OPINION: Economics from the bush - Africa has zero vision about its future

JOHANNESBURG - At times I attack criticism for some of my views on a number of issues, especially my unconventional approach to both economics and politics appears to be a problem.

Unlike the rest of the world I am not a fan of foreign direct investment (FDI) in its present form because I feel that the presence of carriers of FDI multinational corporations (MNCs) has not contributed much towards the growth and development of Africa.

Not that the MNCs have shunned Africa at all, they have always been around. As one commentator said, “there is more Coca-Cola in our streets than water”. In spite of their long historical links with the continent they have become part of the problem rather than offering solutions. Only politicians seem to be scapegoats for bad economic decisions, yet the problem could be much more deeper than that.

My stance on FDI is therefore informed by my unwavering opinion that MNCs are a new VOC searching for spices in the continent and have no interest in its development. The majority of foreign large corporations and their local friends aren’t behaving differently from the British East India Company, the Dutch East India Company or Christopher Columbus “discovery expeditions” – they look for what they can take instead of creating mutually beneficial relationships with countries where they operate.

Hence, MNCs are at the forefront of global economic terrorism and FDI is their weapon of mass destruction: cash hoarding, tax avoidance, child labour, slave wages, transfer pricing and illicit financial flows. Large corporations act with impunity in the international system because they are aware that they are richer than the majority of many states. Small and poorer countries are at their mercy, and can do nothing to defend themselves from massive exploitation and transgressions of their laws.

The sooner Africans and its leaders realise that FDI-led economic growth is a myth, we will have to find better solutions for ourselves to turn our fortunes around.

Today, I stumbled on a beautiful story in the China Daily (09/08/2018) concerning the friendship between former Chinese vice-premier Deng Xiaoping and Japanese industrialist Konosuke Matsushita, founder of Matsushita Electric Industrial, whose home appliance brands include Panasonic and Technics. This is the friendship that is said to have set China on path to “the road to modernisation”.

For many who are familiar with who Deng was, he is said to be the man who launched China to become the large economy it is today. Deng’s educational journey “to learn knowledge and truth to save China” took him to France in 1920 and later to Japan, where he met Matsushita in 1978. Deng and Matsushita developed an unlikely friendship because China and Japan “had once been implacable enemies”. But their friendship is credited for helping put China on the road to modernity.

Visionary leadership was at play.

In October 1978 Japan and China signed the Peace and Friendship Treaty which ended hostilities between the two nations. On this visit to the place of the rising sun, Deng marveled at the sophistication and modernity that Japan had achieved following its defeat at World War II. He saw the bullet trains, and he decided on the spot that “there was no reason why the best of Chinese brains should not be able to replicate that engineering feat”.

A simple shopping activity for electronics took him to a Panasonic plant in the city of Ibaraki close to Osaka, where he witnessed the assembly of TV sets, fax machines and video recorders. On this tour Deng was accompanied by Matsushita himself and this is where the two men are said to have established the friendship. And at the end of the tour, Deng told his new friend that all he wanted was similar expertise because “China was about to launch a modernisation drive”. He added: “One of the key elements would be self-reliance… but to achieve this China would need foreign know-how and investment.”

Deng’s views on investment differ significantly from what we hear on a daily basis that FDI would create jobs. There appears to be no short- or long-term vision to catapult our countries from being FDI recepients to becoming self-reliant as well as to carry their expertise and capital abroad. We are thus expected to run around begging at Davos, Australia’s Down Under Mining Conference and getting shunted around by the likes of US with their African Growth and Opportunity Act (Agoa) trade schemes and told where to get off by the EU.

In response to Deng’s wishes, Matsushita to him: “I’ll do my best to help you!”

Matsushita later created joint venture called Japan-China Electronic Industries Federation with “the aim of promoting the modernisation of China’s electronics”. Also in Japan, Matsushita lobbied other electronics heavyweights in attempt to pursuade them to invest in China. Since the other industrialists did not have much knowledge of China – they turned him down. In 1980, Matsushita then at 85 years old visited Beijing to give feedback on his failure, and Deng is said to have told him: “Never mind, we are still friends.” Deng assured his friend that about staying on the path to opening up.

China is now now Panasonic’s global manufacturing with 79 factories employing nearly 60 000 people. The company made $7.4 billion (R104bn) in sales in 2017. Not only that, Panasonic has “poured huge resources into these factories, producing consumer products, setting up R&D departments and coming up with a business-to-business strategy”.

True to what Matsushita said in the first to Deng that “the 21st century will be an era of Asia, including Japan and China”. Indeed both are in the top three world’s largest economies to date.

Deng’s efforts have not gone to waste. China is now the second-largest economy in the world after the US. In spite of Donald Trump’s trade wars, China’s foreign trade currently stands at $2.61 trillion. Exports and imports for July alone respectively stood at $215.57bn and $187.52bn. Worldwide, no household can claim not be using products made in China from Huawei to FAW.

In Africa, our countries go around “attracting investments” without a clear vision of making the 22nd century an African century. FDI that doesn’t support the political vision is too poisonous, and thus must be avoided at all cost. African leadership, present and future, need to understand that the world owes Africa nothing. It is up to us to change the way we do things and improve lives of a billion people in the continent. Otherwise we will always be treated as a case for development aid agencies, and a playground for global economic terrorism.

What happened to the notion of “Africa is rising”?

Siyabonga Hadebe is executive manager at South Africa’s Department of Labour responsible for the management of international relations portfolio for the Department. His views do not represent his employer.

The views expressed here are not necessarily those of Independent Media.

- BUSINESS REPORT