Development in Africa

The continent heralded as “the China of tomorrow” by economists remains a relatively untouched resource. Could this be due to a lack of modern infrastructure? According to Deloitte’s think-tank, this is the “single biggest threat” to the continent’s future. Logically, improving infrastructure will allow African economies to grow at a rapid rate, as it improves communications and becomes easier to transport goods. However, this is an invalid assumption because it does not tackle the core of the problem; poor governance, regional instability, corruption and lack of access to education.

Compared to the rest of the world, Africa is riddled with resources. This includes oil, diamonds, copper, cocoa beans and iron. Yet these are not been properly exploited, as shown by the British Geological Survey. They found that, out of the top hundred highly important minerals, Africa featured as a major exporter of just 10 of them. Take Guinea’s bauxite industry. It holds the world’s biggest reserves of bauxite, yet it is only the 5th highest producer of the mineral, outflanked by countries with fewer resources such as Australia.

Surely this gap cannot be down just to a lack of infrastructure? The behaviour of Vale in Mozambique, where geologists believe are the world’s largest coal deposits, supports this. According to Carlosa, a local, “if they need a road, they build one, if they need a port, they build one.” Moreover, Vale’s project has only employed 600 hundred people locally. Hence, it is more likely that other factors, such as bad governance and education are holding back development.

There is no better example of how disastrous the mixture of an ill-educated population and modern infrastructure can be than in Djibouti. The country is the gateway to the 84 million strong landlocked country of Ethiopia. Trade travelling through Djibouti to Ethiopia has doubled in the last 5 years and is set to repeat this pattern. This has resulted in a $4.4 billion investment to construct another 5 port terminals. Despite this, a lack of education left Djibouti with 60% of the population unemployed, making it one of Africa’s poorest nations. Clearly, modern infrastructure is only beneficial if the population is educated well enough to be employed by the multinational companies working in the area.

This division between the local people and imported skilled labour has lead to instability in Djibouti and elsewhere in Africa. It discourages investment, as a company does not wish to put its wealth and workforce at risk. In Nigeria, “consumer-goods companies say that insecurity has forced them to retreat from some areas” (The Economist). Setraco, operating in Northern Nigeria, has recently had 7 employees abducted by the Islamist group Boko Haram, causing an immediate closure of all its operations in the country. This caused a disparity as investment was redirected. The solution to this problem lies with politicians, meaning modern infrastructure would be relatively ineffective.

Moreover, issues in the Niger delta have hampered companies like Royal Dutch Shell. The failure of the Nigerian Government to redistribute oil wealth and compensate the Ogoni people of Nigeria, who were removed from their land, has resulted in bad press and regular sabotages on Shell’s operations in the region. This cost the company $1.1 billion and gave it a bad public image, making further investment from other companies unlikely.

Tariffs further complicate problems that cannot be solved by modern infrastructure alone. Uganda’s major cash-crop is coffee. As a land-locked country, 95% of exports must leave the country using the roads, leaving it exposed to tariffs and transport costs. This means little is exported beyond green beans, reducing industrialisation. Additionally, due to transportation, the middlemen take between 64 to 88% of the profits, leaving very little for the farmers. This leaves Uganda as both a poor and unindustrialised nation, which modern infrastructure can do little to solve.

This in turn leads to poverty, poor governance and therefore corruption. Surveys in Kenya found that, on average, people had to bribe someone 16 times a month, with 99% of bribes going to public sector workers. This amount of money totalled Ksh 8,000 out of an average wage of Ksh 26,000, removing substantial amounts of money from the economy, meaning people have less disposable income to spend on commodities, thus reducing economic growth. It’s a similar case across most of the continent.

Africa must first tackle the issues of education, to ensure foreign companies will employ locally. Improved governance will ensure that the wealth from extraction is well distributed, bringing development and tackling instability. Also, corruption must be tackled, ensuring that all companies operations remain visible and easily monitored. At present, Africa still chimes to the maxim; “visible development gives the impression of stability and progress”, as granted by modern infrastructure. However, this does not mean that the lot of Africa’s people has improved.

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