Short Overview of African Countries
Lesotho. Small, landlocked, and mountainous, Lesotho's only important natural resource is water. Its economy is based on subsistence
agriculture, livestock, and remittances from miners employed in South Africa. The number of such mine workers has declined steadily over the past several
years. In 1996 their remittances added about 33% to GDP compared with the
addition of roughly 67% in 1990. A small manufacturing base depends largely on
farm products which support the milling, canning, leather, and jute industries.
Agricultural products are exported primarily to South Africa. Proceeds from
membership in a common customs union with South Africa form the majority of
government revenue. Although drought has decreased agricultural activity over
the past few years, completion of a major hydropower facility in January 1998
now permits the sale of water to South Africa, generating royalties that will
be an important source of income for Lesotho. The pace of parastatal
privatization has increased in recent years. Civil disorder in September 1998
destroyed 80% of the commercial infrastructure in Maseru and two other major
towns. Most firms were not covered by insurance, and the rebuilding of small
and medium business has been a significant challenge in terms of both economic
growth and employment levels. Output dropped 10% in 1998 and recovered slowly
in 1999.
Mozambique. Before the peace accord of October 1992, Mozambique's economy was devastated by a protracted civil war and socialist mismanagement.
In 1994, it ranked as one of the poorest countries in the world. Since then, Mozambique has undertaken a series of economic reforms. Almost all aspects of the economy
have been liberalized to some extent. More than 900 state enterprises have been
privatized. Pending are tax and much needed commercial code reform, as well as
greater private sector involvement in the transportation, telecommunications,
and energy sectors. Since 1996, inflation has been low and foreign exchange
rates stable. Albeit from a small base, Mozambique's economy grew at an annual
10% rate in 1997-99, one of the highest growth rates in the world. Still, the
country depends on foreign assistance to balance the budget and to pay for a
trade imbalance in which imports outnumber exports by five to one or more. The
medium-term outlook for the country looks bright, as trade and transportation
links to South Africa and the rest of the region are expected to improve and
sizable foreign investments materialize. Among these investments are metal
production (aluminum, steel), natural gas, power generation, agriculture
(cotton, sugar), fishing, timber, and transportation services. Additional
exports in these areas should bring in needed foreign exchange. In addition, Mozambique is on track to receive a formal cancellation of a large portion of its external
debt through a World Bank initiative.
Rwanda. Rwanda is a rural country with about 90% of the population
engaged in (mainly subsistence) agriculture. It is the most densely populated
country in Africa; is landlocked; and has few natural resources and minimal
industry. Primary exports are coffee and tea. The 1994 genocide decimated Rwanda's fragile economic base, severely impoverished the population, particularly women,
and eroded the country's ability to attract private and external investment.
However, Rwanda has made significant progress in stabilizing and rehabilitating
its economy. GDP has rebounded, and inflation has been curbed. In June 1998, Rwanda signed an Enhanced Structural Adjustment Facility (ESAF) with the IMF. Rwanda has also embarked upon an ambitious privatization program with the World Bank.
Continued growth in 2000 depends on the maintenance of international aid levels
and the strengthening of world prices of coffee and tea.
Zambia. Despite progress in privatization and budgetary reform, Zambia's economy has a long way to go. The recent privatization of the huge
government-owned Zambia Consolidated Copper Mines (ZCCM) should greatly improve
Zambia's prospects for international debt relief, as the government will no
longer have to cover the mammoth losses generated by that sector. Inflation and
unemployment rates remain high, however.
Zimbabwe. The government of Zimbabwe faces a wide variety of difficult
economic problems as it struggles to consolidate earlier progress in developing
a market-oriented economy. Its involvement in the war in the Democratic Republic of the Congo, for example, has already drained hundreds of millions of
dollars from the economy. Badly needed support from the IMF suffers delays in
part because of the country's failure to meet budgetary goals. Inflation rose
from an annual rate of 32% in 1998 to 59% in 1999. The economy is being
steadily weakened by AIDS; Zimbabwe has the highest rate of infection in the
world. Per capita GDP, which is twice the average of the poorer sub-Saharan
nations, will increase little if any in the near-term, and Zimbabwe will suffer continued frustrations in developing its agricultural and mineral
resources.
So the generalization is
obvious. The countries which have the highest GDP per capita are oil, gas as
well as other raw materials exporters. Almost none of the countries has stable
source of incomes. Oil exporters are in a better condition then the last, but
it has a number of negative consequences. The first is that their economy are
heavily dependant on the oil prices. The next is that even the richest
resources may be easily wasted if the incomes are not managed properly. The
corruption in a government, continuous possibility of warfare wouldn’t let
foreign capital flow easily into these countries. Even the oil fields couldn’t
attract investitions if there’s no political stability. Though the most
population of these countries are involved in agriculture the most of them
couldn’t provide enough food for themselves. The reason is simple lack of water
resources. A number of countries having a lot of resources are not able to use
them efficently because of continuous warfares, which are draining budgets.
These are the major negative facts considering African economy, but there are a
lot of positive ones.
According to ECA’s "Africa Economic Report 2000" shows, for
five years running, Africa's GDP has grown faster than its population,
reversing the falling living standards of the previous 15 years. While growth
trends for the region as a whole remain depressed, some African countries are
doing well. Fourteen countries have grown on average by 4 percent a year during
the 1990s, with rising annual incomes of 2-3 percent and even higher, with
another 10 countries following close behind with growth rates above 3 percent a
year. Some countries have grown at 7 percent a year or higher (Mozambique, 7 percent, and Uganda, 7.1 percent). "These figures show us that
economic reforms over recent years have slowly but surely improved growth in
many African countries and allowed the private sector to take root," says
Alan Gelb, Chief Economist of the World Bank's Africa region. "However,
despite this rising trend, countries are still vulnerable to conflict and
external shocks in world markets, such as the recent rapid increase in oil
prices and fallout from the East Asia crisis. These two forces have together
produced highly unfavorable terms of trade for oil importers."
Now shortly about the social indicators. Although life expectancy has risen
slightly in Africa, this is happening at a slower rate than elsewhere and,
since 1990 the HIV/AIDS epidemic has caused it to decline, especially in
countries with high adult infection rates. In Zimbabwe, for example, life
expectancy has fallen by five years, while in Botswana, it has fallen by over
ten. Life Expectancy at birth is
ranging between 37 year (Sierra Leonne) and 71.8 year (Seychelles). The rule is that Africans
living in countries beset by conflict are more likely to have shorter life
expectancy at birth and have higher infant mortality rates than other more
stable countries. Sierra Leone is a striking illustration of this trend with
the region's lowest life expectancy rate at just 37 years, and its highest
infant mortality rate at 169 deaths per one thousand. Child mortality is a particularly acute problem for many countries in Africa. Infant mortality is close to 10 percent, and on average 151 of every 1,000 children
die before the age of 5, although in many countries the mortality rate exceeds
200 per 1,000. Illiteraci level is
extremelly high for the whole territory of Africa. Population per physician
oscillates in the following range lowest: 827 (Seychelles), highest: 53986 (Niger). There’s no use to say that population per hospital bed is also in very poor
condition. Despite major strides that had been
made in the eradication of malaria, the disease is on the rise again throughout
Africa. Elsewhere in the world HIV/AIDS is on the decline. In Africa, HIV/AIDS has reached pandemic proportions, threatening to wipe out Africa’s fragile social and economic gains. Two-thirds of the world’s 34 million AIDS
sufferers are in sub-Saharan Africa. Today in 21 African countries more than 7
percent of adults live with HIV/AIDS, with the highest absolute number of cases
found in South Africa, where one in every five adults has contracted the virus.
Countries like Niger, Sudan, and Mauritania, which have some of the lowest
incidence of AIDS in the region, offer great potential for control.Yet as
countries like Senegal and Uganda show, with the necessary political will and
resources, the AIDS pandemic can be rolled back. A little bit better situaion
is observed in the sphere of education. The new report shows that Africa has made more progress in education than in health with literacy rates improving for
both men and women. At 41 percent, the illiteracy rate in the region is still
high compared to rest of the world, but it is at its lowest point ever. Of particular
significance is the advance being made in girls' education. While this
represents welcome progress, far more needs to be done. Half of Africa's children of school going age are out of school; this is even lower in rural areas
and among girls.
The statistical data may
vary depending on source due to the insufficent automatization of statistical
institutions of the region. That’s why World Bank approved a grant to transfer
systems to six Southern African countries (Mozambique, Botswana, South Africa, Lesotho, Tanzania, and Zambia) to strengthen their statistical reporting capabilities. "The
quality of development data depends on the source. Our goal is to empower
statistical offices in Africa, and help them to move from hand-written National
Account tables to a modern system that is easy to adopt, maintain, and capable
of delivering quality data," says Ziad Badr, the team leader of
African Development Indicators 2001, and a senior World Bank economist in its
Africa region. "This will bring statistical institutions in Africa into the new millennium, and provide a reliable system to measure development
progress and identify remaining challenges."
In summary, macro balances, or
getting the prices right, is not economic reform just as casting a ballot is not
democracy. The hallmarks of a capable state are strong institutions of
governance; a sharp focus on the needs of the poor; powerful watchdogs; the
rule of law; intolerance of corruption; transparency and accountability in the
management of public affairs; respect for human rights; participation by all
citizens in the decisions that affect their lives; as well as the creation of
an enabling environment for the private sector and civil society.
4. Economic organizations in Africa
The main
economic power of Africa south of the Sahara Desert is South African Republic.
Through its well developed infrastructure and deepwater ports, South Africa handles much of the trade for the whole southern African region. In 1970 its
immediate neighbours, Botswana, Swaziland and Lesotho, and latterly Namibia, signed the Southern African Customs Union (SACU) enabling them to share in the
customs revenue from their trade passing through South African ports. In order
to counter the economic dominance of South Africa in the southern African
region, the countries to the north of it organised themselves into the Southern
African Development Conference (SADC). Member states include those of the SACU
as well as Angola, situated north of Namibia, and it's oil-rich enclave of Cabinda, and Mozambique on the east coast, and the countries of south-central Africa, Zimbabwe, Zambia and Malawi. Kenya, Uganda and Tanzania signed Treaty for Enhanced
East African Co-operation in order to allow free flow of goods and people. The small landlocked central African countries of Rwanda and Burundi form part of an economic union of countries in the central African
region. Other members of the Economic Community of Central African States are Cameroon, the Central African Republic, Chad, Equatorial Guinea, the oil-rich Congo and Gabon and the vast country of the Democratic Republic of Congo. The Economic
Community of West African States (ECOWAS) is a solid geographical bloc of 15
states from Nigeria in the east to Mauritania in the west. The countries of Mauritania, Mali and Niger are located in the southern stretch of the Sahara Desert while the remaining countries are splayed out along the coast line. As a result
of their respective colonial histories, these countries are divided into French
and English-speaking states. The francophone countries include the republics of
Benin, Burkina Faso, Togo, the Ivory Coast (Côte d'Ivoire), Guinea and
Senegal while the remaining states of Nigeria, Ghana, Liberia, Sierra Leone,
and the Gambia have English as their official language. The Republic of Guinea Bissau is a Portuguese-speaking state to the south of Senegal.
5. Problems
and ways to solve them
The biggest
challenge to doing business in Africa is the lack of quality information about Africa. Some of the other challenges of Africa are:
·
fluctuating
currencies
·
bureaucratic red
tape, which is slowly getting easier to wade through
·
graft and
corruption
·
nepotism
·
wars and unrest,
though the changes in South Africa are starting to create a ripple of peace and
democracy throughout the region
·
lack of local
capital
·
monopolies such
as marketing boards, state trading firms, foreign exchange restrictions, trade
taxes and quotas and concentration on limited commodities all place a
disincentive on exports, thus delinking Africa from the world economy.
·
lack of
infrastructure, though in areas such as telecommunications and energy, Africa is able to use new technologies to leapfrog more advanced economies
However,
none of these challenges is insurmountable; in fact, some entrepreneurs would
contend that African risk is lower than that even of North America.
There is
hardly could be a person, who is able to resolve all the problems considering
the challenges in the list. But there are a number of tasks to be completed in
order to improve the quality of life and gain stable economic growth.
Resource mobilization To halve poverty by 2015 countries
must reach the 8 percent growth in GDP each year, instead of present 4.4 %. To
reach this rate investments must be 40 percent of gross domestic product. Even with major increase in domestic
savings, there are still huge financing gaps. Africa’s rate of return on
Foreign Direct Investment is 29 percent per year, higher than any other region
of the world. Annual average foreign investment flows have increased from $1.9
billion in 1983-87 to $6 billion in 1993-97. But this is just 4 percent of the
total investment pouring into developing countries. In the face of global
financial volatility, Africa's nascent capital markets have also remained buoyant.
Yet institutional investors remain resistant to the possibilities in Africa. African countries have undertaken significant economic reforms, but investment has
not come.
Regional
co-operation Regional integration is the key to Africa's success in the
21st century. The challenge is for the subregional initiatives to
march together and in step with the World Trade Organization.
Information
technology Information and communication technologies present some of
the most exciting possibilities for Africa in the new millennium. “With new
ways to communicate we can leapfrog through several stages of development; cut
the cost of doing business; and narrow the gap of huge distances. …At ECA, we
want to make sure that Africans are drivers, not passengers, on the information
highway…” says Dr. K.Y. Amoko, executive secretary, Economic Comission for Africa. at the National Summit on Africa held in Washington D.C. 17 February 2000. There
was registered a significant growth in Internet spreading through the continent.
E-Commerce, television and radio are also developing rapidly.
Governance Ensuring and sustaining good
governance must be an African responsibility, first and foremost.
Social investment. Social spending has become a major
casualty of recent budget cuts in many African countries. To expect that Africa can progress when investment in its human capital is declining is a classic case of
being penny wise and pound foolish. Social investment challenges of
health, education, housing, water supplies and sanitation are enormous and
demand the creativity and partnership of all caring parties.
Gender equality Excluding Islamic countries, Africa is the most remarkable region in terms of discrimination against women. Since the
UN's Fourth World Conference on Women in Beijing in 1995, the world better
understands the need to free women to become equal participants in development.
This is not just a matter of rights but of good economic sense. “It is past
time to lead by rhetoric; it is time to lead by example.” (from the National
Summit on Africa documents”)
Preventing conflict The world has learned expensively
that it is cheaper and far more humane to prevent conflict than to fight a war.
So it is one of the most actual problems for African countries. To quote the UN
Secretary General, "in the past twenty years we have understood the need
for military intervention where governments grossly violate human rights and
the international order. In the next twenty years we must learn how to prevent
conflicts, as well as intervene in them." Peace can no longer be just
about peace making and peace keeping. It is also about peace building.
African diaspora must also take part
in ongoing processes. A lot of Africans live in European countries as well as
in United States. They are able to help their historical homes in three major
ways.
First, Become an Advocate for Africa: For every devastating image of Africa they see on television, not far from that
camera there is an image of people striving to develop. As a start, they should
visit Africa, spread the word about it, become a personal lobbyists for Africa. They must lobby for African products in their stores; lobby for strong US-Africa
ties.
Second, Invest in Africa: Investing
in Africa could be profitable. Now is the time for African-Americans to put
their money where their mouths are. They can invest in Africa, through such
convenient ways as the mutual funds that concentrate on Africa. Members of
other diasporas have accelerated development in their ancestral homelands
through widespread individual investments. Surely African-Americans can do it,
too.
Third, Invest
politically in Africa, 40 percent of United Nations assistance is
currrently going to Africa. When the US and other flourishing countries pay
their UN dues, when someone pays voluntary contributions to United Nations
he/she helps Africa. Foreign aid helps building schools as well as improving
governance in terms of efficancy.
While many
write off Africa as the continent of despair, other enterprising individuals
and organisations have recognised the huge, untapped potential of Africa and are actively pursuing business ventures across the continent.
African Development Indicators show
clearly where the regions greatest social challenges and opportunities lie.
Indeed, Africa's future economic growth will depend less on exploiting its
natural resources, which are being depleted and are subject to long-run price
declines, and more on its labor skills and its ability to accelerate a
demographic transition.
Africa's opportunities, which range in
risk from investing in emerging market funds or one of the listed
multinationals active in Africa to trading with African partners, include:
·
oil and gas (Angola and Libya);
·
mining (West and
Central Africa);
·
privatisations (South Africa and Nigeria);
·
international
trade (oil producers and SADC);
·
infrastructure
(pipelines, roads, telecommunications);
·
stock exchanges
that are mushrooming in many countries
·
using educated
English and French speaking African nationals
·
and leisure (big
game + beaches + golf + climate + satellite + Internet + cell + low cost
structure = huge telecommuting opportunity).
However,
perhaps Africa's greatest opportunity lies in its biodiversity, which ranges
from Sahara desert to tropical jungle, from snow-capped volcanic Mount Kilamanjaro to the beaches of East and West Africa. Then there is the excitement of
stalking big game in the African bush to the thrill of whitewater rafting
through the gorges below Victoria Falls or the awe of seeing the Egyptian pyramids
at sunrise. Africa is going to become the telecommuting centre of the world, in
the short to medium term, ecotourism provides the opportunity to develop
leisure complexes which can take advantage of game parks, golf courses, beaches
and beautiful scenery one day. “We need to stop thinking of ourselves as a single engine
train, but rather a jumbo jet, with several engines revving up for take off,
and several more back ups in case of engine failure.” said K.Y. Amoako
Executive Secretary of ECA at the 40th Anniversary of Africa
Confidential.
6. Conclusion
At the end
few words comparing Armenia with the African region. The main difference is
different natural resources of these regions. Africans may get started their
economic growth with incomes from exporting oil, gas, precious metals and
jewels. Alas, Armenia have no this option. Our country have no significant
resources to exploit them or not to exploit, meanwhile for Africa devastation
of resources may stimulate the economy in the case of peace and efficient
government. There are also a lot of differences in terms of agriculture.
Arfican countries cover wide territory, but they have problems with irrigation.
In the case of Armenia it is important to note, that the situation is just the
opposite. Even the most severe droughts can not be compared with deserted areas
of black continent, but the land is highly limited. I think that the last point
of comparison, which is as important as the previous ones, is the labour force.
Labour force is one of the main differences between former USSR republics and the developing countries of African region. As a result of USSR educational system Armenia has educational level which can be easily compared even
with the most developed countries.The level of literacy is 99%, which is higher
than in African countries. Armenian in spheres of programming, medicine,
science highly priced all over the world. The main problem in these sphere is
brain drain. So the primary task for government is to stop this process. With
the foreign investitions Armenia is able to establish advanced technology
production, which is not available for Africans. This could be a good impulse
to become a new “tiger”.
So our
regions have different prerequisits, different ways of developing, but same
aim, and unfortunately obstacles in terms of government and unstable peace.
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