International Business History

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International Business History

Q.2. Trade and Development in Africa since 19

Century

During the nineteenth century, European countries conquered Africa. Africans were

regarded as uncivilized countries who needed to be civilized. The continent had vast resources

which remained mostly unexploited. When Europeans knocked on its doors, they divided the

promising continent into various territories amongst themselves. The establishment of the

imperial rule in Africa reinforced the continent’s commodity growth with colonial powers

facilitating infrastructural development. Under the colonial rule, Africa opened up to the

outside world and attracted a massive inflow of foreign investment leading to profound

changes in the utilization of the continent’s vast resources (Frankema and van Waijenburg

895). The colonial regimes stopped slavery but replaced the inhuman act with several forced

labor schemes. With the development of anti-slave legislations, human trade was replaced

with commodity trade and this was seen as a game changer. It paved the way for the

development of modern agriculture and trade. African export was pushed to the next level,

and an era of commercialization followed this.

According to Ajayi (21), early nineteenth century brought massive change into the

African History. The European came with a new interest in trade, and this led to a campaign

to learn about the vast resources in the continent, a campaign to end the slave trade and

promote crop exportation. Missionaries also sought to convert locals to Christianity, and this

brought many challenges and economic opportunities to the continent. Ajayi described early

nineteenth century as the time when African continent transited from slave trade to modern

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trade with items such as firearms becoming the new trade commodities. The level of

commercial activities was also increased at the start of the nineteenth century. Ajayi (27)

contends that although some parts of Africa had been incorporated into the world economy as

early as 1750, it was not until 1850 that regions such as Eastern Part became part of the

global economy. The incorporation involved two critical processes. First, integration of the

production process. Second, the transformation of political structure.

The period of industrial revolution in Europe had increased the demand for cash crops

and raw material, and Africa was seen as a source. The continent rolled its sleeves and

increased its exportation of raw materials such as ivory and skin. The scramble and partition

of the continent also increased the market, and this meant more trade and development with

towns and cities emerging from trading and administrative centers. The end of slavery in the

nineteenth century led to the economic integration of Africa, and the continent became more

centralized politically than before (Settles 6). The period also saw the growth of powerful

states in the region which had a considerable influence on trade. These states are Asante,

Buganda, and Madagascar. Although most of the powerful states split after the partition in

1880, they were equally involved in production and trade as Europeans.

By 1850, continent had witnessed improved transport and communication and before

the end of the nineteenth century, continent’s export began generating foreign exchange

amidst many fluctuations. The Berlin Conference 1884-1885 formalized the “Scramble for

Africa” and this changed trade and development patents in the region (Heldring and

Robinson). Before its partitioning in 1885, Africa was increasingly integrated with trade

occurring in East-West and North-South. However, the colonial powers redirected all the

trade to oversee markets, leading to the death of the transatlantic trade. Before the

development of the imperial rule, Settles (12) observed that Africa was progressing well

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economically and politically and although colonialism encouraged growth in most of the

areas, it also retarded the continent.

At the start of the twentieth century, Olamosu and Wynne contends that regions such

as the sub-Saharan Africa had abundant land with inadequate capital and labor. Austin in his

review of African development and imperial legacy contends that output per head in Africa

has remained notoriously low compared to any region in the world and averagely, it has been

expanding haltingly and slowly since 1960 after most of the countries had gained

independence. Austin observed that the continent experienced significant changes in its

policy formulation in the 1980s with approaches changing from administrative to market in

resource allocation. Ironically, in the decade after the adoption of these changes and before

the rise of china in the global commodity trade, the growth of most countries in Africa had

stagnated with a few of them experiencing negative growth. Killick, in his examination of

post-independence development in Africa, argues that nearly all the countries in the Sub-

Saharan African region depend on raw materials as their primary trade commodities (Killick

16), which to a large extent affects its economic development. Baunsgaard and Keen (563)

contend that trade liberalization was a major focus of most of the post-independence

governments in Africa with trading blocs such as COMESA coming up. Trade was

liberalized through reduction of non-tariff barriers as well as custom levies. However, these

efforts could not yield much results since liberalization cannot thrive in an environment

characterized by weak infrastructure in most of the African countries. The high cost of

production and inefficient logistics have reduced the continent’s export capabilities

significantly.

In the second half of the twentieth century, the continent was faced with many

conflicts, but by the start of the millennium the number of conflicts reduced although there is

still war in Sudan, Somalia, Chad, Congo and the Central Africa Republic. The conflict

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witnessed in Uganda, Ivory Coast, Liberia, Sierras Leone have all stopped. However, the

social, economic, and political impact of the conflict is still palpable. Democracy has taken

shape with post-Apartheid South Africa emerging as a significant player in the global

economy. Elections have become a norm, and increased freedom of the press has led to more

transparency and accountability.

Average GDP growth rate in Africa 1961-2002 (Olamosu and Wynne, 2015)

Average GDP growth rate in Africa 2002-2014 (Olamosu and Wynne, 2015)

At the start of the Millennium, China has come up as the largest development partner

in Africa with the country using diplomatic approaches to access the huge market in Africa

(Busse, Erdogan, and Mühlen 228). The Chinese have continued to invest in the continent’s

infrastructure, land, and mines. One major challenge for the continent is that the formal sector

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has mainly remained small compared to the informal sector. There are also high trade barriers

with the continent still exporting raw materials. While African is continuing to get its macro-

management right, sustainable development of the continent’s trade and infrastructure will

depend on greater democratization, good governance, improvement banking sector, energy

generation, and support for SMEs, high standards of education, reduced corruption and high

levels of skills and technology transfers. All these factors provide a conducive environment

for investment in the continent and utilization its vast resources.

Research by O’Brien on trade and economic development in Africa from the

perspective of globalization and concluded that infrastructure and strong institutions are two

essential things Africa is missing (O’Brien 22). Presently, the continent cannot compete

effectively in the global economy using nineteenth-century telecommunication. The continent

still faces major challenges ranging from woefully insufficient infrastructural development to

inadequate power supply to political instability and this hugely affect trade and development

in the region. By 2000, the African Development Bank had forecasted that the continent

needed an investment of between 25 to 30 billion US dollars investment in infrastructure if it

had to catch up with the rest of the world. The recent willingness of China in infrastructural

development in Africa has been taken positively, and many researchers agree that it would

open up the continent to the world. More trade and development between Africa and the East

is expected with several countries focusing their attention from the West to China (Busse,

Erdogan, and Mühlen 228). Africa is expected to rise as an important player in the global

economy.

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Works Cited

Ajayi, Ade. General History of Africa: Africa in the Nineteenth Century until 1880s. California:

Heinemann Publishers, 1995

Austin, Gareth. African economic development and colonial legacies. Vol. 1. No. 1. Institut de

hautes études internationales et du développement, 2010. Retrieved from

https://journals.openedition.org/poldev/78

Baunsgaard, Thomas, and Michael Keen. "Tax revenue and (or?) Trade liberalization." Journal

of Public Economics 94.9-10 (2010): 563-577.

Busse, Matthias, Ceren Erdogan, and Henning Mühlen. "China's impact on Africa–The role of

trade, FDI and aid." Kyklos 69.2 (2016): 228-262.

Frankema, Ewout, and Marlous Van Waijenburg. "Structural impediments to African growth?

New evidence from real wages in British Africa, 1880–1965." The Journal of Economic

History 72.4 (2012): 895-926.

Heldring, Leander, and James Robinson. "Colonialism and development in Africa." Centre for

Economic Policy Research, London, England (2013). Available at

https://voxeu.org/article/colonialism-and-development-africa

Killick, Tony. Explaining Africa's post-independence development experiences', ODI. Working

Paper 60, January, 1992.

O’Brien, Stephen. "Africa in the Global Economy: Issues of Trade and development for

Africa." A Paper presented at the Africa Knowledge Networks Forum Preparatory

Workshop. 2000.

Olamosu, Biodun, and Andy Wynne. "Africa rising? The economic history of sub-Saharan

Africa." International Socialism 146 (2015).

Settles, Joshua Dwayne, "The Impact of Colonialism on African Economic Development"

(1996). University of Tennessee Honors Thesis Projects.

http://trace.tennessee.edu/utk_chanhonoproj/182

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