Globalization has been spoken about by big organizations like International Monetary Fund (IMF), United Nations (UN), African Union (AU) and Governments alike. But what does this 12 letter word really mean for the African continent especially for Zambia in particular? Well globalization is the increasing influence of businesses, organizations, governments and people’s ability to interact through trade and plan together with ease from different countries and continents which is summed up as the global economy and geo politics.
But before I unpack the essence of it, it is important to understand what are the advantages and disadvantages of this world phenomenon called globalization? Globalization was meant to increase free trade between nations, increase the liquidity of capital allowing investors in developed nations to invest in developing nations, and allow for corporations to have greater flexibility to operate across borders. However, some disadvantages of globalization include exploitation of developing countries, cultural homogenization, and adverse effects on local economies and the environment. This is why even though Africa is rich in resources it still has not made its presence known on the global stage. I say AFRICA LACKS AMBITION (knowing full well that pundits will argue otherwise and give examples of outliers, but that’s another argument). The same ambition which took China over 30 years to reach world stardom as an economic giant, lending money to developed and developing nations alike.
Value Addition, Were Africa Is Missing The Point
Here is a realistic hypothetical. Image a lad called “Changwe Banda”, born and breed in Zambia. Yes! Born in the same continent with every resource known to man but almost 80% percent of his clothes, food and furniture are all produced abroad. The point here is this means on average 70% of the money he spends is going out of the country destroying local jobs and reducing the money circulation in the economy because of imported goods. We expect “Changwe” to be leading a life of opulence or at least middle class income, full of affordable goods and services produced domestically to push Value Addition and reduce the National Budget Deficit (our Central Bank Governor dreams of more imports than exports).
Well unfortunately, the aforementioned isn’t the case. Africa isn’t ambitious yet, with the processing and production of the mineral resources out of the continent, making goods and services like cars, medicine, smart phones and white goods (refrigerators, microwaves, stoves, microwaves) are expensive because of the freight costs and tax paid. This has the inadvertent consequence of squeezing the little capital out or innovation, research, development and long term investments like factories. This is where the African policy makers are missing it. Or are they? It should be noted that high taxes on imported goods and services actually discourages imports and encourages local manufacturing. Yes it’s a slow and painful process but it seems that’s the basis of the trade wars between China and America. It should be noted that in geopolitics the actions taken should be given more attention than what is said (Pay attention to Donald Trump’s tweets).
Knowledge and Information
Globalization has broken down barriers of ignorance, and when we talk about ignorance we use it loosely and not in the degrading or insulting way but on the contrary we mean the lack of knowledge or information of a specific subject or activity. Think of it like this. In the past, people never had the information about their suppliers or product process meaning suppliers always had the upper hand in price negotiations (information technology not invented). Well not any more. With the rise of internet access across the world with platforms like facebook, twitter, google, amazon, netflex and alibaba (The FAANGS) information is at the palm of our hands with smart devices key to this over flow of information. Good for the consumer because of competitive prices (information asymmetry dead in the water) and more variety of goods and services. However on the other hand, the death of a sales men and women, whose jobs have are been taken over by artificial intelligence like apps and robots is evident (the start of the New Economy). We see this with ATMs taking deposits and in the west the same machines are giving financial advice. Banking services have already started taking the lead in adopting “robots” to do peoples jobs (Stand by an FNB ATM in Lusaka and you know what I mean).
This knowledge also benefits the innovators or cheaters as Trump points a finger at China for “cheating” by stealing designs and intellectual property to replicate goods and services. The lesson Africa should learn is that buying imported goods which can easily be eased by producing them locally with designs and models acquired through research using the internet.
The internet has changed the way we get our news too. With information about government actions and leaks going viral even before an official broadcast or press release this is a signal to Africa to jump on the technology bandwagon. Furthermore, it is good for the citizens to make clear and informed decisions in a democracy. However, with a threat of fake news flowing everywhere to influence the masses that has presented one of the major challenges of globalization in present day geopolitics. This has been at the heart of the demise of facebook as reflected by its share price fall with the Cambridge analytica scandal which was singled out as being source of influence in the election of U.S President Donald Trump’s election to the White House. This has created a new threat called cyber terrorism, with the social media platforms been put to task to verify any information posted on their platforms. A virtually impossible task considering the amount of intelligent resources that would need to be deployed. This is the reason why Governments now have committed their time to responding to fake reports, false news and allegations spread online.
Migration of Labour
Globalization has made it easier for most people now to travel across borders, especially for the Western World, as seen with South Africa’s recent move to allow some foreign nationals in Europe and the Americas to visit the countries without visas to encourage foreign direct investment (FDI) and the flow of special “skilled” labor to come into the country with other African countries following suit.
This is great in the short term to increase the quality of goods and services especially in the production industries to increase exports and reduce imports. However, it’s not all smooth sailing. The fallout from this has been the African graduates being left in the dark for jobs as they can’t compete with some of the most prestigious university graduates from Europe and America coming to Africa. This theory has been confirmed with protectionism on the rise in Europe (BREXIT and Catalunyan independence in Spain) and America (Trump’s border wall with Mexico) where these jurisdictions are now protecting themselves from immigrants from the developing world who are seeking work opportunities. According to the Edge of Chaos written by Dr Dambisa Moyo, protectionism in the long run isn’t good for any country, as we are in a globalised economy with countries being interdependent.
Capital and Minerals
The flow of capital (surplus money or investment) around the world has increased now, with technology taking the charge forward with crypto currencies like Bitcoin and faster money transfers like mobile money breaking through to international money transfers. This is good for long term investments like factories but poses a challenge especially with the control of money laundering and tax evasion. The ubiquitous network marketing business that is quickly rising comes to mind.
Governments are struggling to get taxes even from social media platforms like facebook, whatsapp and Netflix. Ironically it is the same the governments that are tasked with provide a conducive environment for them to do business. An oxymoron no doubt. This complexity has been confirmed with European countries developing a social media tax on revenues and they are poised to impose them on the likes of facebook and twitter.
What Africans should understand is that the internet is a cheat. Crude as that may read, it is legal so it’s also safe to call it an advantage. It allows an individual or business to get money from another country without even registering the business or paying any transaction fees (obscurity through ubiquity).That is because financial systems are still in a race to catch up making the argument even stronger for minerals produced in the country to be auctioned locally (country of origin). That is why Africa should continue to embrace the e-commerce movement.