Chapter

15 Policies to Achieve Faster Economic Growth in Africa

Author(s):
Claire Liuksila
Published Date:
December 1995
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Author(s)
Micah Cheserem

Although governments in Africa are embarking on comprehensive economic reforms intended to create an environment that is friendly to private enterprise, more action is required to attract more domestic and foreign investments if faster economic development is to be achieved. Areas that require urgent attention include the following.

Civil Service Attitude and Remuneration

There is an urgent need to reorient the attitude of civil servants to the new and changed environment. Their role should be to facilitate and to nurture private enterprise. Governments and donors should organize seminars to educate civil servants on their new role. Further, for civil servants to serve the economy better, steps must he taken to improve their terms of service. Present terms make civil servants susceptible to corruption. Therefore, rationalization of these terms will not only help stem corruption, but will also improve their productivity.

Nationals in Key Policy Positions

In Africa, there is a tendency for governments to rely too much on expatriates in the management of key policy areas. This practice has not only encouraged dependency and stifled national initiative, but has also promoted ill feeling by the nationals on the economic policies being pursued. Emphasis, therefore, should be placed on recruiting nationals to key policy positions in government, and paying them competitive salaries at market rates. In this way, Africans would be encouraged to “own up to” the successes and failures of their economic and political reforms.

Public Awareness of Economic Reforms

Because most Africans are not informed of the benefits of reforms, there is considerable resistance to such reforms. Professional and trade associations and the media should therefore be encouraged to educate people about the scope of economic problems facing Africa and the reforms being implemented to address them.

External Debt Reduction

External debt remains a major constraint to efforts to improve economic performance in Africa. Available data show the ratio of the stock of debt to exports for sub-Saharan Africa as ranging between 230 percent and 1,452 percent and that of debt service between 15 percent and 273 percent. This takes away substantial resources from supporting development. Donors could consider writing off some of these debts, but require that funds saved be used to rehabilitate and expand key infra-structural facilities that support the private sector.

Central Bank Borrowing

In the past, most African countries have made the mistake of borrowing heavily from their central banks to finance their budgets. Governments need to be made aware that financing their operations by borrowing from central banks is only at the risk of causing inflation. To contain the temptation of governments, African countries should introduce laws to eliminate or at least limit the level of government borrowing from central banks.

Central Bank Governors

Because Governors of central banks in Africa operate in environments which do not encourage them to focus on the management and maintenance of appropriate monetary policy, they should be given greater operational autonomy to effectively discharge their responsibility.

Regional Cooperation

The small size of African domestic markets remains a major hindrance to economic development. Regional cooperation, therefore, should be encouraged, initially on a small scale, to enlarge markets, which will serve as a springboard to enlarged cooperation. A good example of this process is the East African Cooperation.

Markets for African Manufactured Goods

To cope with current unemployment and poverty, Africa will have to export more goods with a higher domestic value now than in the past. Donors could assist countries by encouraging developed countries to open up their markets to manufactured goods from Africa. This is important for African countries, as it will additionally reduce their dependence on aid.

Positive Outlook on Africa

News plays an important role in influencing investment decisions. Since news on Africa has focused only on negative developments, investment in the region has been declining. Multilateral organizations can change the African image by disseminating more positive news about Africa instead of negative news. Good news will encourage policymakers, the general population, and potential investors.

The Multiparty System in Africa

Good governance is critical to proper management of national economic affairs. Multiparty forms of government should continue to be encouraged. There is, however, a need to adapt it to reflect the social and cultural diversity of Africa. Governments in Africa should be encouraged to draw participation from the party that wins the presidential election as well as the opposition parties to ensure that all ethnic groups are represented and hence reduce present ethnic conflicts.

The African Economic Role Model

The creation of African economic role models is perhaps more urgent now than ever. In this regard, donors could identify a few African countries that could be sponsored and provided with adequate resources over a period of ten years to undertake appropriate economic reforms and to finance the development of key infrastructural facilities. This is likely to produce a number of economically successful countries in Africa, which would demonstrate that economic success is possible there. There is also a need for societies in Africa to promote their successful entrepreneurs and to shift the excessive energies now spent in politics to other equally important national spheres.

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