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Economic organizations in Africa
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4. Economic organizations in Africa
The main economic power of Africa south of the Sahara Desert is South African Republic. Through its well developed infrastructure and deepwater ports, South Africa handles much of the trade for the whole southern African region. In 1970 its immediate neighbours, Botswana, Swaziland and Lesotho, and latterly Namibia, signed the Southern African Customs Union (SACU) enabling them to share in the customs revenue from their trade passing through South African ports. In order to counter the economic dominance of South Africa in the southern African region, the countries to the north of it organised themselves into the Southern African Development Conference (SADC). Member states include those of the SACU as well as Angola, situated north of Namibia, and it's oil-rich enclave of Cabinda, and Mozambique on the east coast, and the countries of south-central Africa, Zimbabwe, Zambia and Malawi. Kenya, Uganda and Tanzania signed Treaty for Enhanced East African Co-operation in order to allow free flow of goods and people. The small landlocked central African countries of Rwanda and Burundi form part of an economic union of countries in the central African region. Other members of the Economic Community of Central African States are Cameroon, the Central African Republic, Chad, Equatorial Guinea, the oil-rich Congo and Gabon and the vast country of the Democratic Republic of Congo. The Economic Community of West African States (ECOWAS) is a solid geographical bloc of 15 states from Nigeria in the east to Mauritania in the west. The countries of Mauritania, Mali and Niger are located in the southern stretch of the Sahara Desert while the remaining countries are splayed out along the coast line. As a result of their respective colonial histories, these countries are divided into French and English-speaking states. The francophone countries include the republics of Benin, Burkina Faso, Togo, the Ivory Coast (Côte d'Ivoire), Guinea and Senegal while the remaining states of Nigeria, Ghana, Liberia, Sierra Leone, and the Gambia have English as their official language. The Republic of Guinea Bissau is a Portuguese-speaking state to the south of Senegal.
5. Problems and ways to solve them
The biggest challenge to doing business in Africa is the lack of quality information about Africa. Some of the other challenges of Africa are:
· fluctuating currencies
· bureaucratic red tape, which is slowly getting easier to wade through
· graft and corruption
· nepotism
· wars and unrest, though the changes in South Africa are starting to create a ripple of peace and democracy throughout the region
· lack of local capital
· monopolies such as marketing boards, state trading firms, foreign exchange restrictions, trade taxes and quotas and concentration on limited commodities all place a disincentive on exports, thus delinking Africa from the world economy.
· lack of infrastructure, though in areas such as telecommunications and energy, Africa is able to use new technologies to leapfrog more advanced economies
However, none of these challenges is insurmountable; in fact, some entrepreneurs would contend that African risk is lower than that even of North America.
There is hardly could be a person, who is able to resolve all the problems considering the challenges in the list. But there are a number of tasks to be completed in order to improve the quality of life and gain stable economic growth.
Resource mobilization To halve poverty by 2015 countries must reach the 8 percent growth in GDP each year, instead of present 4.4 %. To reach this rate investments must be 40 percent of gross domestic product. Even with major increase in domestic savings, there are still huge financing gaps. Africa’s rate of return on Foreign Direct Investment is 29 percent per year, higher than any other region of the world. Annual average foreign investment flows have increased from $1.9 billion in 1983-87 to $6 billion in 1993-97. But this is just 4 percent of the total investment pouring into developing countries. In the face of global financial volatility, Africa's nascent capital markets have also remained buoyant. Yet institutional investors remain resistant to the possibilities in Africa. African countries have undertaken significant economic reforms, but investment has not come.
Regional co-operation Regional integration is the key to Africa's success in the 21st century. The challenge is for the subregional initiatives to march together and in step with the World Trade Organization.
Information technology Information and communication technologies present some of the most exciting possibilities for Africa in the new millennium. “With new ways to communicate we can leapfrog through several stages of development; cut the cost of doing business; and narrow the gap of huge distances. …At ECA, we want to make sure that Africans are drivers, not passengers, on the information highway…” says Dr. K.Y. Amoko, executive secretary, Economic Comission for Africa. at the National Summit on Africa held in Washington D.C. 17 February 2000. There was registered a significant growth in Internet spreading through the continent. E-Commerce, television and radio are also developing rapidly.
Governance Ensuring and sustaining good governance must be an African responsibility, first and foremost.
Social investment. Social spending has become a major casualty of recent budget cuts in many African countries. To expect that Africa can progress when investment in its human capital is declining is a classic case of being penny wise and pound foolish. Social investment challenges of health, education, housing, water supplies and sanitation are enormous and demand the creativity and partnership of all caring parties.
Gender equality Excluding Islamic countries, Africa is the most remarkable region in terms of discrimination against women. Since the UN's Fourth World Conference on Women in Beijing in 1995, the world better understands the need to free women to become equal participants in development. This is not just a matter of rights but of good economic sense. “It is past time to lead by rhetoric; it is time to lead by example.” (from the National Summit on Africa documents”)
Preventing conflict The world has learned expensively that it is cheaper and far more humane to prevent conflict than to fight a war. So it is one of the most actual problems for African countries. To quote the UN Secretary General, "in the past twenty years we have understood the need for military intervention where governments grossly violate human rights and the international order. In the next twenty years we must learn how to prevent conflicts, as well as intervene in them." Peace can no longer be just about peace making and peace keeping. It is also about peace building.
African diaspora must also take part in ongoing processes. A lot of Africans live in European countries as well as in United States. They are able to help their historical homes in three major ways.
First, Become an Advocate for Africa: For every devastating image of Africa they see on television, not far from that camera there is an image of people striving to develop. As a start, they should visit Africa, spread the word about it, become a personal lobbyists for Africa. They must lobby for African products in their stores; lobby for strong US-Africa ties.
Second, Invest in Africa: Investing in Africa could be profitable. Now is the time for African-Americans to put their money where their mouths are. They can invest in Africa, through such convenient ways as the mutual funds that concentrate on Africa. Members of other diasporas have accelerated development in their ancestral homelands through widespread individual investments. Surely African-Americans can do it, too.
Third, Invest politically in Africa, 40 percent of United Nations assistance is currrently going to Africa. When the US and other flourishing countries pay their UN dues, when someone pays voluntary contributions to United Nations he/she helps Africa. Foreign aid helps building schools as well as improving governance in terms of efficancy.
While many write off Africa as the continent of despair, other enterprising individuals and organisations have recognised the huge, untapped potential of Africa and are actively pursuing business ventures across the continent.
African Development Indicators show clearly where the regions greatest social challenges and opportunities lie. Indeed, Africa's future economic growth will depend less on exploiting its natural resources, which are being depleted and are subject to long-run price declines, and more on its labor skills and its ability to accelerate a demographic transition.
Africa's opportunities, which range in risk from investing in emerging market funds or one of the listed multinationals active in Africa to trading with African partners, include:
· oil and gas (Angola and Libya);
· mining (West and Central Africa);
· privatisations (South Africa and Nigeria);
· international trade (oil producers and SADC);
· infrastructure (pipelines, roads, telecommunications);
· stock exchanges that are mushrooming in many countries
· using educated English and French speaking African nationals
· and leisure (big game + beaches + golf + climate + satellite + Internet + cell + low cost structure = huge telecommuting opportunity).
However, perhaps Africa's greatest opportunity lies in its biodiversity, which ranges from Sahara desert to tropical jungle, from snow-capped volcanic Mount Kilamanjaro to the beaches of East and West Africa. Then there is the excitement of stalking big game in the African bush to the thrill of whitewater rafting through the gorges below Victoria Falls or the awe of seeing the Egyptian pyramids at sunrise. Africa is going to become the telecommuting centre of the world, in the short to medium term, ecotourism provides the opportunity to develop leisure complexes which can take advantage of game parks, golf courses, beaches and beautiful scenery one day. “We need to stop thinking of ourselves as a single engine train, but rather a jumbo jet, with several engines revving up for take off, and several more back ups in case of engine failure.” said K.Y. Amoako Executive Secretary of ECA at the 40th Anniversary of Africa Confidential.
6. Conclusion
At the end few words comparing Armenia with the African region. The main difference is different natural resources of these regions. Africans may get started their economic growth with incomes from exporting oil, gas, precious metals and jewels. Alas, Armenia have no this option. Our country have no significant resources to exploit them or not to exploit, meanwhile for Africa devastation of resources may stimulate the economy in the case of peace and efficient government. There are also a lot of differences in terms of agriculture. Arfican countries cover wide territory, but they have problems with irrigation. In the case of Armenia it is important to note, that the situation is just the opposite. Even the most severe droughts can not be compared with deserted areas of black continent, but the land is highly limited. I think that the last point of comparison, which is as important as the previous ones, is the labour force. Labour force is one of the main differences between former USSR republics and the developing countries of African region. As a result of USSR educational system Armenia has educational level which can be easily compared even with the most developed countries.The level of literacy is 99%, which is higher than in African countries. Armenian in spheres of programming, medicine, science highly priced all over the world. The main problem in these sphere is brain drain. So the primary task for government is to stop this process. With the foreign investitions Armenia is able to establish advanced technology production, which is not available for Africans. This could be a good impulse to become a new “tiger”.
So our regions have different prerequisits, different ways of developing, but same aim, and unfortunately obstacles in terms of government and unstable peace.
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