poor sustainable economic development in sub-sarahara africa [127872]

8/18/2019 Poor Sustainable Economic Development in Sub-sarahara Africa [127872]

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NAMIBIA UNIVERSITY OF SCIENCE AND

TECHNOLOGY

CIS610S ASSIGNMENT 1

CRITICAL ANALYSIS OF

INEFFECTIVE

CORPORATE GOVERNANCE AT AIR NAMIBIA

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1



1 INTRODUCTION

The revival of economic growth across Sub Sahara Africa (SSA) since the beginning of the

millennium is a heartening development. Sustaining over it an indefinite future is both a

necessity but also a challenge of the first order. Sustainable development is briefly defined by the

level of knowledge about the country’s economy. Knowledge conomy is based on creating!

evaluating! and trading knowledge. "n a knowledge economy! labor costs become progressively

less important and traditional economic concepts such as scarcity of resources and economies of

scale cease to apply.

Knowledge about the economy is a conse#uence of few parameters in the country namely$

Standard of educated individuals! economic system used in the country! foreign investors!

corruption severity and allocation of top government positions! advances in "nformation and

%omputer Technology. These factors lead to economic instability e.g. inflation! poverty! reduces

&' turnover! increased debts.

& CAUSES OF POOR ECONOMIC DEVELOPMENT IN SUB

SAHARA AFRICA&1 LEVEL OF INFORMATION COMPUTER TECHNOLOGY 4ICT5

There are serious concerns about the current future capacity of developing countries to couple

"%T to generate and sustain their participation in global markets. anuel %astells warns of an

imminent and catastrophic fragmentation ine#uality! poverty and social e*clusion for the Sub

Saharan region in the new global economy (%astell +,,,). The problem of social e*clusion!

which is caused by inade#uate or lack of "%T! e*ists between and within national conte*ts

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(-endry +,,,). This is particularly true of ali where the internal distribution of "%T access is

e*tremely uneven ("nde* report /' +,,,$01203).

The internet is the main medium for knowledge economy. 4ne of the most important claims

made for the internet is that it enables economic interaction irrespective of the geographic

location. According to this statement! countries in underdevelopment regions like Sub SaharaAfrica (SSA) should also be able to connect and compete in the knowledge disregard of their

geographic location. This is only partly accurate since it fails to give ade#uate recognition to a

range of conditions that prevent access to the "nternet and global economy e.g. poverty! low

economic growth! lack of foreign investment and resource scarcity. South Africa is one of the

Sub Saharan countries that is in some ways vastly better off in terms of internet diversity ("s

South Afica ready to compete in knowledge economy5! +,,6).

&& STANDARD OF EDUCATION

The literacy level in Sub Sahara Africa has fairly increased for the past decade. The level of

education or educated individuals i.e. professions especially in the field of economics has an

impact of the level of knowledge of the economy hence economic development. 7esearch showsthat about 86 9 of adult population in Sub Sahara Africa or :18 million adults! lack the basic

literacy and numeracy skills needed in everyday life. thiopia and /igeria are amongst the top

ten countries in the world with the highest number of illiterate adult (;ilser! +,,6! pp. 82<).

"n addition! the region’s secondary school enrollment ratio was the world’s lowest at 809 in

+,,=. %ountry levels range from less than ::9 in /iger to more than 3=9 in Seychelles and

South Africa. The regional share of technical and vocational education in secondary enrollment

was also among the >orld’s lowest! at <9 in +,,= (ducation for All &lobal onitoring 7eport!

+,:,).

&3 HUMAN CAPITAL-uman capital is arguably the stepping stone to a viable and growth promoting system. hysical

investment institutions are important complements$ the previous cannot be effectively utili?ed

where technical and managerial skills are deficient! and the latter cannot be implemented when

human capital is scarce or #uestionable #uality. The salience of human capital is increased by the

necessity of diversifying into a higher2value! knowledge about the economy and research

intensive activities.

@uality is more closely correlated with economic growth. >orkers with high cognitive!

technical! communications! and team skills are better able to$ assimilate! push the knowledge

frontier! work in groups and make efficient decisions that build the technological capacity for

competitiveness within Africa or the >orld at large.

&. CORRUPTION DOMINANCY

%orruption has been a predominant factor leading to poor sustainable development in Sub Sahara

Africa. "n certain countries like imbabweB the pervasiveness or perception of corruption by

government diplomats! politicians! civil servant and Cudges is the great source of economic

instability. %orruption has been practiced either through access to valuable benefits and the use

of ones position for private gain by accepting illegal payments. ;indings show that eighteen

3



managers at the %ity of -arare were gobbling close to SD1,, ,,, in monthly salaries

(angudhla! +,:0). ;urthermoreB %ampaign group artnership Africa %anada (ac) conducted a

study in +,:+ which concluded diamonds worth over SD+ billion had been looted out by

resident 7obert ugabe’s allies. These factors degrade the economy of the country hence

leading to economic crisis.

%orruption is #uite prevalent in Sub Sahara Africa for various reasons. ;irstly! the probability of

being caught and punished is e*tremely low since the civil servant and Cudges can be victims of

corruption. Secondly! the incentives for corrupt behaviors are generated by the policy

environment! coupled with the wide preference and lack of accountability that government

employees have.

&2 INTRAINTERNATIONAL TRADES

4ne important trend has been the growth of "nternational trade! or the globali?ation of economic

activity. Thus world e*ports grew at a comple* annual rates (i.e. about :+.= percent) a year in

dollar terms (Eittle et al.! +,:,) over the #uarter century from :361 to :336. >hile most of this

growth in the world e*ports was based on manufactured goods! many Sub Saharan Africaneconomies rely mostly on e*ports of primary products like oil! minerals and agricultural

commodities to finance their "nternational trade. As a result the e*port share of these economies

has declined. "n addition! these economies are particularly vulnerable to the effects of

fluctuations in price of their e*ports. Thus fluctuations in oil prices have had a significant impact

on the /igerian conomy! while oscillating coffee prices have affected %ameroon and Kenya

(>orld Trade %ommodities! %//. arch +,:<).

At the same time! the international monetary order and the international and availability of credit

have gone through a number of changes that have had a significant impact on the growth and

stability of the Sub Sahara economy (see Eittle et al.! :338! %hapter 821).

&6 URBANI7ATION

rbani?ation is the prevalent factor hampering sustainable development in Sub Sahara African

countries. This is common in low to moderate income countries that have mi*ed economic

systems. 4n the other hand! in the hub of the labor2intensive subsistence farm economies! we do

find urban districts with modern manufacturing and processing operations. This enclave in turn

attracts futile and unproductive labor from the rural sector. This contributes to congestation and

overpopulation of maCor cities e.g. Euanda in Angola.

-owever! the urban areas are not only e*periencing a severe increase in population but they

serve as an enclave for underemployed and poorly paid rural workers. oreover! the urban

growth of Sub Sahara Africa has increased the premium on urban spaces and has thus made itdifficult for urban poor individuals to afford ade#uate housing. This lack of ade#uate physical

facilities degrades #uality of life for most cities and impedes economic development in a variety

of ways. "ndeed! because of these problems it is possible that urbani?ation may to some e*tent

contribute to economic instability in Sub Sahara Africa.

.



3 MEASURES TO TAC8LE POOR ECONOMIC

DEVELOPMENT IN SSA

31 USE OF GOVERNMENT PO9ER

An efficient use of government official power can contribute powerfully to sustainable

development since the misuse can create serious problems of credibilityB erode the constituency

for development programs and humanitarian relief! and could further economic instability. The

conse#uence of corruption is evident in South African as resident Facob uma suffers the

conse#uence of the use of the government to build himself a modest rural town in Kwaulu2

/atal province worth 7<1 million. -e now faces charges for using government resources for

personal benefits by the "nternational %ourt! hence criticism by fellow South Africans.

3& RULE OF LA9

The rule of law is e*tremely important for sustainable development because the constitution and

system of law defines the parameters of the legal framework within which economic and

political activities must take place. >ith reference to rofessor Ayittey (+,,:)! the rule of lawdoes not e*ist in many African nations where economic! political leaders and their government

flout the law.

33 ACUITION OF LOANS

'ebts or a loan is a necessary handmaiden but the conciliator of economic success2 even

survival2 in the world today is the capacity to mobili?e knowledge and to use it to fullest. Eoans

to strengthen the economy can be ac#uired through the >orld Gank or any other world financial

institutions. The ac#uired capitals have to investment in the most predominant sectors of the

economy e.g. the /amibian government can borrow money to strength the mining sector to build

mineral processing plantsB this would be a great investment as this sector contributes to about 1,

per cent of the country’s economy. This benefit the country since the dominance of foreignining companies will be minimi?ed hence there will be no need for e*port of raw minerals for

processing which in turn are sold back at e*tremely high prices.

3. ENHANCING THE LEVEL OF EDUCATION

Sub Saharan countries should aim at achieving high literary level of literacy and raising primary

enrolments and most importantly post2secondary and tertiary institutions. This will increasingly

enhance the learning outcomes as well building a foundation for future development. ;or

e*ample! in +,:+ the late /amibian inister of ducation 'r. Abraham "yambo (at that time)

initiated the idea of free education from grade :2= which was implemented and currently

underway (The /amibian /ewspaper! +,:+). This will increase the rate of achieving and

ac#uiring higher order skills and e*pertise. oreover! there will be an enhancement onknowledge economy thus adding value in e*isting economic activities and create room to

embark into new industries and services.

Gy increasing the level of education and its #uality countries in SSA may be able to stimulate

innovation! promote the diversification of products and services hence ma*imi?ing returns from

capital through more efficient allocation and management.

2



32 MOBILI7ATION OF HUMAN CAPITAL

-uman capital is a key strategy to enhance knowledge economy and achieving sustainable

economies in Sub Sahara Africa (SSA). -uman capital! effectively connected! would enable Sub

Sahara Africa economies to increase allocated efficiency and ma*imi?e the returns from limited

physical capital. "n addition! it is only through knowledge economy and informed Cudgment that

SSA countries will be able! that African countries will be able! to cope with profound threatsfrom disease! unemployment! urbani?ing population and climate change.

The key economic success in a globali?ed world lies increasingly in how effectively a country

can assimilate the available knowledge. This can be achieved by building a comparative

advantage in selected area of the economy with good growth prospects and in how it can enlarge

the comparative advantage by pushing the frontiers of technology through innovation.

.CONCLUSION

Eack of knowledge about the economy is the significant factor leading to poor sustainable

economic development in Sub Sahara Africa. The leading factors to poor sustainabledevelopment are evident in the content and various measures have been outlined. >e can

conclude that knowledge economy and poor economic developed are correlated. The level of

education in Sub Sahara Africa defines knowledge economy and it is #uite low in the region.

revalent corruption is the region has led to economic crises in countries like imbabwe for

decades. The utili?ation of "%T is relatively low which make it hard for countries to complete

economically especially on the global scale. ;urthermore! e*ports commodity e*ports can lead to

high but not sustainable economic development. Harious measures to address the latter issue

have been discussed. nhancing the education level with help in developing knowledge

economy! optimi?ing human capital with improved #uality as workers will be e#uipped with high

cognitive and technical skills to build moderate technological capacity for economic competition.

7eduction of corruption through the "nternational court will deduce the effects of corruption on

the economy. "n conclusion! knowledge economy and sustainable economy are mutually

dependent factors.

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poor sustainable economic development in sub-sarahara africa [127872]

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