AFRICA’S DEVELOPMENT CHALLENGES AND THE WAY FORWARD

10 mins read
By Mesfin Genanaw, a college professor in Texas, USA

Africa has been depicted as the “hopeless continent” by Western media and the public. But Africa is more diverse and bigger than most people think, with a land area exceeding Europe, the United States, and China combined and a three trillion-dollar economy. According to UNDP, Africa has 1.34 billion people (17% of the world pop), home to some 30 % of the world’s mineral reserves, 40 % of the world’s gold, 90 % of its chromium and platinum, 12 % of the oil reserves, largest reserves of uranium in the world and 65 % of the world’s arable land. Despite such a long list of natural resources, Africa can’t fully feed itself.

Two main reasons account for why nearly half of the African population is poor. First, Africa is not monolithic. No African country is the same as another, despite their UN classification as least developed countries. Challenges vary from country to country and from one region to another.

Second, Africa’s problems cannot be narrowed down to one single cause. They include military dictatorship, corruption, ethnicity, civil unrest and war, brain drain, debt financing, the illicit outflow of money to the west, high population growth, high unemployment, lack of infrastructure, bad governance, inadequate education, draught, colonial legacy, lack of skilled workforce, poor intra-Africa commerce, land-locked borders, little or no manufacturing industries, outsized foreign ownership of African businesses, unfair trade practices, etc. Some of the factors, like bad governance, are linked to many of the listed problems.

Corruption costs Africa billions of dollars a year; six out of the bottom ten countries in the global Corruption Perceptions Index (CPI) are African. It has become so endemic in the continent that the African Union (AU) named 2018 as the year for “winning the fight against corruption.” Though some countries like Rwanda, Ghana, and Tanzania have made great strides in limiting corruption, many African countries are consumed by it. Bribe has its language in every culture. It is dubbed ‘Kitu kidogo’ or ‘chai” in Kenya, dash in Nigeria, Gubo in Ethiopia, and baksheesh in Egypt. According to one survey by Transparency International, urban-dwelling Kenyans pay on average 16 bribes a month. In Ethiopia, hundreds of buildings in Addis Ababa were found without registered owners when the former TPLF led government fell out of power in 2018.

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While corruption is not unique to African, it is different in its broadness and the destituteness of its victims. People often pay bribes to access the most basic services like housing, healthcare, and education. According to the Global Corruption Barometer (GCB), Africa’s poorest citizens are twice likely to be forced to pay a bribe and more likely to be victims of corrupt practices by authorities than the wealthiest.

Not just local authorities but foreign companies and governments pay billions in corrupting African politicians to gain mining rights, contracts for major projects, and other lucrative deals. Governments in resource-rich countries are often a target for such corrupt business practices. Despite perennial anti-campaign campaigns, it is too hard for many African governments which rose to power through corrupt elections to win the so-called “war on corruption” or turn around and practice good governance. As hard as it may be to get rid of bad governance for most African countries, good governance is the only salvation to promote entrepreneurship and build a conducive business climate to lift people out of poverty.

According to the UN forecast, Africa’s population will reach 2.5 billion by 2050 and 4.4 billion by 2100. Nigeria, Ethiopia, and Egypt are the most populous countries in Africa today. Such a high population growth with a median age of around 20 creates a problem unless accompanied by the right economic policy and fast urbanizing. If Africa can break the old colonial trade routes and promotes intra-African trade, it will have a giant market to promote industrialization. Currently, intra-African exports as a percentage of total African exports is about 17%, well below 69% for Europe and 59% for Asia. Improving intra-African commerce and investment will advance the continent’s economy and strengthen its negotiating power to deal with developed countries–which cannot be done with small and weak economies of individual African countries.

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Conventional wisdom is that developed countries are providing aid to Africa, but development aid is negligible compared to the illicit outflow of money from Africa. About $134 billion flows in each year, predominantly in loans, foreign investment, and aid. Around $200B goes out to foreign companies in the form of profits and tax evasion. According to Economic Development in Africa Report 2020 an estimated $88.6 billion, 3.7% of Africa’s GDP, leaves the continent as an illegal capital flight every year. From 2000 to 2015, the illicit total capital flight from Africa amounted to $836 billion. The report says that Africa’s entire external debt stock of $770 billion in 2018 makes Africa a “net creditor to the world.” In fact, Africa is financing other continents. The Thabo Mbeki report of 2018 put Africa’s losses at between $50 and $60 billion per year, with Nigeria accounting for 30 percent ($15 to $18 billion/year) of this amount. In Ethiopia, according to Transparency International, an estimated $30B elicit money has left the country during the last 20 years.

Africa has been ravaged by slavery, pillaged by colonizers, and exploited by developed countries. Today, Africa is facing many problems due to neo-colonialism. Most of the inter-ethnic strife that explodes like time bombs in Africa have colonial roots. For example, 12 African countries that are still forced to pay colonial tax to France long after independence. France holds hundreds of billions of dollars every year (50 percent of their foreign reserves) in its central bank, hampering their development and enriching itself with Africa’s wealth. In the past, African leaders who had tried to get out of the French debt were killed by mercenaries. The first presidents of Togo, Mali, the Central African Republic, Burkina Faso, the Republic of Benin, and others were killed through coup d’état. In addition, France has the first right to buy any natural resources found in its ex-colonies or any public bidding. In March 2008, former French President Jacques Chirac admitted that “Without Africa, France will slide down into the rank of a third [world] power.”

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Currently, Africa’s GDP from value-added manufacturing is around 12%. No country has ever developed without expanding its manufacturing base. Though countries need to build capacity in all industries, robust manufacturing is the key to improving citizens’ quality of life. Industrialization will allow Africa to emulate Japan, South Korea, Taiwan, China, and other east Asian countries. China is on the verge of slowing down its low-skilled manufacturing job. That will make available hundreds of millions of labor-intensive manufacturing jobs enough to boost manufacturing employment in low-income countries. Africa is a natural destination for these jobs. Furthermore, manufacturing investment has big multiplier effects. Building a manufacturing plant is followed by service industries.

Africa is not poor because it has untapped abundant natural resources and technology input found nowhere else on earth. It is just poorly managed, with half of it seemingly sleeping on a mattress stuffed with dollars and not knowing it, whereas the other half which knows it steals the money and lives larger than life at the expense of others. Breaking out of this mold will be a multigenerational process that will require a clear-eyed long-term continental vision and strategy, an educated workforce, discipline, political stability, the unleashing of the local entrepreneurial talent, and the elimination of artificial barriers and corrupt bureaucratic chokeholds. The thriving young population, untapped resources, and substantial unmet demands make Africa a continent ready for the next big world economic transformation in which the world will need Africa more than Africa needs the world.

The author can be reached at mgenanaw@yahoo.com

 

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