Africa Faces Challenges of Globalization

• Author: Mohamed Daouas
• Position: Governor of the Central Bank of Tunisia

Globalization is multidimensional, affecting all aspects of life-economic, cultural, environmental, and social-as well as relations between governments and nations on the five continents.

Globalization is characterized, in particular, by an intensification of cross-border trade and increased financial and foreign direct investment flows, promoted by rapid liberalization and advances in information technologies. For many countries, this global process has made the pursuit of development and maintenance of internal and external stability very difficult and delicate tasks. On the one hand, globalization holds out to participants the promise of growth in trade and international investment; on the other hand, it heightens the risks of instability and marginalization.

Impact of globalization

Although globalization has helped increase growth and wealth in recent years, it has not done so for all continents and all countries. In the least developed countries, and on the African continent in particular, a worsening of existing imbalances has impeded development and aggravated poverty. The marginalization of these countries is reflected in their small share of world trade (barely 2 percent), output (not much higher), and foreign investment (1 percent).

This situation is exacerbated by Africa's unsustainable external debt and by unfulfilled promises of official assistance at a time when most countries cannot continue their reforms and development efforts without financial support. Although the countries of the Organization for Economic Cooperation and Development have committed the equivalent of 0.7 percent of their GDP to official development assistance, at present, average disbursements amount to only 0.25 percent. In absolute terms, the difference between the amount committed and the amount actually provided by donors comes to $100 billion a year.

Given these facts, we should examine the different facets of globalization and assess its benefits and risks in light of the recent economic and financial crises that have shaken various parts of the world and diverse economies, from the very rich to the very poor. This approach should improve Africa's chances of successfully integrating with the world economy.

Despite a sometimes unfavorable international environment, marked by natural disasters that have affected a large number of countries in the region, Africa has, on the whole...