DEVELOPMENT-AFRICA: Geography Conspires against Progress

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Jul 31 2000 (IPS) - Geography is a major obstacle for economic growth on the African continent, which is far from the world’s trade centres and major trade routes, and most of its population lives in landlocked areas where there are few navigable rivers.

A popular saying in Mexico attributes many of that country’s problems to its location “so far from God and so close to the United States,” but it seems now to be contradicted by development theories that stress the benefits of proximity to major markets.

In the case of Africa, geographic location plays a decisive role in the continent’s alienation from world trade systems, stated US economist Jeffrey Sachs, Harvard professor and adviser to the Argentinean and Bolivian governments, during a conference here on African development.

The great distance from the world’s trade centres, international ocean routes or even from a coast in the case of landlocked countries, reduces the possibilities of a developing country to incorporate technologies and attract significant direct foreign investment.

On the African continent, where there are few major navigable rivers, 80 percent of the population lives far from the coasts, inhabiting the plateaus or other highlands that favour agricultural production.

This is one of the reasons Africa is not integrated into the world systems of goods and services and remains an exporter of raw materials – just as it has been for centuries.

For 20 years African countries have implemented structural adjustment policies in their economies and administrations, but the only evident changes are the decline in the value of exports and a 50 percent population growth.

African nations now have to import 50 percent more in order to obtain the same levels of inputs, capital and consumer goods, explained economist Korkut Boratov, of the United Nations Conference on Trade and Development (UNCTAD).

The UN agency stressed that industrialised countries must beef up overseas aid if they hope to break the vicious cycle of low growth and dependence on foreign assistance that dominates sub- Saharan Africa.

An UNCTAD report calls on donor nations to increase their contributions for development in Africa. It would require just five cents on the dollar for every 100 dollars spent on consumption in industrialised countries, the agency’s Richard Kozul-Wright pointed out.

But donor contributions have been dropping off in recent years. In the case of the United States, foreign aid averages just four dollars per US resident, “a disgraceful level of inaction,” Sachs commented.

Currently, Jordan receives more US foreign aid than the sub- Saharan African countries combined. The United States is “in a deeply misguided state of thinking about its role in the world right now,” Sachs commented at the Geneva conference.

The enormous levels of assistance given for political reasons to South Korea and Taiwan allowed the two countries to join the group of “Asian tigers,” characterised by rapid economic and technological growth over the last few decades, he said.

In the 1950s, Ghana and South Korea were at a similar level of development. But the Asian country took off economically as a result of changes in government policies and generous foreign aid, primarily from the United States.

Sachs criticised the therapies of economic liberalisation and public morality that do not distinguish between developing countries which are prescribed by the Washington Consensus, the name given to the think tanks, private and inter-governmental financial powers that decide world policy.

The Harvard academic proposed confronting Africa’s lag in development by focusing on coastal zones, which have greater possibilities for development.

The most successful areas of the continent are Tunisia, Morocco, and to some extent Egypt – all three are close to the large European market, and also Mauritius, an island that lies close to ocean shipping routes.

But to achieve this level of development, the four nations had to establish incentives for tax-free industrial areas and for the clothing industry.

In opposition, the International Monetary Fund (IMF) and the World Bank have tried to eliminate all investment incentives in the last 15 years. This has proven to be a disastrous mistake, said Sachs.

The World Bank’s record in attracting foreign investment is among the worst in the world, and the IMF never had to attract it. The advice they give does not make sense, he said.

The lessons of Penang, Malaysia, of eastern Asia, of Mexico or of the Dominican Republic demonstrate that through generous tax incentives countries can obtain direct foreign investments, though the rest of the system, such as infrastructure, must be in place.

Sachs, who has served as consultant to the governments of Bolivia and Poland, among others, proposed fomenting the development of port cities in Africa, like Dar es Salaam, Abidjan and Accra.

Even if Africa’s location were conducive to development, it could not function without inducements for investment and an adequate communications infrastructure.

The countries of Africa also need research done on the results obtained by different initiatives to encourage investment so that they may utilise the conclusions when it comes time to negotiate with the international financial organisations, Sachs said.