Sub-Saharan Africa’s economic situation has developed positively in the past twenty years, much due to better policies. Some 10 to 20 countries in the region managed to achieve significant growth rates, despite the international economic crisis.
But economic dynamism is still unsatisfactory in many countries where, despite growth, there has been less than adequate improvement in living conditions. Reforms aimed at improving the political environment have yet to be undertaken in many countries.
What is behind the recent progress? Was international aid possibly more successful than many have conjectured? And: what does that mean for the future role of aid in Africa?
Aid continues to play an important role, even with increasing foreign direct investment and remittances. With China and other new actors, the importance of South-South relations for sub-Saharan Africa is growing.
In large part, success stories about economic progress have dominated international coverage of Sub-Saharan Africa in recent months. This attention is justified, since the situation of these 48 countries has continued to take on clearer outlines. The countries of sub-Saharan Africa have undergone processes of change at different speeds and, to some extent, in different directions. Existing country classifications have only just begun to find appropriate categories for the current process of differentiation.
In point of fact, some countries in the region – even if not all – can look back on an economic success story that has been going on for several years. By and large, Sub-Saharan Africa’s economic situation has developed positively in the past twenty years, not least because the various countries have pursued better policies.
While the majority were characterised in the 1990s by enormous budget deficits, high rates of inflation, government intervention, capital flight and black markets, the countries of the region generally have more room for manoeuvre today, not least with regard to their own budgets. In the last decade a group of some 10 to 20 countries in the region managed to achieve significant growth rates; the international financial and economic crisis did little to alter this.
At the same time, there are still a number of countries where economic dynamism is still unsatisfactory or where, despite growth, there has been less than adequate improvement in living conditions.
The quality of governance has improved in sub-Saharan Africa as a whole. Public financial management is, on average, better today than it was in the past. Nonetheless, clientelist and neo-patrimonial systems, which have considerable influence on the use of resources, continue to leave their mark in many countries. Reforms aimed at improving the political environment (political openness, etc.) have yet to be undertaken in many countries of the region.
The question, of course, is: what is behind the progress made by some African countries in the last one to two decades? Was international support for the continent in the form of developmental cooperation possibly more successful than many have conjectured? And: What does that mean for the future role of aid in the region?
There is no really accurate and reliable way of measuring the contribution of aid to development progress. What is clear, however, is that the policies of the countries themselves are decisive in many respects. Countries which have successfully reduced the number of poor people in their populations and have initiated growth processes (i.e., those not merely based on raw materials) have been able to achieve this on the basis of their comparatively good governance activities.
It makes a great deal of difference, for example, whether clientele-type structures predominate in a country or transparent processes determine how public resources are used. In like manner, the international context is also naturally important for African countries, which are being drawn more and more into the processes of globalisation.
The interest of emerging economies, like China and India, in African countries has contributed to a new focus on the part of the traditional European and North American cooperation partners. What all of this means is: for African states too, a large number of factors influence policies, and aid is in fact only one factor among many.
Variances in development
The ‘aid-factor’ in this regard has varying degrees of importance. On the whole, political obligations within the G8 context and in other forums has had the result that aid funding for Sub-Saharan Africa has grown substantially in the last 10 years. Some 44 billion US dollars are available annually from OECD donors.
A number of countries are very dependent on aid funds for their public investments. In some cases, like that of Burundi, considerably more than 20 per cent of a country’s entire economic power is tied to aid. In other cases, like those of Angola and South Africa, on the other hand, aid has gradually taken on marginal importance and amounts to far less than 1 per cent of GDP.
The numbers for these countries show that flows of private funds to the Sub-Saharan region have now risen to a much higher level than is the case for aid. In total, international financial flows to sub-Saharan Africa have grown sixfold since 2000. This steep rise has been accompanied by major changes to financial structures, the proportion of private inflows having increased significantly.
Aid continues to play an important role, although the scene is increasingly dominated by foreign direct investment and migrant workers’ remittances. Such ‘new cooperation partners’ as China, India and Arab countries are also triggering major changes; the importance of South-South relations for sub-Saharan Africa is growing.
In the coming years, the trend in Sub-Saharan Africa will likely continue to take on clearer outlines.
The reasons: on the one hand, aid will develop more and more into a side-line factor for a steadily growing group of countries. Countries in the grip of dynamic reform will focus even more than today on the private sector and foreign direct investment.
For other countries, now booming on the basis of crude oil and minerals, the primary question is whether available resources will benefit the population at large. Nigeria and other countries offer an abundance of study material for the much-discussed ‘curse of resources’.
On the other hand, however, some countries in the region will continue to remain dependent on aid in the foreseeable future. In fragile countries, aid and humanitarian assistance are of central importance in many respects for making available a minimum of state-maintained structures and public services.
Aside from this, however, there are also numerous poor countries – such as Ethiopia – which are thoroughly functional on the one hand but for whom aid will continue on the other hand to be an important means of financing and implementing long-term programmes which address poverty and growth. But even low-income countries such as Liberia and Rwanda are making growing efforts to escape their long dependence on aid.