Economics in Africa

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Nickle | 1 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,

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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Works Cited

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