Despite the wealth of resources, many African economies continue to perform dismally on the international front. According to research by the World Economic Forum in collaboration with the World Bank and the African Development Bank, the African economy is the lowest ranking in the world. The study shows that out of twenty least competitive economies in the world, fourteen are in Africa. But what are the reasons for such dismal economic performance by the African economies when they have plenty of resources?
One of the reasons that have been quoted by many scholars for underdevelopment in Africa is poor leadership. Many of the African leaders are too much into themselves. They are in positions of leadership to make themselves rich and more powerful, at the expense of their failing economies.
There is no denying that countries such as Zimbabwe were once a breadbasket for the southern region of Africa but through Robert Mugabe’s leadership, the country is now among the poorest on the planet. Yet still, the same Robert Mugabe is seen as an African champion, a clear indication of poor leadership on the continent.
Corruption and mismanagement of resources
The prevalence of corruption cases in Africa is high compared to any other country in the world. While the continent has vast resources, corruption has made these resources worthless, as proceeds from them only land in the pockets of a few individuals.
Corruption is multi-dimensional in African economies. It is not hard to observe that every state officer engages in corruption in one way or another. Major forms of corruption include bribery, extortion and unfair allocation of resources to favor political interests.
The economic decisions made by African decision makers are thus biased in favor of certain things but not society at large. Due to this, the transaction costs are high, transparent and normal markets operations are distorted and many other negative things that come with corruption.
Unfair trade policies
Trade policies that have been formulated by African leaders in collaboration with their trade partners largely favor developed countries. These unfair trade policies have made the growth of African economies all but elusive.
Most of the problems facing African economies seem to be emanating from the centralization of governance. In order to alleviate poverty and to a large extent foster economic growth, African countries could adopt anarcho-capitalism as an alternative that could help to decentralize governance, put resources in the hands of society and thus reduce corruption and build a freer society.
Most of the institutions that have been formulated in African countries serve selfish interests of African leaders and those rich in society. At the same time, governments have not made things any better. They haven’t provided an institutional framework for good governance, transparency, and accountability from the existing institutions. This means that these institutions are unable to secure long-term sustainable economic growth, given that they are all meant to serve the interests of the elites in society.
Civil wars and instability
African leaders are known to use whatever means to wield power regardless of the impact that some of their actions have on the economy. A good example is the case of South Sudan, the youngest country in the world.
As each leader fights for power, wars become the order of the day. This means that it becomes hard to organize both physical and human capital in order to boost the economy. Most of the resources that would have otherwise been used for development are dedicated to buying war weapons to fight perceived enemies. This has led to the displacement of people from their homes and the growth of refugee camps, an additional burden to the hosting countries. Here, you will observe the difficulty that Kenya is going through to host refugees from South Sudan, a country at war with itself.