Is Sub-Saharan Africa at a Turning Point? Posner

Sub-Saharan Africa became and remains the world’s poorest region in the post-colonial era. This is generally attributed to bad governments and to foreign aid, the latter because it enables countries to defer necessary reforms and enriches (and thereby helps to entrench) the countries’ generally bad (inept, vicious, corrupt) governing class.

Beginning in the mid-1990s, however, economic growth rates in the sub-Saharan countries rose briskly, reaching 6 percent in the 2000s (and this after having dropped between 1980 and 2000). This rate is not as impressive as it seems, because the sub-Saharan African population is growing by more than 2 percent a year. The increase in per capita income (less than 4 percent) is a more meaningful indicator of economic development. The economic growth rate dropped to 2 percent in 2009 as a result of the global economic crisis, which means that there was a decline in per capita income, but it is expected to reach 4 percent this year. (On the economic improvement in Africa since the mid-1990s, see Jorge Arbache et al., “Is Africa’s Economy at a Turning Point?” (World Bank Feb. 2008), http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2008/04/14/000158349_20080414093531/Rendered/PDF/wps4519.pdf; on the impact of the current crisis on the economies of the sub-Saharan African nations, see “Sub-Saharan Africa: Back to High Growth” (IMF Apr. 2010), http://www.imf.org/external/pubs/ft/reo/2010/afr/eng/sreo0410.pdf.) Sub-Saharan Africa was not hit as hard by the economic crisis as the other regions of the world because its financial sector is small. Most of the capital that flows into the region comes in the form of foreign aid or foreign direct investment, rather than loans, and so the region was less affected by the credit crunch that followed the banking crisis of September 2008 than the rest of the world was.

A major factor in the region’s increased growth rate since the mid-nineties has been increased demand for commodities, such as oil and gold, which are major African exports, by China, India, and other rapidly developing countries; the increased demand has resulted in higher prices for these commodities. Many sub-Saharan African countries are net importers of commodities, and thus have been hurt by the higher prices. The countries that are the major commodity exporters, such as Nigeria, Angola, and South Africa, have grown at faster rates on average than the other countries of the region. Some of these other countries, however, have had fast rates of economic growth as well, and this may be due mainly to improvements in their governments in the areas of protection of property rights, curtailment of corruption, encouragement of private enterprise, and management of monetary and fiscal policy.

Will sub-Saharan Africa, having as I said weathered the global economic crisis rather well, take off economically and catch up with other regions of the world, such as East Asia, which a half century ago was poorer than sub-Saharan Africa? Perhaps so, but I have my doubts. To begin with, I have no idea how accurate these countries’ economic statistics are; the Greek debacle has reminded us of the importance of determining the accuracy of economic statistics before opining on a country’s economic performance.

Moreover, the higher growth rates of the sub-Saharan African countries  in recent years may be in part an artifact of the very substantial increase in foreign aid (roughly a tripling between 2000 and 2008) to those countries. And exports of raw materials (other than farm products) are not a very promising route to prosperity. Often they do not create a great many jobs in the exporting nation, in which event most of the income from the exports go either to the owners, many of whom are foreign, or to the governments of the exporting nations—and this means, in corrupt governments, into the pockets of government officials. Commodity prices are volatile, moreover, and no one can know whether they’ll be higher in real terms a decade from now.

Levels of education and health are very low in sub-Saharan African countries; life expectancy is low and is actually declining; productivity is very low; fertility though declining remains very high; poverty of course is widespread; ethnic conflict (often violent) and political violence are common; corruption is endemic; opportunities for women are meager. These impediments to economic growth will probably change very slowly because they are deeply rooted in African culture. And the rest of the world will not stand still while they change.

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