He believes that the AGOA played an important role in expanding exports, especially manufactured exports, from Africa to the US and the dynamic growth of Lesotho?s textile industry is a befitting example of that. Shantayanan Devarajan, Chief Economist of the World Bank?s Africa Region, explains to Sarika Malhotra how business is on the agenda as Africa?s growth depends on the growth of its private sector. Excerpts:

Given the potential of the African market, and the MNC penetration, will it be correct to say that Africa is becoming a dumping ground for the world?

It will not be correct on several dimensions. First, while the African market has potential, it is a long way from realising that potential. The total GDP of Sub-Saharan Africa is only slightly larger than that of Belgium. Second, MNCs have only recently started to ?penetrate? the African market. Although private capital flows to Africa had been rising before the onset of the global economic crisis, foreign direct investment was concentrated in a few countries and a few sectors?mainly minerals. Finally, even if MNCs did penetrate more in Africa, it does not necessarily follow that Africa will become ?a dumping ground for the world.? These MNCs would bring much-needed infrastructure investments and other capital goods that Africa does not produce, enabling African countries to increase investment and generate self-sustaining growth. The key is the terms under which these MNCs come in, but that is something that African countries, possibly with the assistance of their development partners, can determine, to make sure they are in the best interests of the African people.

Would it be right to say that the world is practicing neo-colonialism in Africa?

The world is engaging with Africa in trade, aid and investments. I wouldn?t call that ?neo-colonialism?; I would call it the engines of economic growth and poverty reduction. China, and to a lesser extent India, are engaged in trade and investment, both of which are important for economic growth. The US engages in trade, investment and aid, including some high-impact aid programmes such as PEPFAR, a multi-billion-dollar programme to fight HIV/AIDS in the continent.

What does this ?scramble for Africa? entail for the African economy and people?

To the extent that the ?scramble for Africa? refers to investments in Africa?s mineral resources, it represents a potentially lucrative opportunity for African economies and people. However, to realise this potential, the mineral contracts have to be fair, in the sense that African countries get a significant share of the royalties, and African governments should ensure that the revenues from these extractive industries are well-spent. Both of these considerations are facilitated by transparency and civil-society oversight of mineral contracts and public-spending decisions.

It will be an understatement to say that Africa?s natural resources have been plundered by the world?do you think that the international community will owe up to its deeds and work responsibly for the region? And how can the international community help in this regard?

There is no question that Africa has not realised the full potential of its natural resources. Nigeria?s per-capita income today is lower than what it was before the oil boom began in 1970. But the reasons behind this lost opportunity are many, including mismanagement of resource revenues by African governments and poorly-designed contracts. The international community can help by strengthening African government?s bargaining power in mineral contracts, and by assisting the government in better managing public spending by, for example, providing technical assistance in public financial management and disseminating information about the effectiveness of public spending to the country?s citizens.

What are the development issues plaguing the continent?

The main development issues plaguing the continent are (i) improving the investment climate and competitiveness (Africa?s private investment rate is only 15% of GDP); (ii) increasing agricultural productivity, since 75% of the poor depend on agriculture; (iii) plugging the continent?s massive infrastructure deficit; and (iv) improving the delivery of basic services such as education and health. Cutting through all these issues is Africa?s fundamental problem, which is weak governance and public sector capacity.

How realistic are the claims that African leaders are more concerned about maintaining economic aid than fostering accountability to their people through responsible action?

If leaders are more concerned about maintaining economic aid than fostering accountability to their people through responsible action, they do so at their own peril?since every four or five years, the people will hold them accountable in elections. Furthermore, as the effectiveness of aid is improved by greater accountability to the people, and donors are always concerned about aid effectiveness, leaders who try to maintain aid without fostering accountability may find aid declining.

What can the African nations do to stem the problems and imbalances caused by the expanding engagement by the world?

Most of the problems and imbalances in Africa are not ?caused? by expanding engagement with the world; they are caused by weak governance and public sector capacity. Some may be exacerbated by increased engagement with the world, but they should be solved by addressing the problem at its roots.