Has neoliberal mirage become apparent?

Saturday February 2 2019

Moses Khisa

Moses Khisa 

By Moses Khisa

There was a time when African leaders and policy makers were told that there was no alternative: They had to embrace externally dictated economic reforms. There was one template that had to be foisted on every poor African and Latin American country that was economically distressed.

Africa has had many scams. Perhaps the biggest of all in contemporary times is the ideologically-loaded narrative, aggressively peddled in the 1980s, that a fictitious ‘free market’ was the magic bullet to ending mass poverty and social deprivation.
African peoples were blatantly robbed of their economic policy sovereignty when international financial institutions forcefully seized direction of national economic strategies. We were told that the right policy approach, which in practice was reduced to overnight economic liberalisation and throwing everything to the market, was all that was needed to unleash private enterprise and propel growth. The ahistorical nature of this proposition is striking.
No country or region of the world has ever broke out of the chains of poverty through the magic of the market. And no country has developed because of the benevolence of foreign capital. None. The consistent historical record has entailed growth and development anchored in highly nationalist economic agendas with heavy involvement of public institutions.
In fact, for much of medieval and early modern Europe, with England leading the way, national economies were built around mercantilism. This was a system that directly employed state power for national economic accumulation. Merchants and rulers drunk from the same teacup.
This system of mercantilism is in fact still alive today: For example, American military power is intricately tied to business interests for national accumulation and when American politicians talk about ‘our national interest,’ they primarily mean economic.
With a terribly disappointing record of modest growth, at best, without transformation, the neoliberal creed has come under increasing doubt from the front-runner converts of the 1980s, including our own NRM regime in Uganda. There has been a striking turnaround in rhetoric though not practice.
It is instructive to hear the Ugandan ruler belatedly lamenting the dubious practices of multinational telecom companies that evade taxes and repatriate all their profits: That is precisely what we signed up for. Sorry Mr President. With rapidly growing and disproportionately young populations, African countries are increasingly seen as the main frontier for product innovation and experimentation. So, China’s aggressive penetration of the continent, seductively using infrastructural projects, has to be viewed in that light – to capture markets and raw materials for the long-term.
The raw end to Africa’s place in the global economy, and for which African governments show little concern, is the one-way traffic of an unlimited open policy in Africa, but not for African products out of Africa, not in China or India and not in the West.
Part of the problem, we are often told, is not having competitive products for the so-called global markets, but how on earth is this ever going to happen when local producers are overrun on the home turf by cheap Chines goods? Much the same way we hunger for foreign investors, there is a rather misleading obsession with exporting to foreign markets. But the immediate, domestic market provides the necessary testing ground for breaking into the distant consumer.
African governments, more so the one of Mr Museveni, will do well to fully concede to the neoliberal mirage. Markets can theoretically do many things, but they have never on their own, delivered robust and sustained growth or brought about economic transformation.

There is now wide consensus in academic circles that fiscal coercion, to direct credit and investment to certain critical sectors of a poor economy, is crucial to propel and sustain high growth.
For Uganda, the greatest obstacle to a radical rethink and turnaround of national economic policy is the powerful cabal, comprising local comprador class and foreign speculators, who have profiteered enormously from the laissez faire system, including commandeering public property and using state power for economic predation.
In that regard, the struggle for political change is also, in fact, most importantly in concrete terms, a struggle for economic revolution, to embark on a wholly different approach to a long-term national economic strategy.
Without an internally coherent and clearly articulated long-term plan for economic transformation, away from the orthodoxy of the IMF and the World, Uganda will remain trapped in poverty 50 years down the road.

Dr Khisa is assistant professor at North Carolina State University (USA).