African Partnership - A Corner Stone for Global Economic Development
By Dr. RAVINDER RENA
[Eritrea Institute of Technology]
The G8 summit, which met in Gleneagles in Scotland from 6-8 July 2005, has put Africa at the top of its agenda. In March 2005, the Commission for Africa that was set up by Tony Blair also called for another $25 billion for the next three to five years. Besides, in January 2005 it unveiled the results of its Millennium Project, which called for a doubling of aid worldwide. The Millennium Development Goals (MDG) has been set up in the year 2000 with a dead line to achieve them by 2010. The MDGs include: halving poverty and hunger, arresting disease and environmental degradation, helping newborn babies survive infancy and educating them in childhood etc.
At present economic growth rate, Africa will meet none of these goals. It is reported that in many countries in the continent, income per head has yet to regain levels reached in the 1960s. Life expectancy is in decline. The continent is burdened by disease. According to the studies available, African accounts for 1.2 million deaths from malaria and 75 per cent of the deaths globally from AIDS in 2004. Besides, it is to be noted that Africa is disfavored by geography i.e. less than quarter of sub-Saharan Africans live within 100 km of the coast. Thus, it can attract and amass too little capital, it is too poor to save: its national savings were just 16 per cent of GDP in 2003, whereas in East Asia it was reported that they were 42 per cent. According to the reports, the West has spent $450 billion on foreign aid to Africa over the past 40 years.
Further, the Commission for Africa’s plea for $25 billion represents just 0.08 per cent of the 22 richest donors’ national income; the Millennium Project ambitions require donors to raise their worldwide spending from just 0.25 per cent of GDP to about 0.5 per cent by 2015. It is to be noted that America’s post-war Marshall Plan for Europe, allocated more than 1 per cent of America’s national income albeit for only four years.
Hence, a fraction of G8 income, these sums are huge relative to the size of the African economies they would help. It is also reported that about a dozen of African counties already depend on aid for a fifth or more of their national income. For example, Mozambique relied on it for more than half in the mid 1990s.
Most part of sub-Saharan Africa has a level of human development that would have been familiar to pre-industrial Europe in the 18th and 19th centuries. It is to be reported that only 12 per cent of the roads in Ethiopia are paved, life expectancy in Mozambique is 38, Eritrea is 55, and the average yearly income per head in Sierra Leone is about £86, Eritrea $ 230 and Ethiopia $110.
Many countries in Africa got their independence at least a decade to four decades ago. However, the development path seems to be very slow. Here, the question is: what kind and how much investment is required to develop the poor countries of Africa to replicate the success stories of Asia particularly, China, Singapore, Thailand, Taiwan, South Korea and India? It is impossible to develop a country or continent without pain and/or hard work.
Action across a broad front is required, instead of including increased aid and debt relief, improved trade conditions and governance is needed in the continent. The key word here is partnership: the West provides finance to kick-start development via debt relief and better aid; Africa does its bit by improving the way it manages its affairs.
Africa's biggest challenge is to compete in the global economy. Is its deficit in human capital formation? It is a known fact that economic strength depends on size or command over natural resources and also on the quality and skill level of the labour force. Besides, the ability to cope with complex production techniques and technological changes that are cropping up in Global arena, Africa requires healthy and educated workforce.
It is reported that life expectancy has been falling in much of sub-Saharan Africa over the past decade because of HIV/Aids. Malaria and tuberculosis kill for want of affordable drugs and healthcare workers. The report sets African Governments a target of a million health workers being needed by 2015.
With education, the picture is equally bleak. According to research reports, more than 100 million African children are not in school; only a small proportion goes on to secondary school. Girls are less likely to be in class than boys though development experts say female education is critical to health improvements.
The priority is ensuring that things do not get worse — hence the emphasis is given to minimize HIV/Aids in some African countries like Uganda, Botswana, and Eritrea etc. However, investment is also needed in physical infrastructure. Lack of roads and railways is inhibiting trade in Africa with farmers unable to get their goods to market and have few links to facilitate intra-regional trade, let alone access to international trade. It is reported that Africa requires an extra $10billion a year for infrastructure until 2010, and $20billion a year in the following five years.
The concern among many economists is that what Africa needs, are not resource-hungry, large-scale farms producing cut flowers for the West, but policies supporting the poor — such as credit being more widely available particularly to the rural people, investment in rural roads, and support for small-scale enterprises.
It is to be observed that the continent has had serious problems of governance; it will not be easy to dislodge special interest groups from their control of resources. The evidence is, aid doesn't work well in environments with bad institutions. Developed countries must realize that their future growth depends on catering to the needs of developing nations. For example, mobile phone industries in developed countries must reduce the price for more than 50 per cent to sell the mobile phones in developing countries particularly in Africa. When the customers in Africa get the affordable right, this would certainly increase the market 20-30 million customers a year for the coming 5-10 years. Therefore, the partnership with African countries is imperative that will eventually support the global economic development.
Author can be contacted for feed back comments by email: drravinderrena@gmail.com
Dr. RAVINDER RENA, M.A., B.Ed., LL.B., M.Phil., Ph.D., Asst. Professor of Economics, Dept. of Business and Economics, Eritrean Institute of Technology (Under Ministry of Education), Mai Nefhi, The State of Eritrea.
Sunday, December 11, 2005
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