Sources of slow growth in African countries

Essay by tmandiriza September 2004

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Introduction

Economic growth takes place when there is either an increase in the national income of a country, or in the country's productive capacity, this productive capacity being the country' ability to generate national income. (Gross national product)

There are many challenges faced by most Sub-Saharan African countries including Zimbabwe in trying to achieve sustained economic growth. Most of the constraints stem from the social, political, economic and cultural setups and institutions of most Sub- Saharan countries. The major constraints will be briefly outlined and possible solutions will be identified in turn.

Constraints

Commodity Concentration in Trade: High Reliance or Dependency on One Primary Product

This is the primary feature of most Sub-Saharan African countries. The dependency on one major export crop like tobacco in Zimbabwe, tea in Kenya, copper in Zambia and cocoa in Ghana leaves the country's export potential vulnerable due to changes in the world market for the respective products.

The fall or decline in the export prices for copper in Zambia in the early 1990s left the country facing massive balance of payments short falls, even up to this year. The reduction in export earnings has a negative effect in capacity building as LDCs have to import material in order to improve productive capacity. In short; exogenous shocks to a single primary product can affect the prospects of improved growth.

Market Concentration in Trade

Most of the major exportable in Sub-Saharan African countries are usually sold in a few markets of the industrialised countries, e.g. flowers from Zimbabwe are exported to Europe and a few to America. This implies that economic fortunes of most African counties are strongly related to the rise or fall of the domestic prices and economic activities of some industrialised countries. The lack of a diversified export market is a hindrance...