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Development perspectives and priorities in sub-Saharan Africa: An overview of the difficult economic conditions of the region and what can be done to improve them

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
March 1981
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Shankar Acharya

The 46 countries of sub-Saharan Africa vary enormously in their climate, geography, cultural heritage, and political institutions. But despite this underlying diversity, these countries share a number of common features and predicaments. Most of the sub-Saharan countries had been bypassed by commercial and technological developments in the rest of the world until the late nineteenth century “scramble for Africa” brought European rule to the continent. From then until about 1960 these countries shared the experience of European colonialism and, at independence, took over the institutions which had been largely created during the colonial era.

The similarities in economic structure are also quite marked. With the exception of Ethiopia, Nigeria, South Africa, and Zaire, the African countries are small, with populations of less than 20 million. Agriculture is the dominant activity, providing the means of livelihood to over 70 per cent of the population and accounting for 40-60 per cent of gross national product (GNP)—except in a few countries, such as Botswana, Gabon, and Zambia, where mining is an important sector. For most of these countries, the ratio of foreign trade to national product is high—20 per cent or more. Exports are mainly concentrated on a few primary commodities, while the small modern sectors of these economies are heavily dependent on imports. As a result, these economies are very vulnerable to changes in external market conditions. Finally, in coping with the varied tasks of economic development, the African economies are ail severely handicapped by shortages of entrepreneurs, administrators, and technical personnel.

According to the World Development Report, 1980, GNP per capita in the oil importing countries of sub-Saharan Africa grew at less than 1 per cent a year during the 1970s. And even under optimistic assumptions, annual per capita income growth is not expected to exceed 1.5 per cent during the 1980s. Such bleak prospects for growth are particularly disquieting, given that almost one half the population of sub-Saharan Africa is estimated to be living in absolute poverty.

The key to more rapid growth and poverty alleviation in most of these countries is to improve productivity and incomes in the agricultural sector. This will entail mammoth efforts to make the best of meager resources and support them with appropriate policies.

Conditions in agriculture

At independence (around 1960 for most African countries) the agricultural sector in most African economies suffered from severe handicaps. Over large tracts of the continent, the natural endowment of soils and climates was inhospitable to farming; the technology was primitive—manual cultivation with the hoe was the norm and even ox-drawn ploughs were a rare sight. The infrastructure of roads, markets, credit facilities, and extension services was grossly inadequate in relation to the size and importance of the agriculture sector. The limited development of support services that had occurred during the colonial era had been largely confined to a few cash crops such as coffee, cocoa, and cotton, which had been developed for export. The research, extension, and support services necessary to sustain yield increases were sorely lacking in the crucial area of food crops. Yet these crops were the principal source of livelihood for African smallholder peasants, who constituted the overwhelming bulk of the rural population.

A few countries recognized the crucial importance of developing policies to increase the productivity of smallholder agriculture. To varying degrees, Ivory Coast, Kenya, and Malawi acted on the need to sustain remunerative price incentives for peasant agriculture while providing government support through the development of transport infrastructure, research, and extension services. The successful adaptation of hybrid maize for cultivation by smallholders in high-potential areas of Kenya was a rare success story of adaptive research in food crops in sub-Saharan Africa.

However, in the majority of African countries, the development of smallholder agriculture lagged well behind potential, particularly in such mineral-rich nations as Zaire and Zambia. In some countries, such as Ghana, Sudan, and Tanzania the initial programs of agricultural development concentrated scarce public capital and trained manpower on a few large-scale schemes, while the majority of peasants remained generally untouched by the development effort. Governments in Ghana and Tanzania also experimented with far-reaching institutional reorganizations of the rural sector: the mechanized state farms of the early 1960s in Ghana, the village settlement schemes of that period in Tanzania, and the more recent “ujamaa” and “villageization” programs of Tanzania. Thus far, the results of these initiatives have been, at best, mixed.

Sub-Saharan Africa: basic data
GNP per
Populationcapita
(In millions(In 1978
In mid-1978)U. S. dollars)
Angola6.7300
Benin3.3230
Botswana0.8620
Burundi4.5140
Cameroon8.1460
Cape Verde0.3160
Central African Republic1.9250
Chad4.3140
Comoros0.4180
Congo1.5540
Djibouti0.3450
Equatorial Guinea0.3
Ethiopia31.0120
Gabon0.53,580
Gambia, The0.6230
Ghana11.0390
Guinea5.1210
Guinea-Bissau0.6290
Ivory Coast7.8840
Kenya14.7330
Lesotho1.3280
Liberia1.7460
Madagascar8.3250
Malawi5.7180
Mali6.3120
Mauritania1.5270
Mauritius0.9830
Mozambique9.9140
Niger5.0220
Nigeria80.6560
Rwanda4.5180
Saō Tomé and Principe0.1490
Senegal5.4340
Seychelles0.11,130
Sierra Leone3.3210
Somalia3.7130
South Africa27.71,480
Sudan17.4320
Swaziland0.5590
Tanzania16.9230
Togo2.4320
Uganda12.4280
Upper Volta5.6160
Zaire26.8210
Zambia5.3480
Zimbabwe6.9480
Source: World Development Report, 1980.…Indicate data are not available.
Source: World Development Report, 1980.…Indicate data are not available.

Urban bias

A number of factors conspired against policies promoting the development of private peasant agriculture. First, in many African countries the specialization in export agriculture was perceived as an undesirable colonial legacy which had to be transformed through rapid industrialization. Tariffs, import restrictions, and subsidized credit were liberally deployed to protect and foster domestic industry. Since indigenous African entrepreneurs were scarce, and reliance on foreign private capital or ethnic minorities disfavored, most African countries chose state enterprises as the principal vehicle for industrialization. The combination of high protection and inexperienced industrial and commercial management typically spawned a high-cost industrial sector which pre-empted resources that might have gone into agricultural development and produced manufactured consumer and intermediate goods for sale to rural buyers at prices far above those for comparable imports.

Second, government wage and price policies were heavily biased in favor of urban, and against rural, sectors in most African countries. At independence, the colonial pay structures inherited by governments typically displayed enormous disparities. The salaries at the top of the scale, designed to facilitate recruitment from the colonial nations, were often 30 to 50 times as high as those paid at the bottom to unskilled African labor. Independence brought in its wake rapid replacement of expatriates by Africans in government jobs and strong pressures to reduce the striking disparities between the top and bottom of the public pay scales. It was politically easier to accomplish this compression through raising the wages at the lower end rather than reducing the higher salaries. This is what happened. Increases in the wages of government employees spread to the rest of the modern urban sector, partly through minimum wage legislation and partly through the trend-setting influence of the most rapidly growing sector of urban employment—the government and its various parastatal agencies. At the same time, public sector employment grew rapidly in most countries as the newly independent governments assumed ever greater roles and responsibilities in the commercial, industrial, and social areas.

The expansion in incomes and job opportunities for unskilled labor and clerical staff in urban areas accelerated the pace of migration from the countryside to the cities. This reduced the relative rewards for enterprise and effort in the rural economy. The rapid growth of urban populations, at rates ranging from 5 to 8 per cent a year, increased the vested interests in favor of cheap food in cities and towns, and influenced governments to hold producer prices for food crops below their export and import parities. (In most African countries the government sets producer prices for important food and export crops.) The farmers’ returns from export crops were also frequently depressed by taxes, which were easy to levy and collect on these products.

The bias of incentives against agriculture was a major reason for Africa’s poor performance in food production which, in contrast to other continents of the developing world, failed to keep pace with population growth. Between 1967 and 1978, food production per capita declined by 7 per cent in Africa, in contrast to increases of 7-8 per cent in Asia and Latin America. Yet the bias against agriculture and in favor of urban, industrial activities failed to benefit industrial development in the long term. Slow growth of agricultural incomes in predominantly agricultural economies meant slow expansion of the market for manufactures. It is noteworthy that both Ivory Coast and Malawi, two of the countries in which the bias of incentive policies against agriculture was least pronounced, were also the ones in which the manufacturing sector grew at annual rates of 10 per cent or higher between the early 1960s and 1975. In contrast, despite attempts to “force” the pace of industrialization through heavy protection and state involvement, the manufacturing sector in Ghana, for example, grew at only 3 per cent a year.

The external sector

Another consequence of weak policies for agricultural development was the slow growth of exports and, hence, slow growth in the capacity to import. Except for the major exporters of minerals, the initial export structure of these countries was heavily concentrated on a few agricultural commodities. The choice facing African nations was whether to pursue the existing specialization further on the basis of comparative advantage or to nudge the evolution of export competitiveness away from agricultural products. A strong attraction of the latter choice was the very sharp decline in the external terms of trade that these countries had experienced between the mid-1950s and mid-1960s (see Table 1), and which was part of the explanation for the ambivalence shown toward primary exports by many of the newly independent nations.

Table 1Export volume and terms of trade

(1970 = 100)

1954-561964-661975-77
Ivory Coast
Export volume2283152
Terms of trade13982102
Purchasing power3168155
Kenya
Export volume1781103
Terms of trade154103106
Purchasing power2683112
Malawi
Export volume2977118
Terms of trade11197113
Purchasing power3274133
Ghana
Export volume529692
Terms of trade1486692
Purchasing power776484
Sudan
Export volume428076
Terms of trade11990115
Purchasing power507186
Tanzania
Export volume399569
Terms of trade123100113
Purchasing power479578
Source: United Nations Conference on Trade and Development, Handbook of International Trade and Development Statistics. 1979.
Source: United Nations Conference on Trade and Development, Handbook of International Trade and Development Statistics. 1979.

A few countries, notably Ivory Coast and Malawi and, to a lesser extent, Kenya, chose to increase their specialization in agricultural exports together with some diversification into new agricultural commodities. It was no coincidence that these were also the countries which sustained the most favorable environments for private peasant agriculture. But the majority of African nations followed a more lukewarm policy toward agricultural exports, without, however, achieving conspicuous success in developing alternative manufactured exports.

The sharp difference in outcomes is shown in Table 1. Ivory Coast, Kenya, and Malawi achieved such massive increases in export volume that, despite declines in their terms of trade, they were able to more than quadruple the purchasing power of their exports over the period 1954-56 to 1975-77. In contrast, the purchasing power of exports of Ghana, Sudan, and Tanzania—countries which followed more in-ward-looking development policies—recorded only modest gains. In order to finance the growth of imports necessary for development these nations had to rely increasingly on foreign aid. Thus, a paradoxical outcome of inward-looking strategies was increased dependence on foreign assistance.

Population

Any appraisal of development priorities over the long term must contend with the underlying trends in population growth and their consequences. Population growth rates in African countries are among the highest in the world, ranging from 2.5 per cent to 3.5 per cent a year, compared with averages of 2.2 per cent in Asia (excluding China), 2.4 per cent in Latin America, and 0.7 per cent in Japan and in the industrial countries of North America and Europe.

Further, the high rates of population growth are associated with unusually high birth and death rates (see Table 2). The high mortality rates stem from the usual factors of disease, malnutrition, and poor traditional midwifery and weaning practices. These bear especially harshly on Africa because of adverse climate and terrain, unusually hardy disease vectors, and the lack of countermeasures. High fertility is attributed to strongly held feelings about the importance of having children and the need for many births to ensure that a few survive to adulthood. While mortality rates have been declining in the last two decades, there is yet to be any significant fall in birth rates. Indeed, with the improvement in general health conditions, fertility appears to have risen in some countries.

Table 2Population indicators
Average population
growth rate
Crude birthCrude death(In per cent perPopulation
rate (per 1,000)rate (per 1,000)annum)(In millions)
197819781970-7819782000
Selected African countries
Kenya51143.31532
Ghana48173.01121
Nigeria50182.581153
Tanzania48163.01732
Zaire46192.72747
Zambia49173.0510
Regions
Africa45-4716-182.9
Asia (excluding China)33-3513-142.2
Latin America32-3392.4
Industrial countries1490.7
World27-2911-121.8
Sources: U. S. Department of Commerce, International Population Dynamics, 1950-79, and World Bank, World Development Report. 1980.
Sources: U. S. Department of Commerce, International Population Dynamics, 1950-79, and World Bank, World Development Report. 1980.

Over the next two decades, death rates are expected to fall steadily with improvements in health and living conditions. The declines in fertility are likely to be slower, which means that the already high rates of population growth are likely to rise before they decline. The decline in fertility can be accelerated, however, through strong family planning programs, which are presently scarce in Africa. But, in the meantime, policymakers must plan on the basis of high rates of population growth; countries as varied as Ghana, Kenya, Nigeria, Tanzania, Zaire, and Zambia are expected to about double their populations between 1978 and the end of the century (see Table 2).

Agricultural priorities

For most African countries the key to more rapid growth, swifter alleviation of poverty, improved balance of payments, and a stronger basis for industrialization, lies with increasing productivity and incomes in agriculture. Within agriculture, programs and policies should favor smallholders, not just because most of the poor are among their ranks, but also because smallholder agriculture offers the best opportunities for transforming the relatively abundant resources of labor and land into output, while economizing on the scarce factors of capital and foreign exchange.

One major consequence of rapid population growth is the need to transform African peasant agriculture. Compared to other developing continents, arable land has, until recently, been abundant in Africa. This has sustained primitive farming methods which make extensive use of land. With the pressure of the population on land, the old patterns of shifting cultivation, long fallow periods, manual farming, and little use of fertilizer are becoming uneconomic. Increasingly, agricultural growth will have to come from the application of improved techniques to already cultivated areas. This will require both better husbandry and greater use of “technical packages” of fertilizers, pesticides, and improved seeds.

Given Africa’s enormous heterogeneity of soil and climate, and the relatively small stock of existing research (especially in food crops), its transition to a science-based agriculture will be a long, slow haul. It will require a great deal of adaptive research into appropriate crop varieties and seed fertilizer combinations for specific areas, particularly in the semiarid zones. Special attention is necessary for root crops and coarse grains, which figure prominently in African consumption patterns. National and regional research organizations will have to be strengthened to generate innovations that are feasible and profitable for small farmers.

But the existence, or discovery, of high-yield “technical packages” will not be enough. They must be accompanied by improvements in cropping and tillage practices, including greater use of animal draft power and associated implements and improved agricultural extension services. One mechanical innovation—the tractor—needs to be approached with caution. The experience with tractorization schemes in Africa is, on balance, adverse. And quite apart from doubts about their technical efficiency, grandiose plans for mechanized farming will do little to benefit peasant farmers, who form the overwhelming bulk of the farming population and the rural poor.

In the short run, production and incomes can be greatly increased by reducing the widely prevalent incentive bias against agriculture. There is overwhelming evidence from Africa and elsewhere that, given favorable incentives, peasant production will increase substantially. But this will require hard decisions on agricultural producer prices, exchange rates, tariff structures, and urban wages. Such reforms in the incentive system must be accompanied by improvements in the efficiency of transportation and distribution systems for agricultural products—areas in which the state plays a major role in many African countries through parastatal enterprises.

Role for industry

Though the manufacturing sector currently accounts for between 10 and 15 per cent of GNP in most sub-Saharan African countries, its contribution to employment is much less—less than 5 per cent of the total labor force in most cases. The sector is still in its early stages in African nations and caters almost exclusively to domestic markets. By international standards, economic efficiency is low for several reasons. These include a scarcity of experienced entrepreneurs and managers; high unit costs of labor stemming from relatively high urban wages and low productivity; the inadequacy and inefficiency of basic infrastructure inputs such as transport, power, and water; a virtual absence of industrial consultancy and technical services; heavy protection from imports, which reduces competition; and the special problems of parastatal manufacturing enterprises.

Manufactured exports, which are currently miniscule in volume and value in most African countries, suffer from the additional disadvantages of policies that are typically biased in favor of production for the home market and against export and—especially in the case of landlocked countries—high transport costs to external markets.

In the long run, African countries must work toward the goal of an internationally competitive manufacturing sector. As population growth increases the demands for food and fuel wood, the competition for land use between food and cash crops will increase. In any case, the demand for foreign exchange will expand, either to purchase more food abroad or to replace the export earnings lost through substitution of food crops for cash crops. To meet this growing demand for foreign exchange, African countries will have to turn increasingly to their manufacturing sectors. For most countries, which are still abundant in land compared to other developing nations, these long-term economic choices are still distant. But in some, like Kenya, where the arable land frontier is closer, the need to develop a manufacturing export capability has already become pressing.

The state’s role

The role of governments in economic development has been pervasive in African nations—even more so than in most developing countries. It has included not only the traditional responsibilities of determining broad economic policies (such as setting taxes, tariffs, and subsidies and controlling prices, wages, and interest rates) and providing basic infrastructure and social services, but has also extended to owning and running manufacturing, commercial, financial, and transport enterprises. In the initial years after independence, such a dominant role for the state was perhaps to be expected in view of the absence of alternative indigenous private institutions which could spearhead development efforts. But the experience of the last two decades indicates widespread inefficiencies in state enterprises: overmanning, inappropriate wage policies, poor financial management, and failure to institute clear objectives and accountability for managers and workers. This record suggests that, in the future, African governments might be well advised to encourage other institutions—such as private firms, cooperatives, small traders, and businesses—to assume greater roles in industry and commerce, while redirecting government efforts toward the design and provision of badly needed infrastructure and social services, notably education, health, family planning, and water supply.

Such a reordering of government priorities and roles will obviously have to run the gauntlet of political and ideological obstacles in many countries. But past experience and the present economic realities facing African nations hold little hope for “business as usual” approaches to their development problems. F&D

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