Economics in Africa
Transcript of Economics in Africa
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Economic growth is essential to the well-being
of any state and to achieve prosperity. The post-colonial states
of Africa, however, since moving out of colonialism, have failed
to develop their economies despite sitting on the resources that
the Europeans had used to build their respective countries in
Europe. Since that is the case, the central question that thus
lingers is; “What is preventing economic growth in post-colonial
African states?” Some authors link the lack of economic growth in
Africa to the political structure and governance, while others
contend that corruption is the root cause for the lack of
economic growth; some think political structure, governance and
corruption should be considered together while still others
assert that the problems that Africa is faced with are due to
external factors.
According Ake from the book Democracy and Development in
Africa, Africa’s lack of development is not due to more obvious
factors such as: colonial legacy, social pluralism, corruption of
leaders, centrifugal tendencies, lack of entrepreneurial skills,
poor labor discipline, low levels of technical assistance,
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inappropriate policies, unfavorable terms of trade, low levels of
technical assistance and low levels of saving and investment. Ake
asserts that these factors by themselves or together may prove to
be serious impediments to development, however, according to Ake,
development was never on the agenda. Ake instead believes that
the primary reason why development has not taken place is because
of the political climate in Africa. It inhibits the pursuit of
development and the emergence of relevant and effective
development paradigms and programs. Ake goes on further to say
that even though the African states have attained independence
and have brought some change to state managers, the character of
the state remained much as it was during the colonial era. Ake
surmises that with the exception of few states whose nationalists
fought for their freedom against their colonial regimes and
gained freedom, most African States got their freedom when their
colonial masters ceded power. Ake believes that, due to the fact
that the colonial powers were the ones that ceded power, vestiges
of colonialism in the political structure of post-colonial Sub-
Saharan African countries still exist because when they ceded
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power the colonial powers they turned power over to people who
shared their interest.
John Hatch, in his book Africa Emergent: Africa’s Problem
Since Independence, uses the same line of reasoning as Ake when
he contends that African nationalist made a mistake when they
were solely concentrated on the transfer of political office. He
asserts that the African countries left themselves unprepared for
the complex dilemmas of political sovereignty. He further asserts
that the nationalist politicians who took over were indoctrinated
in foreign institutions that were created by the colonial powers.
Ministers were taught to consult civil senior colonial officials.
Most of the advice that was intimated to the nationist ministers
was designed to create a thread of continuity from colonial to
indigenous rule.
Mulinge and Lesetedi (1998) conducted a study in Interrogating
Our Past: Colonialism and Corruption in Sub-Saharan Africa which established
that there is a connection between colonialism and corruption.
Their study seems to be in agreement with Ake and Hatch’s line of
reasoning because Mulinge and Lesetedi assert that the practices
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of post-colonial bureaucratic elites are merely an extension of
colonial policies and practices.
Gumede (2012) continues in Corruption Fighting Efforts in Africa Because
Root Causes Are Poorly Understood with similar rhetoric used by Ake,
Hatch and Lesetedi when he asserts that most-well intentioned
corruption-busting remedies in Africa fail because the root
causes of corruption is often poorly understood. He further
contends that post-independent countries inherited deeply corrupt
institutions, laws and values from colonial and apartheid
governments. Gumede states that in the majority of the African
former colonies the colonial elites – people who the colonizers
handed power to – centralized political, economic and civic
power, exclusively reserving top jobs in the public and private
sector, as well as education only to fellow colonial elites.
Tangie Nsoh Fonchingong (2010), in The State and Development in
Africa, also shares Ake’s view that even though colonialism has
left, the colonial character is still present. Fonchingong
contends that colonization has obstructed the internal process of
state formation and development in Africa, and left
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authoritarianism, corruption and political instability.
Fonchingong believes that these attributes are still present as
the residue of colonialism, which he believes is being sustained
by foreign aid. Fonchingong asserts that these colonial legacies
constitute the main obstacles to development in post-colonial
Africa.
Sandbrook (1985) continues with the same rhetoric as Ake and
company in his book The Politics of Africa’s Economic Stagnation.
Sandbrook contends that Africa’s economic crisis is legion:
consistent decrease in Gross Domestic Product per capita, decline
in the export of primary products and in agricultural
productivity, underutilization of a modest industrial plant, a
severe Balance of Payments deficit worsening, inequality and more
extensive absolute power. Sandbrook contends that all of these
economic crises all stem from a corrupt government structure.
Brautigam and Knack (2004) authors of the academic journal,
Foreign Aid, Institutions, and Governance in Sub-Saharan Africa agree to some
extent with Ake that lack of development is due to the colonial
political structure. Brautigam and Knack acknowledge that
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colonialism did little to develop strong indigenously rooted
institutions that could tackle the development demands of modern
states. Brautigam and Knack, however focus the breadth of their
argument on the poor governance of the in the Sub-Saharan African
States. Both authors believe that poor governance is preventing
Sub-Saharan Africa from economic growth. Brautigam and Knack
believe the poor governance stems from poor quality institutions,
weak rule of law, an absence of law, an absence of
accountability, tight controls over information and high levels
of corruption.
Baliamoune-Lutz and Ndikumana (2009) takes a different
approach from the previous authors because Baliamoune-Lutz and
Ndikumana instead contends that corruption undermines economic
growth through its effects on investment. Their findings support
the view that corruption hampers growth, and calls for
institutional reforms to improve the quality of governance as a
prerequisite for achieving investment-led growth.
Oluwaseum Bamidele (2013), similarly to Balimoune-Lutz and
Ndikumana, asserts in Corruption,Conflict and Sustainable Development in
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African States that he believes that corruption is a major
challenge to Africa. Bamidele argues that corruption is
principally a governance issue, which is a challenge to African
democratic functioning.
Lawal (2007) contends, in Corruption and Development in Africa:
Challenges for Political and Economic Change, similarly to Bamidele, that
corruption has been at the centre of lack of development which he
thinks is an impediment to true and real development. Corruption,
he argues, has ravaged the entire African System, causing the
continent to be the most corrupt in the world. Corruption in
post-colonial Africa diverts already limited funds, undermines
economic progress and impedes policy changes required for
development.
Brempong (2001) also agrees with Lawal when he extrapolates
in Corruption, economic growth, and income inequality in Africa that corruption
does prevent economic prosperity, as his study found that
corruption has effects on economic growth directly and indirectly
through physical capital. Brempong investigated the effects of
corruption on economic growth and income distribution by using
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panel data from African countries and he found that a unit
increase in corruption reduces the growth rates of GDP and per
capita income by between 0.75 and 0.9 percentage points and
between 0.39 and 0.41 percentage points per year respectively.
These results indicate that increased corruption is most
definitely correlated with income inequality. The combined
effects of decreased income growth and increased inequality also
suggest that corruption hurts the poor more than the rich in
African countries.
Savo (2007) takes a different stance from these two schools
of thought because he conversely contends in African Stagnation and
Underdevelopment that Africa’s economic stagnation is partly due
to external actors such as the IMF and the World Bank. Savo
argues that these international institutions have a negative
impact on African economies because it makes African economies
static and that they can also impinge on the sovereignty of
African countries.
Ismi (2004) agrees with Savo’s notion that the IMF and the
World Bank have a negative impact on post-colonial African
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States. Ismi explains the roles of the IMF and the World Bank in
Impoverishing a Continent: The World Bank and the IMF. Ismi argues that the
US government dominates both of these bodies and has used these
bodies to economically subjugate the developing world. The World
Bank and the IMF are able to do this by forcing Third World
countries to open their economies to Western penetration and
increase exports of primary goods to wealthy countries. The World
Bank and IMF are able to force these countries to open their
economies through Structural Adjustment Programs (SAPS). SAPs
require governments to cut public spending – including
eliminating subsidies for food, medical care and education – and
raise interest rates, which reduce access to credit, privatizes
state enterprises, increases exports and reduces barriers to
trade and foreign investments such as tariffs and imports duties.
These measures are supposed to generate export-led growth that
will attract foreign direct investment and can be used to reduce
debt and poverty. A study conducted by the Structural Adjustment
Participation Review Network (SAPRIN) however has found that SAPs
actually blight economic growth instead of fostering it. The
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study found that SAPs have expanded poverty and inequality and
have torn the heart of African economies. SAPs have also caused
increased tensions in society; many extremist movements have
mobilized due to the impact that SAPS have had on life in
countries subject to them. SAPs from the IMF also delegitimize
the political systems of African countries because a foreign
body, via the IMF, is dictating the policies of a sovereign
nation. These steps amongst others, according to Ismi, have
multiplied profits for Western multinational corporations while
subjecting Third World countries to horrendous levels of poverty,
unemployment, malnutrition, illiteracy and economic decline. Ismi
contends that out of all the Third World regions of the world,
the IMF and the World Bank’s actions have affected the continent
of Africa the most.
Abed and Gupta describes SAPS in Governance Corruption &
Economic Performance as “economic genocide.” Abed and Gupta contend
that this is justifiably called economic genocide – because it is
carried out through the conscious and deliberate manipulations of
market forces – when compared to previous periods of colonial
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history (e.g. forced labor and slavery). Adel and Gupta,
similarly to Ismi, agree that the social impacts of SAPS are
devastating. Abed and Gupta assert that structural adjustment
programs directly affects the livelihood of people.
Nicholas van de Walle(2001) argues in his book African and
the Politics of Permanent crisis, 1979-1999 that foreign aid had
a powerful impact on African state’s institutions in that it
simultaneously sustained them and stripped them of decision–
making power and it undermined the state’s institutional
capacity. Van de Walle further contends that foreign aid is a
mechanism used to maintain the colonial political structure in
African countries after they gained independence.
Federici (2000), also agrees with Van de Walle’s notion that
foreign aid is a mechanism through which the colonial political
structure is propagated in his book A Thousand Flowers. Federici
argues that the IMF and the World Bank have imposed devaluations,
structural adjustments and have taken economic and political
decision making out power of the hands of African States through
conditionality.
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Ray Bush further opines a similar rhetoric about
international financial institutions when Bush argues, in Africa
and Globalisation (2008), that Globalization has transformed states
in Africa, and reduced their economic and political independence.
For instance, neoliberal globalization builds the growth and
development of one part of the world on the backs of other parts
which is fundamentally opposed to the theory of Free Markets.
Bush argues that Africa's difficulty is thus countering the
intellectual deceit peddled by international financial
institutions – that globalization brings universal economic
growth rather than a continued subordination to the rule of
capital. Bush further submits that globalization brings poverty
and inequality to Africa as a result of the continent's uneven
incorporation into the world economy. For Bush the main hope for
the future is not free trade, open markets and technological
gains, but rather it is resistance to the impact of globalization
by workers and peasants, and the construction by Africans
themselves of an alternative future.
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The central theme that seems to permeate into all parts of
the literature regarding the lack of economic growth in post-
colonial Africa, always seems to be Africa’s colonial past. For
instance, with the Political Structure and Governance literature,
it is seen how vestiges of colonialism are at the backbone of
African governments. Some of the proponents of this assert that,
the reason why the vestiges of colonialism remained in Political
Structure is due to the fact that when the colonial powers turned
power over to each African country, the colonial powers ensured
that they turned over power to the African elites who shared
their values. It can be inferred from these actions that what
really happened after Colonialism was essentially a change of
face, as opposed to any real change of hands. What, however,
remained the same was the political structure that the Europeans
had established. In some cases, according to Hatch, the new
ministers of the independent African states were asking senior
colonial officers about how inquiries regarding the jobs the
senior officials had left should be made. Essentially there was
an indoctrination to the political institutions that the
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Europeans had set up. Ake is one of the authors in this school
of thought, who argues that since power was turned over to the
Africans which worked under – and agreed with – the former
colonial masters instead of the Africans dethroning the colonial
masters, vestiges of colonialism remain embedded in the political
structure. Ake’s assertion is tenable since the political
structure that was used by the Europeans did not change, despite
the fact that the colonial powers have ceded power. Obviously
since there was no change in the political structure from
colonialism, vestiges of colonialism will remain. Authors in this
school of thought, also argue that the colonial powers turned
over power to African elites, who shared their interest.
Brautigam and Knack contend that the poor quality of
institutions, weak rule of law, absence of law, absence of
accountability, tight control over information and high levels of
corruption are the symptoms of poor governance. Essentially
according to Brautigam and Knack, poor governance stems from poor
quality institutions and no checks and balances. These tenets
give way to the second school of thought: Corruption. Proponents
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of this school of thought assert that there is a connection
between economic growth and corruption. Balimoune-Lutz and
Ndikumana contends that corruption is due to the weak
institutions of post-colonial Sub-Saharan African states, and
calls for institutional reforms to improve the quality of
governance as a prerequisite for achieving investment-lead
growth. Bamidele argues that corruption is a governance problem
which stems from poor government structure where there are no
checks and balances to ensure that there is accountability in
government. This idea traces back to colonialism because
corruption traces back to the political structure and the
political structure was created by the Europeans. The third
school, external factors, is not as directly connected with
colonialism but there is, however, an indirect connection.
According to Van de Walle, foreign aid is a mechanism used to
maintain the colonial political structure after African countries
gained independence. Walle’s argument seems feasible and seems to
coalesce with Ismi’s description of the role of international
organizations such as the IMF and the World Bank. Ismi argues
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that the US government has used these bodies to economically
subjugate the developing world. Van de Walle’s argument is
formidable when one looks on the oppressive policies of the IMF
such as Structural Adjustment Programs (SAP). SAPs require
governments to cut public spending (including eliminating
subsidies for food, medical care and education,) and raise
interest rates, which reduces access to credit, privatizes state
enterprises, increases exports and reduces barriers to trade and
foreign investments such as tariffs and imports duties. These
measures are supposed to generate export-led growth that will
attract foreign direct investment and can be used to reduce debt
and poverty. In truth though, SAPs actually blight economic
growth, not foster it. SAPs expand poverty and inequality, and
harbors social tensions. The idea that colonialist ideals are
still being reinforced, as Van de Walle contends, is seen when
the IMF uses SAPs to delegitimize the political systems of
African countries. The foreign body is able to do this through
conditionality, where they can tell these African countries where
and what to invest the money in their budget. In order to get the
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money that the IMF is offering, the African countries need to
comply by these policies. Essentially what this really does is
impinge on the sovereignty of the African states because states
should be able to govern their own affairs without an alien body
infringing on that.
In all three schools; Political Structure and Governance,
Corruption, and External Factors, the specter of colonialism
appears to always be the root cause of the host of problems that
post-colonial African States encounter, especially economic
growth. Many people have come up with various different reasons
as to why economic growth has been stagnant in Africa, but no
matter what all of the multifarious explanations and conjecturing
seems to find its way back to colonialism.
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