The Social Market Economy Model in Africa: A Policy Lesson in the Pursuit of an Inclusive Development

Abstract

A contextually rethought coexistence of capitalism and socialism, particularly, the ‘Third-Way’ politico-economic framework is a contemporary dominion  in the pursuit of prosperous and inclusive development. Regarding the third-way position, however, there is a dearth of theoretical framework in African  studies. Hence, this article aimed at exploring the theoretical significance of ordoliberalism and its social market economy model that is often praised as  the secret(s) in the wake of the ‘Wirtschaftswunder’, meaning the ‘economic miracle’, of Germany. In so doing, the article has sought the common  conceptual ground between the notions of the social market economy and inclusive development through the extensive review of theoretical evidence  available in the secondary sources of data. The review of literature has revealed that unlike the German experience, the policy choice among the African  countries, in the postcolonial era, was never consistent with ordoliberalism or social market economy. However, the post-2000 economic trajectory of  Africa has shown the coexistence of the welfare state and coordinated market thereby creating a convenient condition to implement the lessons learned from the development path of Germany. Besides, the prevalent socio-economic problems in most of the Sub-Saharan African countries including  demographic bulge, abject poverty, high levels of income inequality, extractive/rent-seeking institutions of governance, brain-drain, and aid/loan  dependency syndrome are the major factors that underline the urgency for policy reforms geared towards an Afro-centric social market economy. Yet,  the levels of economic development, historical, cultural, and geopolitical differences need to be taken into account to effectively implement the policy  instruments of the social market economy in Africa.