By Fekadu Bekele (Ph D)
March 7, 2023
The pandemic and ecological disasters on the African continent are exacerbating the widening employment crisis since 2000. Every year, up to twenty million people will try to enter the labor market. The vast majority of Africans will not find formal employment opportunities with work contracts, social insurance schemes and opportunities for advancement. Public administrations, large domestic and foreign companies create only seven percent of all jobs. Even the better educated find it difficult to find employment. In many countries, unemployment among academics is very high, for example in Tunisia with about 30 per cent. The chance of becoming unemployed even increases with the length of education, a consequence of inadequate vocational training and a lack of demand for labor by companies. Almost 70 per cent of the population are informally and precariously employed and about 60 per cent belong to the group of poor and extremely poor workers. Informal workers are mainly young men and female.
As is well known, the African employment crisis is an expression of the economic policies of the last 6 decades. The employment crisis is also a reflection of the political and governmental systems that prevail in many African countries. Since independence, no reforms have been undertaken in most African countries to build the African society on secure foundations. The political system as an expression of the existing state structures could not react flexibly to ever-changing situations. In many African societies, the political systems and the state structures were and are understood as private property of a certain elite. The state apparatus serves as organs of repression instead of creating favorable situations for creative activities that promote accumulation and industrialization. Most African governments do not know how to organize the economic system so that small and medium size industries could slowly develop and become the backbone of the entire economic activity. Therefore, African governments are unable to create framework conditions for political, economic and social developments.
The political, military and economic situations created after the Second World War have no emancipatory effects on African states. Integration into the world economy and into the international political structures have created a kind of structural violence that undermine the democratization of the African societies and the state structures in general. The African rulers could not therefore think and act autonomously. They are virtually controlled from the outside through various mechanisms. It is therefore no longer possible to formulate an independent economic policy with which to organize the economy that is based on vast division of labor, science and technology. Without an economic system that is based on the division of labor, science and technology, it is no longer possible to develop a strong internal market. Employment opportunities could only be created when a well-organized and transparent internal market exists. As a matter of fact, the economic policies of all African societies are not endogenous, but imported from abroad. There is only a marginal understanding of economic theory and policy. As a matter of fact, one cannot formulate any kind of economic policy without a profound knowledge of economic theory. In most African societies, there is little or no debate about the right economic policy that can promote real economic development. The economic policies imported from abroad and recommended by the IMF and the World Bank, so-called international experts, are not able to create new impulses for economic and social developments. In reality the IMF and the World Bank policies are not economic policies, because they could not as such reflect the social and political realities that do exist in each individual African country. The IMF and the World Bank economic policies are therefore mere ideological in nature rather than solving human misery. Therefore, such an economic policy that is mere ideology in its character cannot solve the existing economic and social problems. Instead, the economic policy instruments that are imported from abroad distort the social structures. Instead of developing an entrepreneurial spirit, a comprador bourgeoisie is created that specializes purely in trade activities. We know today that taking part into international trade cannot transform societies. Social transformation can only take place through production activities based on the division of labor, scientific researches and technological developments.
After political independence, advised by international experts, especially by the IMF and the World Bank, many African countries had to introduce the so-called import substitution industrialization. The main purpose of such an industrialization model is to meet the consumption needs of the growing middle class, that lives mainly in the big cities. Food products and beverages that used to be imported from abroad should be produced in every African country. Spaghetti, sugar, cigarettes, drinks like Coca-Cola, clothes, especially shirts, and even shoes are now to be produced in many African countries. This model is called Growth-Pole Model. However, such an industrialization model based purely on the production of consumer goods is not suitable to lay the ground for a systematic industrialization that can grow organically. Since the model is not based on the production of machines, it is no more possible to design and produce new industries that could produce various products. Therefore, the so-called trickle-down effect could not occur. Instead of creating and developing a capitalist market economy that is based on the production of machines, science and technology, unstructured economic activities that are not able to create wealth for the entire population in each African country become the phenomena of many African countries.
If one studies very closely, the main beneficiaries of this industrialization model are less than 5% of the population in each African country. Such an industrial model, therefore exacerbated the contrast between the rural and some urban areas. Resources of all kinds flow from rural areas to less developed cities. Since the development of a machine industry is neglected, it is no more possible to produce agricultural instruments that could increase the productivity of land. For unknown reasons, African governments could not find it necessary to develop the agricultural sector. They could neither support the development of small and medium size industries that could create employment opportunities for the youth. Lack of developments in rural areas means, that the youth is compelled to go to the few developed cities, where it thinks it could find employment opportunities. In the cities, again contradictory developments could emerge that are not conducive to healthy social development. Slum formations and underemployments are negative effects of such an industrial model. The informal sector, that is widely spread in many African cities, is the product of this kind of industrial model. It was widely believed that with the implementation of the import-substitution industrialization, African countries could enormously save foreign currency. However, the model could not prevent the importation of luxury goods. Due to the bad performance of the terms of trade, and because of the importation of luxury goods, many African countries must experience trade balance deficit. Therefore, African governments could not generate sufficient revenue that could help them to finance different projects.
By its very nature, import-substitution industrialization does not have a multiplier effect. Manufacturing, science and technologies are not the basis of this model. Space and time are not known in this model. The emergence and development of handicraft activities are also not known. Therefore, the model could not provide employment opportunities for those who are immigrated from the rural areas to the cities, and who seek employment opportunities.
The successive economic policies that were implemented thereafter, such as the Basic-Needs approach, the Green Revolution and the Structural Adjustment Programs could neither create employment opportunities. The economic policies of the IMF and the World Bank are not economic policies as such. Their theoretical and scientific basis is unknown. The IMF and World Bank experts believe that they have found a cure that can be applied in all societies. According to the belief of the IMF and the World Bank, the application of the Structural Adjustment Programs would automatically lead to the development of a market economy. Alternative theories were rejected from the very beginning, and some African governments that tried to pursue a different economic policy that is inward-looking, were strongly opposed. Instead of supporting their efforts, they were seen as the main enemy of the capitalist countries. The IMF and the World Bank, that are representing the interests of the capitalist countries believe that African countries are not sovereign, and therefore cannot decide over the fate of their societies. Governments that do not want to accept the advices of the IMF and the World Bank, in short, the so-called international community, must be destabilized by any means. If they are being destabilized, they lose the orientation. It is therefore obvious that international organizations, such as the IMF and the World Bank, and the capitalist states are also responsible for the employment crisis that prevails in many African countries.
In particular, the implementation of the Structural Adjustment Programs under the auspicious of the IMF and the World Bank did not bring the desired effect. The policy instruments, such as devaluation of the currency of a given country in relation to the dollar, privatization of state-owned enterprises, liberalization of the market, reduction of the state budget for social spending, etc., did not enable the development of a market economy as many governments are told. Science and technology, that are necessary for economic and social developments, could not emerge. Without manufacturing, science and technology, without division of labor and manageable market size, a comprehensive economic development cannot take place. Without sustainable economic development, without interlinking the various sectors necessary for the creation of national wealth, jobs cannot be created.
If one studies the European economic and cultural history, a kind of cultural revolution took place before industrialization. Without Renaissance, Reformation and Enlightenment, the further development of capitalist production relations, and the scientific and technological revolution would not have been possible. The partial liberation of the mind from archaic ways of thinking, could make the development of capitalism possible. Debates had taken place on all aspects of knowledge, such as philosophy, theology, and later on economics and sociology. Cities and villages were developed. The so-called proto-industrialization could develop that later become the basis of full-scale industrialization. When the time was ripe, Absolutist Monarchs were forced to introduce a mercantilist economic policy. It was on the basis of this all-encompassing economic policy, consciously promoted and supported by the states, that the so-called free market economy was able to develop. Mercantilist economic policy helped the emergence of a bourgeois class that did not think locally but nationally. Without a mercantilist economic policy, Adam Smith’s so-called invisible hand could not have emerged.
Except for some periods, the state has always played a central role in shaping and planning social and economic developments in many western European countries from the 16th until the 20th century. All industrialized countries, including the USA, Japan, South Korea, Singapore, finally China, could not develop to such a scale without massive intervention by the state. After World War II, may European states had to intervene massively in the economy. Without state intervention, without allocation of money for research and development, the development of the economy in all European countries as well as in Japan, America and South Korea, would not have been possible at such a level.
If we look at the situations in all sub-Saharan African countries, states and governments were not allowed to intervene consciously and purposefully in the economy. In countries where some governments deliberately wanted to intervene in the economy were overthrown. African governments and states are not allowed to implement economic policies without the permission of the so-called international community. In 1979, the Lagos Plan for Action was launched to transform the African economy. The plan was to develop an internal market in every African country based on science and technology. This plan was deliberately sabotaged by the international community. Instead, many African countries were forced to introduce the Structural Adjustment Programs. In fact, no one understands the essence of the Structural Adjustment Programs, because it cannot address the issues that do exist in each African society. One cannot therefore wonder if this kind of unscientific economic policy aggravates the economic crisis in many African countries that have applied the so-called Structural Adjustment Programs.
The negative impacts of the Structural Adjustment Programs were enormous. The introduction of such a program did not set new dynamism in motion. Because the program did not focus on the causes of the economic problems, it was bound to fail. According to the plan and ideology of the IMF and the World Bank, the state should not intervene in the economy. By using certain instruments, such as privatization, devaluation of the currency, reduction of the state budget for social expenditures, liberalization, a market economy could develop. After about 40 years, after the program has been practiced in many African countries, many African states are facing enormous challenges. Trade balance of deficits, debt, inflation and unemployment problems, increasing corruption, and the contrast between the rich and the poor people are the downsides of such a program. Because the program could do not bring economic and social transformation, and since the tax base of many African governments is very narrow many African countries were forced to take more loans that deepens the existing economic crisis. If governments want to take more loans, they must introduce the austerity program of the IMF that aggravate the economic and social crises. Because of the import of luxury goods, and the further specialization on raw materials and few agricultural commodities that are planned for exports, the trade balance deficits increased sharply. Due to the wrong economic policies that many African governments were forced to implement, jobs could not be created. Therefore, a strong domestic market could not emerge. Globalization has worsened the situation. Instead of regulated jobs, the so-called informal sector is widespread everywhere.
If all economic policy measures failed, how can the African economy be shaped differently? The wrong approaches of the so-called international experts to look at the economy in isolation from all other aspects of social life, political and state structures, presented many African countries with major challenges.
- Without reforms of the state and political structure, one cannot design appropriate economic policies. The prerequisite for a comprehensive transformation of the African society and economy is the reforms of the state structure Since most African states and governments are unenlightened, they cannot bring about societal transformations. The European economic and cultural history proves that without intellectual activities in all fields, no social development is possible. Science and technology, literature and other intellectual developments could only be developed outside the political sphere. Therefore, without intellectual participation and pressure there cannot be social transformation.
- The state apparatus must be staffed by capable and qualified people who understand
Economic and social theory. This intern must be supported by political philosophy.
Without understanding the essence of politics, one cannot bring social transformation.
- Proper economic policies must be formulated by endogenous forces. Foreign experts must not be allowed to formulate Africa’s economic policy over and over again. It must be strictly forbidden for foreign experts, and international institutions such as the IMF and the World Bank to formulate Africa’s economic policy.
- International Institutions that strictly follow a neo-liberal economic policy have other intentions. Since they do not have alternative theories and policies in their minds, they are against a comprehensive economic and social development.
- Only through proper economic policy that is based on science and technology, that is holistic by nature, one can solve the employment crisis in Africa.
- Foreign investors cannot solve the employment crisis in Africa. They are only interested to invest in sectors where they can generate extra profits. Foreign investors are not interested in generating social wealth, and in developing new technologies. The creation of social wealth is only possible if there are linkages among the various sectors.
- Foreign investors are not interested in research and development, that is essential for a comprehensive economic development. Without research and development, one cannot create new technologies. Without the introduction of new technologies, one cannot raise productivity in all sectors.
- Foreign investors do not follow investment processes that are necessary for the development of the economy and job creation. Therefore, such investment stages like primary investments, expansion and rationalization investments do not take place. Profits that are being generated in every African country will not be invested in every country. Without reinvesting some of the profits where they are being generated, there is no economic development. Without economic development, jobs cannot be created.
- If profits are always reinvested where they are being generated, jobs can be created. This also makes social development possible.
- It is therefore not possible to solve the employment crisis in Africa with simple so- called market economic instruments that are being formulated by the IMF and the World Bank.
- The solution to the employment crisis in Africa cannot be seen in isolation from building a well-organized and functioning society.
- The classical way of social and economic organizations and constructions, that have already been practiced in some industrialized countries, is the appropriate way to solve the employment crisis in any African country.
- In this sense, Food for Work program must be organized to mobilize both natural and human resources. All forces that are being integrated in this program will be allocated for the construction of houses, roads, sewerage systems, horticulture, tree planting, etc. in all the regions of a given country.
- Furthermore, the support of handicraft activities, and small and medium size industries should be part and parcel of a comprehensive economic development plan.
- Therefore, a concerted initiative by the state and society is needed to build a productive and just society.
- The main aim of such a concerted effort is not to promote a market economy but to develop a just, creative and a productive society. One should not organize societies for the sake of developing a market economy. That does not mean however, that African countries do not need any kind of a market economy.
- How can one finance the mobilization and allocation of all resources to develop a givensociety.?
- There is a worldwide belief that without the dollar and the euro it is not possible to promote economic and social developments. However, the history of mankind proves that the right idea and the existence of democratic institutions are the most important prerequisites for systematically organizing and developing any country.
- In the modern era, money is certainly needed because many of the materials that are needed for the construction of factories and buildings are privately produced. If one studies the history capitalist development, one can realize that money is the product of division of labor.
- The development of division of labor and its unfolding made possible the creation of various forms of money.
- Capitalist development and gradual industrialization is only possible after the development of the banking system in most capitalist countries.
- Therefore, all industrialized countries could finance industrialization by mobilizing themoney circulating in each country. When the currency of each country is used for productive purposes, the velocity of money will increase. The productive allocation of money, and its velocity will prevent the devaluation of any currency. The artificialdevaluation of a given currency in any African country that is being promoted by the IMF is totally wrong and bring only inflation.
- Today, many countries have their own money and banking systems to promote inward- looking economic development.
- By setting up a kind of credit procurement institutions, as a collection point for money,one can finance economic development. State owned credit institutions should issue bonds of any kinds to attract money holders to put their extra money in state owned credit institutions.
- Foreign currencies can only be allocated for the importation of machines, spare parts and medicaments that cannot be produced locally. The allocation of foreign currencies for the importation of luxury goods must be strictly forbidden.
- If the above measures are introduced and are being controlled from time to time one can develop a given country holistically.