African Progress

I often comment on Africa, not because I’m black, as much as it is a development nightmare, and big problems fascinate me.

This is only progress because it is in Africa, anywhere else it would be average to pathetic, when you consider how far behind most African countries are (as compared to the average developing nation outside of Africa). 5.4% is not fast enough growth for economies that low to pull enough people out of poverty in a way that can compete with inflation and population growth. “Moving at tandem with the rest of the world” is not enough. If East and Southeast Asia moved at tandem they would still be as poor as Africa.

AID to Africa should focus on 3 things: Education, Infrastructure, Disease. This is the only way they will ever attract significant FDI (foreign direct investment), outside of the normal resource whoring. FDI in the form of joint ventures is the only way African nations will ever hope to not only export raw materials but also developed finished goods in country and export them. Value added goods and labor intensive industries that can employee masses of semi-literate people is the only way Africans will ever really start the ball rolling.

That is not enough, all aid must have feedback loop to ensure it is allocated effectively. Corruption must be culled, even if that means doing what Vietnam and China do, putting politicians in front of a firing squad. In Africa, it is far more critical that this be done than in Asia, due to tribalism.

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World Bank reports progress in sub-Saharan Africa
By Sharon LaFraniere

Thursday, November 15, 2007
JOHANNESBURG: After enduring decades of economic collapse and stagnation, many countries in sub-Saharan Africa have turned a corner and are now growing economically at rates comparable to rates in the rest of the developing world, according to a report released Wednesday by the World Bank.

The report attributed Africa’s progress over the past decade in part to smarter economic policies, better government and fewer armed conflicts. The strong global economy, trade expansion and greater foreign investment have also helped the region.

“Africa is now moving in tandem with the rest of the world,” John Page, the bank’s chief economist for Africa, said.

Over all, the region’s economy grew by 5.4 percent in 2005 and 2006, faster than the economies of many developed countries and similar to those of developing nations other than India and China. Nations that export oil or minerals led the pack, but 18 others — home to more than a third of the region’s population — also performed well, the report said.

Africa still occupies the bottom rung of the world’s economic ladder. Forty-one percent of sub-Saharan Africans live on less than $1 a day — an improvement from 47 percent in 1990, but still the world’s worst poverty rate. A lack of skills, low productivity, red tape and poor infrastructure hobble business development.

The recent economic progress merely made up for ground lost during the plunge that accompanied independence and the painful belt-tightening that followed. Over all, Africa has simply recovered its position of three decades ago, the report says. “The reason: when things go well they do not last, and when they go wrong, they go very wrong,” the report states.

Still, Page said, Africa is at a turning point. He credits the improvement, in part, to the fiscal discipline advocated by the World Bank and the International Monetary Fund in the late 1980s and early 1990s.

But some African leaders now condemn the bank and the fund for persuading them to cut budgets and trim the ranks of teachers, nurses and other trained workers at a time when their countries, arguably, needed them most. And critics argue that in some nations with oil or other natural resources, growth has enriched an elite class but passed over the poor.

Page acknowledges some ill-advised outcomes. But over all, he said, many nations managed to reduce debt, tame inflation and set competitive exchange rates, setting the stage for economic growth. “The alternative would have been much worse,” he said.

The report offers a varied picture of Africa’s economic strengths: It takes just 14 days to start a business in the Central African Republic, for instance, but 233 days in Guinea-Bissau. South Africa is ranked among the top third of the best nations in which to do business, but over all Africa ranks in the bottom fourth.

More than 60 percent of the region’s direct foreign investment in 2005 was in its oil-exporting nations. South Africa and Nigeria, the continent’s leading oil producer, accounted for more than half of sub-Saharan Africa’s gross domestic product.

For the poor, the report states, avoiding drastic economic downturns is crucial because they suffer most from declines. “The question for economic policy-makers in Africa, then, is how best to sustain the pickups in growth,” the report states. “The answer: avoid crushing declines.”