Date: Wed, 25 Jan 1995 03:45:13 EST
Sender: The African Global Experience <>
From: Erisa Ojimba <>
Subject: Africa - A Continent Marginalized (fwd)

From: (Mrex)
Newsgroups: soc.culture.nigeria
Subject: Africa - A Continent Marginalized
Date: 24 Jan 1995 21:20:07 GMT

Africa - A Continent Marginalized

Mrex <>. 25 January, 1995.

In December 1992, Boutros, Boutros-Ghali, the UN secretary-general said the following regarding Africa:

Some are inclined to write Africa off as hopeless. Others see Africa as a special case to which the principles of economics do not apply. I reject such views. It is our approach that has failed. Africa has not. . . We need to bear in mind that Afro-pessimism is widespread in the world outside. We face a challenge. We must overcome pessimists.

The so-called *Afro-pessimists* are definitely an easy target for those who are loath to confront the scope of Africa's lingering crisis.

Among the reasons offered for Africa s economic problems are: the legacy of slavery and colonialism, the Structural Adjustment program prescribed by the World Bank in the 1980s and their harsh impact on everyday life for ordinary Africans. Other reasons include the miserly aid and restrictive trade policies of technologically developed countries and the leaders of the continent's penchant for stealing from the public treasury.

For those who think that Africa has enough industry and resources to forge ahead by closing itself to the world, perhaps the following will convince them otherwise. Despite $170bn in net development assistance, Black Africa, excluding some in the Southern part of the continent continue its downward march. Incomes per head in Africa fell 1.1 per cent a year between 1982 and 1992 - partially a result of the huge decline in Nigeria s GNP during this period - compared with 0.8 per cent increase for all Less Developed Countries (LDCs). In East Asia, the growth rate during this period was 6.4 per cent for its developing countries.

The size of aid going to Africa in coming years will probably decline. If the aid plan of the new Republican Congress is an indication of future trends, then it bodes ill for Africa. The US aid to Africa is very meager, if Egypt is excluded. The real test is whether foreign investment and returning capital flight that has bedeviled Africa can make up for Africa's needs in capital and an ability to generate domestic savings.

To be sure, there are success stories. Throughout the continent, infant mortality has been cut from 137 per 1,000 live births in 1972 to 107 in 1991, and life expectancy has grown from 45 years to 51 years in the same period. All these occurred despite declining commodity prices in world markets in the 1980s and the doubling of the share of export earnings going to service external debt.

Why Do Sub-Saharan economies perform poorly?

The first broad explanation is that most African governments have not been serious about structural adjustment. The second explanation is that the experience of those countries that have adapted the structural adjustment programs (SAP) as prescribed by the World Bank suggests that the programs, while necessary is not sufficient to bring about sustained economic growth.

One of the reasons why SAP is harder to sustain is the time-lag between policy and results. Perhaps the most overriding reason is the urban elite, who dominate government in Africa. Their interest invariably runs contrary to economic reform. Many of rulers in Africa are politically dependent on the corruption and patronage which economic reforms are meant to curb. Thus African leaders are saddle with a strategy which few of them believe in and most of them condemn. They only put up with it for fear of international economic isolation.

Nigeria s Experience

Nigeria failed in its effort to reform its economy despite the need for such reforms. The rewards from a distorted foreign exchange enjoyed by powerful members of the elite and city dwellers. The distorted exchange rate of the 1970s in most African countries created an import dependent economy. Asian countries kept their currencies undervalued in order to pursue an export strategy while their African leaders, in contrast, pursued policies of over-valued exchange rates. That led to enormous corruption via import licenses and the crushing burden of external debt that has come to haunt the continent.

When General Babangida instituted the reform package called SAP, the reform was bold, the naira was devalued 66 per cent, import licensing was abolished, most prices were deregulated and some form of monetary reform was introduced. Inflation immediately tumbled and export of the non-oil sector that had been declining in the previous decade was partially halted. Within 18 months of the program, opposition to the program was fierce, especially from those who had lost out from their preferential treatment in the allocation of foreign exchange. The government soft-pedaled and the rest is history. Nigeria went back to printing nairas and the resultant inflation with its pressure on the exchange rate.

Nigeria's 1995 Budget
The budget of Abacha (January 1995) has tacitly acknowledged its error in trying to control the movement of foreign currency in and out of Nigeria. They have now deregulated the foreign-exchange market and lifted exchange controls. Now, businesses can buy and sell foreign exchange at market rates. The Nigerian Enterprise Promotion Decree was repealed allowing for unrestricted foreign ownership of ventures in Nigeria.

The deficit of $4 billion in 1994 - a full 12 percent of GDP - is still an eyesore. For some of my friends who think that the World Bank and the IMF are responsible for Nigeria s foreign exchange crisis, look no further, you have your answer.

When Will Africa Get Out Of The Mess?

Africa's problems require a combination of external as well as home-baked solutions. I disagree with those who advocate isolationism or unbridled capitalism as dictated by the World bank for our solutions.

First, Africans must demand change and only then would it come. Our educational institutions should be re-energized to produce the likes of Nobel Laureate Wole Soyinka, Chinua Achebe and Mr. Mandela. More emphasis should be placed on primary and secondary education as well as vocational training instead of the present emphasis on University education.

Internal revenue generation needs to be revamped in most of Africa. The Nigerian government, for example, loses millions of dollars each year to corrupt custom officials. The revenue generated in one part of a country should not only benefit country as a whole but the producing area. That is not the case in most of Africa right now.

Restraint on population growth must be tackled sensibly by taking into account deep religious feelings and traditions. The best solution is one that puts premium to the education of young girls. Educated women tend to have fewer children.

Finally, the infrastructure must be a priority, for no development can take place without it.