Why are Sub-Saharan economies lagging behind ?
The economic growth of SSA countries has accelerated these past ten years, thanks largely to improved macroeconomic policies and favorable terms of trade, but living standards of the vast majority of the population are still lagging far behind that in other regions. Taking a longer view view, SSA’s massive exodus to city slums is largely a result of failure, in most countries, to modernize smallholder agriculture. Such modernization provided a foundation necessary to long-term development everywhere except in the case of “city-states”. The reasons for lagging smallholder progress in SSA are rooted in geography (climate, inaccessible “interior”) and history (no written language except in Ethiopia, which made it difficult to transmit knowledge across generations and between African societies; no history of “real states”, slavery, colonial rule, and then very bad governance.
To make things even more difficult, SSA’s population growth rate is the highest in the world. Unlike in other regions – particularly East Asia, where the ratio of working-age population to dependents has risen sharply to around two to one – SSA’s dependency ratio has remained close to one for the past half-century and more. This means that the proportion of young people is one of the world’s highest, and this makes the challenge of catching up with the education gap formidable.
Last, but not least, SSA’s economies are tiny on the world scale, and in the absence of far greater intra-African economic integration, small market size precludes economies of scale in many activities. The whole of SSA’s GDP is about the size of Belgium’s ; South Africa’s is equivalent to the San Francisco area’s Nigeria’s is smaller than Baltimore’s ; and the average economic size of each of the remaining 45 countries is smaller than Honduras’s.
International development cooperation has achieved mixed results over the last half-century. The literature is roughly evenly-divided between studies which show that “aid worked” and those that do not. One thing about which there is consensus is that despite rhetorical support for institutional and human-resources development (“capacity-building”), in reality aid organizations have tended to eschew such long-term efforts in favor of programs yielding more easily quantified and shorter-term results.
Nor can scarcity of economic resources be blamed entirely for lagging development (notably the failure to modernize smallholder agriculture and to provide adequate education and health services). Two large pools of under-used resources exist throughout SSA. First, corruption remains pervasive. According to Transparency International, not only do SSA countries show undesirable levels of “perceived corruption”, but perceived levels of corruption have not diminished significantly since the “corruption perception index” was first published in 1998 . Resources that might be redirected from corruption to development include not only annual illegal flows but also the capital accumulated – for example in Swiss banks – over the decades by corrupt public officials. Second, and this is the subject of Section 2, weak management translates into wasted resources; better management can “revive” such resources, increasing their development impact.
