Slow economic growth in Sub-Saharan Africa: An insight

The cardinal explanation for why countries fail to achieve economic growth often focuses on poverty related issues. On the other hand, domestic factors such as poor delivery of public services and the perception of high risk for investing, are likely more important than external factors like trade and commodity prices in explaining the slow growth in the sub Saharan Africa.
Coffee is one of the main cash crops sub-Saharan Africa depends on for economic growth.
Coffee is one of the main cash crops sub-Saharan Africa depends on for economic growth.

The cardinal explanation for why countries fail to achieve economic growth often focuses on poverty related issues. On the other hand, domestic factors such as poor delivery of public services and the perception of high risk for investing, are likely more important than external factors like trade and commodity prices in explaining the slow growth in the sub Saharan Africa.

However, to find out what could be done to lead sub Saharan Africa back to growth, we need to shape out what went wrong over the last forty years. In this sense, the easiest way to progress is to correct the mistakes of the past. In the recent past development economists have tempted to say that if Africa is to grow, it needs to invest enough especially in physical capital.

In his book, “The end of Poverty” Sachs points out that in economic growth, problems can cause an economy to decline or stagnate in the number of ways.

“One, the key problem for the poorest countries especially those situated in SSA is that poverty itself can be a trap. When poverty is extreme, the poor tend not to have the ability to carry out any economic activity that can improve living standards. The deprived in the SSA particularly in the countryside villages lack trucks, paved roads, power generators and irrigation waterway to water their crops during the dry seasons. This is the reason why the poorest of the poor are most prone to becoming trapped with negative growth rates in the region. They are too poor to save for the future so as to accumulate the required capital per person that could pull them out of poverty”.

But, why are some communities in SSA so trapped? The ideas that have been put to the fore front emphasize on high transportation costs because many countries in the region are landlocked and some tend to lack high navigable rivers, coast lines or good natural harbors for easy transportation of goods.

We should recall that Africa in general has been the recipient of a large amount of foreign aid for the last couple of years but this has not played any cardinal role in improving the region’s economic growth.

Sub Saharan Africa since 1960 to 2008 received at least a total of $526 billion (in constant 2000 US$) in aid more than any other developing region.

Why has aid not improved the SSA growth performance? In answering this question Dollar (2000) emphasize that  aid raises growth in an environment were there are  good policy measures but this has little effect if economic policies are poor.

Another argument put forward by Van de walle (2001) argue that foreign aid in Africa and sub Saharan Africa in particular had a negative effect on development simply because poor governance structures and corruption in the region.

So, for SSA to prosper governments need different policies that can yield the same result. However, the same policy can yield different results, depending on country’s institutional contents and underlying growth strategies.

Presently, there is no sole laid down policies that can be certain to ignite persistent growth. Nations that have succeeded at this extremely important task have faced diverse sets of obstacles and have adopted varying policies concerning regulation, export, industrial promotion, and technological innovation and knowledge acquisition.

On the other side, fiscal trap can lead to negative growth rates in the region. Still when the private economy is impoverished, the government may lack the resources to pay for the infrastructure on which economic growth can get started. 

Governments tend to be crucial in investing public goods and services like primary healthcare, roads, ports that are of paramount importance for good growth uplifts.

Governments in SSA lack the financial means to provide public goods chiefly because the  population itself is impoverished, and the taxation system that is no where to be seen and some corrupt officials in the taxation bodies that tend to put some money collected from  taxes into their pockets.

Furthermore, most of the governments in SSA have failed to put up good governance structure, see the recent chaos in Zimbabwe and different functions in Somalia struggling to grasp power.

In this situation many analysts tend to define such countries as failed states because of poor governance and prolonged conflicts based on different ideologies.

It is worth to note that, since this part of the world gained independence it has been embroiled in political turmoil. Furthermore, SSA low growth performance is disadvantaged by nonexistence of trade.

We capture an example of a family that hears about the pyrethrum opportunity, but is powerless to put collectively the use of it.

There may be no road connecting the ranch and the provincial market, so it is not likely for the family to market the pyrethrum.

As the result, the family passes up the opportunity to specialize in a cash crop and stays with food crop on which it depends on to stay alive. In this case, trade can be in an inferior position.

Overall, the region’s solely primary exports put it in the disadvantaged position hence leading to deteriorating terms of trade.

So in order for growth to take place, we need to make structural  shift from low to high productivity sectors, say from agriculture to industrial development.

To do this, we need to strengthen linkages through import-substitution and public investment in infrastructure and education.

In addition, for sub Saharan Africa to achieve economic growth, we need to focus on creating our model that suits our development objectives. This does not rule out borrowing a leaf from other successful world economies.

Contact: sfeston2000@yahoo.co.uk

 

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