Five Barriers to Prosperity in Africa: Unchaining the Economy through Economic Freedom
Written by: Belinder Frenny Odek
For any region to grow genuinely, a system that enables and supports free markets must be created. People must be able to move freely, interact freely and add value to each other. Undoubtedly, Africa has the potential to achieve prosperity, but there are several barriers delaying the process, as explained below.
Anyone who is passionate enough about a prosperous Africa, will admit that you need more than just a pen, paper and time to depict the magnitude of corruption on this continent. We see, hear and experience corruption on a daily basis. The situation is disastrous, due to failed leadership that has created a very fertile ground for this vice to thrive. It is indeed a very sad state of affairs. Money allocated to various development projects conveniently find their way from government coffers into individual pockets.
In Kenya, parliament passed a Bill in 2013 stating that 30% of government tenders be awarded to women and youth. Crony capitalism, which is the order of the day, will not give convenient ground for this law to thrive. Corruption conveniently allows tenders to benefit friends of government and their allies.
Transparency International’s (TI) 2010 Corruption Perception Index (CPI), released in October 2010, identified Africa as the most corrupt region in the world, with Sub-Saharan Africa ranking as one of the most under-developed regions on earth. While governments commit large sums to addressing the plethora of problems hindering development on the continent, corruption remains a major obstacle to achieving much needed progress.
Over-Reliance on Foreign Aid
Africa is endowed with resources that if well harnessed and managed, would end dependence on foreign aid. History confirms that Africa has, for a long time, relied on financial aid – so much that our internal capacity to handle issues is totally neglected. The problem with foreign aid is that they reinforce the image of a continent badly in need of external help to resolve its problems. This contributes to a cycle of dependence. The truth is that, greater cooperation among African states is the most promising route to transforming the continent’s economic fortunes.
Artificial barriers such as high tariffs, inefficient transportation and reluctance to facilitate the free movement of people and goods within regional economic blocs are among the biggest factors holding back African economies. With some exceptions, such as the conflict-ridden South Sudan and the Central African Republic, Sub-Saharan Africa is booming. But more inter-regional commerce would bring even greater results.
There is a highly celebrated policy paper published in January 2012, in which the African Union and United Nations Economic Commission for Africa outlined a road map, whose implementation would see intra-African trade rise to 25 percent within a decade.
According to South African president, Jacob Zuma, the primary objective of this paper was to establish a pan-African free trade area that would end tariffs and import quotas, and create a free trade zone worth $2.6 trillion. Unfortunately, the African Union is known to be excellent at doing needs assessment and drafting recommendations, but not so much of anything else. The problem is that most of these recommendations lie comfortably on government officials’ desks for donkey’s years and many of them even end up not seeing light of the day. This is mainly due to protectionism and the need to preserve vested interests.
Government’s role should be limited to protecting lives and property. Anything else is detrimental to the growth of the economy. When government interferes with private businesses by imposing unnecessary regulations, it deprives the business of the opportunity to grow. Private businesses have the potential to grow into major business outlets, to create jobs and improve living standards. When this happens, even the rate of crime depreciates.
Terrorists leverage Africa’s failed leadership, where divisive politics create an enabling environment for them to steal dreams from Africans who are determined to see the continent move forward. This has wreaked havoc in quite a number of African states, posing a major threat to lives and property. Nigeria has had a taste of what terrorism can do to an economy. When terrorists make it clear that they can attack a country at will, potential investors shy away from doing business in such country. Small business owners suddenly lose interest in expanding their businesses. This will, no doubt, impede economic growth.
In conclusion, it is economic freedom, especially for those at the bottom of the economic ladder, that offers Africa hope. Only by removing the complex controls and interventions of the elites and giving entrepreneurs/peasants a good ground to thrive, will African nations move toward the attainment of higher standards of living, and above all, economic prosperity.
Consultancy Africa Intelligence (2010)
Transparency International’s (TI) 2010 Corruption Perception Index (CPI)
Author: Belinder Odek is a communications and journalism graduate from Moi University, Kenya.