Is Africa's economy crisis a results of the crisis of governance
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Africa has a negative tag of being 'the world's poorest continent' and as such is viewed as an object of pity world over despite having vast natural /raw resources. There are many reasons for Africa's poverty such as the poor colonial inheritance, dependence on raw materials, difficult geography, natural disasters etc. However, the most important barrier to Africa participating in the international economy is the crisis of governance. Despite the continent realizing an economically active population increase of about 32.6% between 2000 and 2010 Africa achieved an average growth of 4.9% during the same period. African countries are extremely open to the international economy as exports plus imports constitute a very significant share of the total economy. Africa's share in world trade is about 3.2%.
As a concerned economic and political bloc, the Africa Union in an effort to shade off the tag, under its auspices, enabled the creation of financial institutions such as the African Central Bank, the African Monetary Fund and the African Investment Bank to foster economic integration and development.
Overall, AfricaÂ´s economic performance has shown steady improvement in recent decades showing a more balanced and stronger growth. Energy products contribute to more than half of Africa's exports products, almost the same level over the past years, showing the lack of diversification of Africa's exports.
Following the world economic recovery, although timid in the advanced countries but particularly robust in the emerging economies, Africa achieved average growth of 4.9% in 2010 compared with only 3.1% in previous year and one of the reasons was inflow of revenue as a result of its involvement with 'emerging partners'.
Thanks to the look east nonaligned policies of bargaining with "old" and "new" powers taking centre stage across the continent. As a result, Africa has gone through a remarkable decade of economic transformation. Trade between Africa and its new partners is now estimated to be more than USD 673.4 billion a year. And this year's African Economic Outlook describes and analyses Africa's surge in relations with their â€œemerging partners", who are now on the top table of economic decision making alongside the â€œtraditional partners" from Europe and North America. The continent is abuzz with talk of new investment, new cities, new airports, new refineries etc.
The share of women in the economically active population in Africa has shown some promising progress in the last decade. This share went up from 40.3% to 41.0% over the ten years under consideration. This has been seen as a positive development in empowering women and facilitating their participation in the economic development of the continent.
Africa's heavy dependence on natural resource exports poses difficult and persistent problems. These arise from the characteristics of natural resources such as exhaustibility, negative externalities associated with their extraction and consumption as well as price volatility. The state in Africa has a crucial role to play in facing various current and emerging development challenges. Diversification of production and exports is an important element of transformation.
Are new players hindering Africa's industrialization, debt sustainability or governance? Whatever the case Africa needs a clear engagement strategy and all sides must show greater transparency.
Most African governments have not managed to commit themselves to policies that guarantee sustained growth and have in the past or are now experiencing considerable conflict in vicious attempts to assert their political superiority in areas like the DRC, Somalia, and Sudan etc. Such unimpressive security problems lead to investor apathy, fatigue and despondency.
African countries face when developing relatively labour-intensive raw materials is the competition, especially from China and India. These two giants have a seemingly inexhaustible supply of low-cost labour in business environments where most business transactions are relatively less expensive. African countries have skill gaps that impede growth and despite the heavy use of foreign skilled labour by non-African countries that have developed in the past. Continents such as India or China regarded as â€œnew partners" have had long-lasting relations with Africa although marginal until the last decade.
Whilst we recognise the need for political independence in Africa and elsewhere, we equally advocate for total economic emancipation of sovereign states as they try to break away from the colonial yoke of previous masters entrenched over a protracted period of time.
We realise that African states face a number of significant challenges to productive participation in the international economy and therefore suggest that they implement significant domestic reforms before they can hope to increase their niche. We call upon all former occupiers to honour their obligations in assisting the freed nations escape the vices of industrial marginalisation. We believe that African governments must take the responsibility for formulating appropriate development policies that are best carried out through constant dialogue with key social and economic agents on both the production and consumption sides as opposed to unilateral styles which result in scaring foreign investors.
Source: Zimbabwe People's Movement
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