Africa’s economy has been beset by problems, such as zero order institutions and poverty, and further heightened by the ongoing global COVID-19 pandemic and Russia and Ukraine war. But these are not the only factors that prevent the region’s economic upswing.
Each country has its own set of features that significantly impact its economy’s success. Considering a country’s landscape, existing natural resources, available skills and workforce, climate, etc., all of these factors can influence a country’s capacity to build and grow its economy. Samuel Enajite Enajero’s book, Collective Institutions in Industrialized Nations, touches on the African continent and discusses the modern-day catalysts affecting sub-Saharan Africa’s economic success. Enajero shares that societies without dynamic collective institutions rely on fundamental zero order institutions and poverty.
Factors affecting economic growth
These factors, also known as economic factors, are described as those aspects that affect or influence a country’s economy. How these factors are run or managed determines the quality of the standard of living of a nation. How successful and effective these economic factors are can be the make or break between living in poverty or living abundantly.
Economic development typically shows a progressive improvement in the overall economic welfare. Progress comes in the form of higher income, better healthcare, improved literacy, solid infrastructure and facilities, and reduced unemployment and poverty.
“As African countries face continued uncertainty, supply disruptions and soaring food and fertilizer prices, trade policy can potentially play a key role by ensuring the free flow of food across borders throughout the region. Amid limited fiscal space, policymakers must look to innovative solutions such as reducing or waving import duties on staple foods temporarily to provide relief to their citizens,” said Albert Zeufack, World Bank Chief Economist for Africa.
From the African perspective, Africa continues its current economic struggles heightened by the global COVID-19 pandemic. On top of that, the Russia and Ukraine crisis also further increased the continent’s and the rest of the world’s woes regarding the challenges faced by economic growth, as evident by rising world commodity prices.
To break it down, sans the pandemic, what are the common factors that affect Africa’s economic development?
Africa as a continent has been besieged with political instability, unrest, and civil wars from time immemorial. The region’s rich, vast, and abundant natural resources make it a likely target of foreign occupation, colonialism, and government takeover. Because of unstable leadership, it hampers the government from implementing long-term planning and effective policy enforcement.
Roads and water supply are an essential part and indicator of an economy’s growth. Africa’s current poor and lack of infrastructure such as roads suggest a poorly run economy and government; it also indicates Africa’s current economic state. Inexistent, congested, or damaged roads affect supply delivery or transportation, resulting in the uneven and delayed distribution of supply or resources. Roads are not only essential for transport, but they are also a crucial part of trade.
Other infrastructures that affect the economy are hospitals, healthcare clinics, banks or financial institutions, schools, housing, etc.
Africa is well-known for its raw material or natural resources such as diamonds, copper, and petroleum – such and such that it has become the source why Africa has become the “apple of the eye” for foreign occupation. Most African countries have focused solely on revenue from exporting the raw materials, ignoring the sustainable practice of maintaining their land and natural resources. Hence, the imbalance between the export and import activity and revenue, the lack of skills development in other aspects of labor and trade, and the lack of focus and study on other trade policies.
Most African countries are underdeveloped, hence, the lack or deprivation of education. Aside from that, areas where there are ongoing conflicts, hinder children from continuing or finishing their schooling and damage existing school infrastructures. This leads to the problem of a high illiteracy rate among adults, and being illiterate can also be a hindrance to being accepted for employment.
These are some of the common factors that hamper and prevent Africa’s economic progress. Author Samuel Enajite Enajero talks about some critical economic lessons for sub-Saharan Africa, distinguishes between economic goods, and expounds on macroeconomics.
Read more about Samuel Enajite Enajero’s thoughts on Africa’s economy in his book, Collective Institutions in Industrialized Nations. Grab a copy of the book on Amazon, or visit the author’s website at www.aafee.org.