User:Envegas/African dream

The African Dream

The African Dream is the hope of a united Africa that will be recognized as a business partner and not the world's poorest and most underdeveloped continent. A prosperous Africa that does not rely on aid but has the capacity to give aid to other continents. An Africa  considered as a serious competitor in the global market place and organizations seeking capital in Africa. African companies offering competitive remuneration and returns therefore attracting professional skilled labor at home and from abroad.

The current African scenario

Africa is in dire need of development and investment so as to minimize dependency on the outside world and rely on its own resources. The potential for highly profitable foreign investment in Africa is enormous, but many investors remain unaware of the past record and current opportunities, argues the UN Conference on Trade and Development (UNCTAD). Although external investment in Africa has been increasing in recent years, it still lags far behind the flows to other developing regions, in part because of the generally negative image of the continent portrayed in the international media, explains the UNCTAD report Foreign Direct Investment in Africa: Performance and Potential. 'Africa's profitability is one of the best kept secrets in today's world economy.' They is still a lot of room for growth in the African markets which has to be exploited. In the past fifty years, more than $1 trillion in development-related aid has been transferred from rich countries to Africa. Has this assistance improved the lives of Africans? No. In fact, across the continent, the recipients of this aid are not better off as a result of it, but worse—much worse. Poverty levels continue to escalate and growth rates have steadily declined—and millions continue to suffer. There is a sharp contrast between African countries that have rejected the aid route and prospered and others that have become aid-dependent and seen poverty increase. Overreliance on aid has trapped developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty, leaving them with nothing but the “need” for more aid. The profitability of foreign companies in Africa has been consistently higher than in most other regions of the world, reports the UNCTAD study. Since 1990, the rate of return on foreign direct investment (FDI) in Africa has averaged 29 per cent, and since 1991 it has been higher than in all other regions, in many years by a factor of two. The only problem is that investors remain unaware of the opportunities that lie untapped. African economies are forecast to grow by an average of 6.2 per cent in 2008, according to the latest edition of the Economic Report on Africa (ERA 2008), the annual joint flagship publication of the United Nations Economic Commission for Africa (ECA) and the African Union (AU), launched. Titled “Africa and the Monterrey Consensus: Tracking Performance and Progress”, the ECA noted that African economies continued to sustain the growth momentum of previous years, recording an overall real GDP growth rate of 5.8 per cent in 2007. Although 30 countries recorded higher economic growth rates in 2007 than 2006, growth performance varied substantially across countries and regions. The report also noted that economic growth recovery in Africa has not yet translated into meaningful social development and has not benefited vulnerable groups. Africa's growth performance was driven mainly by robust global demand and high commodity prices. Other growth factors in Africa include continued consolidation of macroeconomic stability and improving macroeconomic management, greater commitment to economic reforms, increased private capital flows, debt relief and increasing non-fuel exports. Africa has also witnessed a decline in political conflicts and wars, especially in West and Central Africa, though peace remains fragile in some parts of the continent. Key challenges to Africa's growth in 2008, according to the report, included the risk of sharper slowdown in the US economy and a fall in global commodity demand and prices. Also, high oil prices will hurt oil importers through the current account and inflationary pressures. In addition to political instability in some countries, inefficient public infrastructure and unreliable energy supply at the national level as well as poor integration of transportation and energy networks at the regional level continue to pose important constraints to Africa’s growth. Between 1970 and 2000 over $400 billion was poured into Africa yet little development was achieved. Money was often stolen by corrupt government officials. Even when aid actually translated into investment, the projects were often white elephants that failed to be economically viable because governments do not make decisions based on the same profit and loss expectations that investors do.

Current efforts and how the African dream can be achieved.

“Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime”—Unknown. This statement clearly explains what needs to be done for the African Dream to be a success. Recent research by Capital University economics professor Robert Lawson found that investment generates higher economic growth rates in freer countries than in less free countries. Further, he found that even in the least free countries, private investment still generates economic growth more efficiently than public investment. Unfortunately, development aid can discourage private investment by hampering the economic freedom that is necessary to attract it. Noted development economist P.T. Bauer long contended that government-to-government aid promoted statism by politicizing economic life and enlarging the relative size of the public sphere. Recent research by Matt Ryan and Benjamin Powell supports Bauer’s claim that higher levels of economic aid depress economic freedom scores. Yet it is higher freedom that is necessary to attract investment and grow. Aid and debt forgiveness will not promote the institutional environment of economic freedom and property rights that Africa needs to grow. Unfortunately, it is unlikely that Western nations can do much to get African nations to adopt pro-investment policies. There is a greater need for the integration of the United States of Africa economy and capacity building and development in Africa. There is need for organizations that can play a leading role in capacity building and the development of the African region into a more competitive trading and economic bloc matching investments to the available opportunities. There should also be the creation of lasting, productive and beneficial relationships in business across the African region. There are humanitarian organizations working towards achieving the African dream and dedicated to empowering lives and eliminating poverty through non-profit service programs that utilize individuals' skills and passions by providing education and small-scale business. The leadership and capacity development should be dealt with on a bottom up approach as when a person at the grassroots level of the community leadership is empowered then the entire state is empowered. Obviously not enough efforts are being made and Africa is still a long way from achieving the African Dream.

--E Vega 22:38, 10 September 2009 (UTC)