Implications of Chindia on African development

LAST week, I was one of about 200 business persons who attended a dinner hosted by Investec Private Bank to celebrate the economic ascendancy of India in South Africa.
The High Commission of India and the Consul General of India both made presentations chronicling the achievements made by India since 1991 when New Delhi decided to liberalize its economy by throwing off the shackles of Fabian socialism and embracing free markets.
India is now one of the major trading partners of South Africa and some of India’s major brands like Tata, Mahindra Mahindra, State Bank of India, Mittal etc now have African operations headquartered in South Africa. We were told that India considers Africa as a natural partner in its quest to expand its global tentacles.
A representative of Investec Private Banking made a very interesting presentation about the emergence of India and China as the two most interesting development case studies with different political and economic systems. While China’s reforms started in 1979, India’s market reforms only began in 1991 but India is catching up with China. The economic ascendancy of both India and China is naturally one of the most widely discussed trends in today's globalized world.
The countries' advantages are formidable: huge surpluses in working-age populations; cost competitiveness; efficiencies in manufacturing and services; and huge markets increasingly integral to the business strategies of multinational companies, all make them structural drivers for global productivity and disinflation.
The two economies will be the dominant growth stories for the next 30 years. By 2015, India's gross domestic product is projected to reach the $2 trillion mark while China's is projected to surpass $6 trillion, driven by the powerful combination of favorable demographics, structural reforms, and globalization. There is little doubt that the importance of the two countries is only likely to rise.
By 2050, China and India will make up half of the global economy. Information technology has been India's most remarkable business success story. The sector now contributes 4 per cent of the nation's GDP and the industry's revenues are growing by 38 per cent a year. Analysts predict it will have sales of $70 billion by 2008. It is the efficiency and the fact that India is a market economy that was considered as the driver in helping the country catch up with China in the future.
This week, I decided to look at the experiences of Chindia and implications for Africa in general and Zimbabwe in particular. The Chinese reforms began one year earlier than Zimbabwe’s independence and the changes in 1979 were necessary not because there was a political will to open the economy, but because the consequences of the Cultural Revolution left it with few options. The liberalization was half-hearted and limited to a few sectors, and nowhere near as broad as it needed to be. The Chinese took a different strategic choice than India that remained a democratic country characterized by far reaching market reforms. China remains a communist country with the state playing a central role in the development of the country. With respect to political reforms, China has not moved from a one party state.
China and India, therefore, represent two exceptional countries that have an African agenda but with ideologically different social and economic systems from which one can draw lessons regarding development options for Africa. In both countries, one can accept the proposition that free markets are a sine qua non for development. However, the same is not true in the political market where China has defied the odds by maintaining a repressive political and social order while allowing the economy to be driven by a combination of private and public capital. In the global arena, both countries are now players with China increasingly providing the world with the manufacturing platform and India with the intellectual property platform.
The Chinese and Indian entrepreneurs are active in driving the development agenda unlike in Africa where black Africans are missing in action. The entrepreneurial vacuum that is glaring in Africa for a variety of reasons is also the driving force behind both India and China participating in the new scramble for African resources under the guise that their economic imperialism is friendlier than the western imperialism that led to the political and economic subjugation of Africa.
The new India shares a lot with Zimbabwe: both have been colonized by the British. They both are well endowed with a highly literate and educated population. They also have large segment of the population in the diaspora. The non-resident Indians have played a leading role in the renaissance of the country by creating institutions and also playing a catalytic role in mobilizing investment for India. When the reforms began in India, Zimbabwe was only eleven years old and the signs were already evident that the economy was in for a rough ride. Those were the years of ESAP (euphemistically called Eat Sadza And Porridge or the Extended Suffering of African People) and given the development strategy chosen at independence the fate of Zimbabwe was already written. In fact, the massive investment in education, health and rural development that Zimbabwe has been credited for were not sustainable. They were funded with borrowed funds and the economy was not growing.
Many have asked whether Zimbabwe has any prospect of changing its fortunes. Some have blamed the land reform program and the targeted sanctions as the source of Zimbabwe’s problems while others have put the blame squarely on bad policies.
What then are the lessons from the Chinese and Indian experiences?
The Chinese example would say that democracy does not have any bearing on economic growth and prosperity. If anything, the economy can grow with the state machinery being controlled by one party. It is not surprising that the Chinese have no problem with the political crisis that is often cited in the west as the major problem facing Zimbabwe. We have seen the Chinese responding to the Zimbabwean political and economic crisis in a predictable manner and more determined to take a slice of the resources to feed into the expanding Chinese economy. On the other hand the Indian example provides many lessons for Zimbabwe about what not to do in a democracy. The economic policies pursued by the government of Zimbabwe in the face of an economic and political crisis are not dissimilar to the policies that characterized the pre-1991 Indian governments where the markets were controlled by the state.
I left the dinner more convinced of the importance of learning about the Chinese and Indian experiences if the prospects of transforming Zimbabwe from the current basket case are to be realized. If India and China can do it, I am sure that Zimbabwe can also rise to the challenge. The real threat remains that the Chinese and Indian form of imperialism may not be in the national interest of Zimbabwe. Is it not ironic that in as much as the western countries remain engaged in Africa through a combination of state and non-state actors, we have yet to see the Chinese version of the Salvation Army or the Red Cross.