, leading to the results we see today. According to former Chairman of General Electric (GE) Jack Welsh, if you thought Japan gave the US a run for its money in the 1980s wait and see what China has in stock. Reports by BBC online already show that China is now utilizing its huge foreign reserve estimated at over $700 billion to scoop up investments abroad. India has remained on the cutting edge of the information technology and gaining grounds daily with outsourcing in all possible spheres ranging from financial services, telecommunication, biotechnology, pharmaceuticals etc.

These are the trends making policy makers in Western countries quake. Even in the low-tech arena, elimination of visa regime in global textile trade this year has resulted in the immediate loss of thousands of jobs in the US, Europe, Africa and the Caribbean.

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�Re-alignment of Forces.
Recent Fortune Magazine article authored by Geoffrey Colvin, predicts a continued loss of every kind of skilled job that could be performed cheaper in a distant location, which apparently means that unless developed countries pioneer novel technologies and uncover new areas of opportunities, the overall quality of life of its citizens would come under intense pressure by the low labor cost in developing countries for the foreseeable future.

Where does all this leave African countries? Most of them will remain in the lowest rung of the food chain for sometime to come because they are still pre-occupied with political infighting, social crises, structural dislocation and a general lack of direction as the world progresses. There is nothing to suggest that these conditions will radically improve overnight, unless policy makers wake up to the new reality and adjust their mindset. Case in point - despite widespread media coverage of malnourished kids and women in Niger, President Mamdou Tandja continues to deny that there is famine.

�Rapid Differentiation.
Despite the common practice of lumping African countries together in the international press, there is currently a rapid polarization in the continent. In my reckoning, countries of sub-Sahara Africa could be categorized into four broad groups:

• Group A - Countries on the path of long-term economic prosperity, thanks to sustained political reform, economic modernization and favorable regulatory environment � South Africa, Botswana, Mauritius, Ghana, Namibia, Senegal, Lesotho.

• Group B - Countries with favorable long-term conditions or prospects for economic transformation, only if fiscal discipline could be instituted, corruption combated, radical market reform and predictable business climate ensured � Kenya, Angola, Nigeria, Mozambique, Uganda, Cameroon, Guinea, Tanzania, Mali, Guinea. Zambia, Malawi, Sao Tome and Principe, Benin, Togo, Equatorial Guinea, Mali, Gambia, Ivory Coast, Burkina Faso, Zambia.

• Group C - Countries with less prospects, where immediate radical domestic economic and socio-political measures are imminent to stem prolonged decline � Liberia, Congo, Sierra Leone, Liberia, Ethiopia, Eritrea, Burundi, Rwanda, Madagascar, Djibouti, Mauritania.

• Group D - Countries with bleak possibilities, where international intervention is most needed to ameliorate social unrest/ armed conflict, address hunger/famine, disease, abject poverty and serious economic ailments capable of totally destabilizing the countries/region. � Sudan, Somalia, Sudan, Niger, Swaziland, Zimbabwe.

African countries in large part will not find their feet and gain competitive advantage if they are unable to understand this change process and adapt quickly. The most backward countries will continue to be confronted with serious quagmire such that not even the abundance of natural and human resources would be enough to guarantee their future. No amount of debt relief or foreign aid would easily rectify this imbalance for Africa. Already, empirical evidence suggest that with Africa as primary suppliers of raw materials fraught with unstable price mechanism, China and other exporting countries are hungry for natural resources at any cost, which is converted into higher prices for finished products in the world market.

�Re-Invent or Perish.
China possesses the capacity to out-produce African countries in practically any basic commodity, not even African Growth And Opportunities (AGOA) Act is softening the blow on Africa�s textile industry. However as China moves up-market, it is possible that African countries can fill a vital void, if they could determine their comparative advantage. Increased focused on value-added goods and services for local/regional markets potentially could help unleash economies of scale, sustain domestic production and improve living standard. Better performing countries should assume commanding heights in propping up their less privileged neighbors in Africa.

Some optimists call Africa the last frontier. That might well come to pass. The good news is that with preponderance of technology, it is possible for African countries to leapfrog into the future. As much as mobile telephony now dominates in the continent, Internet use will continuously bridge the digital divide and curb information asymmetry. With the right infrastructure in place, it�s even feasible that some African countries will become the technology outsourcing centers of the future as Ghana and Mauritius are proving.

The world has changed dramatically in the last 10 years, but the transformation that portends over the next decade and beyond is impossible to imagine according to Larry Summers, President of Harvard University, during a recent speech to Harvard Alumni Association. African bureaucrats have in the past been asleep behind the wheels. In the best-case assessment, it is expected that the current events will awaken their consciousness and jolt reforms in the region. Otherwise things could really get messy for Africa in a fast changing world, before it gets better � if ever in our lifetime.

Chamberlain is the Founder & President of New Era Capital Corp. and MyCompleteFinance.com, a New York based financial services group. He was previously a Financial Advisor in the Global Private Client Group, of Merrill Lynch.