Dr. Wolassa Kumo
Introduction

Fixed capital has long been considered as an engine of growth both as a factor of production and as an embodiment of technological progress. Countries that had made sustained accumulation of fixed capital were able to achieve higher and sustained economic growth and development while those who had not lagged behind. For instance, economic development in Sub-Saharan Africa has been severely constrained by inadequate saving and investment, among other things. The average annual gross domestic saving rate by 41 sub Saharan African countries during the period 1980-2010 was as little as 14.3% of GDP while the average fixed investment was 20% of GDP for the same period. Therefore, sub-Saharan Africa’s burgeoning debt was not primarily meant to finance investment as the saving- investment gap was only about 6% of GDP during the past three decades.

Sub Saharan Africa’s dismal average economic growth of about 3.8% during the past three decades was therefore a direct consequence of low saving and low investment. The Sub Saharan Africa average saving and investment rates pale in comparison to the saving and investment rates of the newly industrialized and emerging Asian economies, such as China, whose saving and investment rates of over 40% of GDP ensured real economic growth rates of over 10% during the same period, i.e. 1980-2010.

Average annual growth in Africa reached above 5% during the past decade following the commodity price boom since the early 2000s but was dampened by the global economic and financial crises during 2008-2009. Growth rebounded in 2010 and is projected to reach 5.5% in 2011 making sub Saharan Africa the second fastest growing region in the world following Asia.

However, heavy dependence on growth driven by improved commodity terms of trade subjects the sub continent to vagaries of global demand uncertainty. Unless improved commodity terms of trade translates into higher saving and investment, the sustainability of the current improved growth performance will be at stake. Equally important is the continuation of economic and political reforms that are required to enhance the participation of the private sector in economic development, and also improve productivity and investment efficiency.

This brief paper presents an overview of investment efficiency, savings and economic growth in 41 sub Saharan African countries for the past three decades using data from the IMF, World Economic Outlook Data Base, April 2011. Six countries have been excluded from the analysis for lack of consistent time series data. These are Djibouti, Liberia, Mauritania, Sao Tome and Principe, Sudan and Zimbabwe.

Investment Efficiency in Sub Saharan Africa

There are two broad concepts of efficiency: allocative efficiency and technical or production efficiency usually measured by total factor productivity. Some empirical analysts use these broad concepts of efficiency to assess inefficiency in aggregate investment in terms of excess investment demand that captures the deviations of actual investment from the desired investment. These approaches usually use nonparametric methods, such as Data Envelopment Analysis (DEA), as well as, parametric methods including multiple linear or non- linear regression models.

In this brief article, we use a simple approach based on marginal productivity of capital, known commonly as the Incremental Capital Output Ratio (ICOR) to measure investment efficiency in 41 sub Saharan African countries for the period 1980-2010. ICOR is the ratio of investments in some previous period or periods and growth in output in subsequent period or periods measured at constant prices.

Growth in output is not attributed only to investment in fixed capital. It could be due to growth in productivity (partial or total factor productivity), increased use of labour input or improvement in the level of education of the labour force (growth in human capital), and/or improvements in productive capacity utilization. However, changes in fixed investment still explain a significant portion of growth in output particularly in developing countries with limited fixed capital stock and therefore the efficiency with which this input is utilized provides a useful clue about the correlation between the later and economic growth.

The higher the ICOR, the lower is the implied investment efficiency. That is fixed investment is more efficient if fewer dollars are required to generate a unit growth in output. The average ICOR for sub Saharan Africa for the period 1980-2010 was 5.23 and was comparable with the ICOR for of about 5 during the 1980-2003 period. This implies that fixed investment in sub Saharan Africa is pretty efficient and the level of investment efficiency in the sub region is comparable with that of China during the early two decades of its rapid industrialization. This is not only because the sub region is capital scarce but also because there have been marked improvements in business climate and political environment during the past two decades. Therefore, no wonder that foreign direct investment surged in Africa from less than US$15 billion in early 2000s to over US$80 billion in 2007 before the inflow was hit by the global financial and economic crises of 2008-2009.

While average investment efficiency in sub Saharan Africa is high, performance varies from country to country. The 41 countries in sub Saharan Africa can be classified into three groups based on their ICOR performance for the period 1980-2010: (a) those with ICOR value of 1-5, (b) those with 6-9, and (c)) those with ICOR values of above 10.

The majority of the 41 counties (i.e. 25 countries) in the sub region recorded higher investment efficiency during the past three decades. These countries include both the least developed countries with very low fixed capital stock base, as well as, some middle income economies with higher level of capital stock. These best performing countries with ICOR value of 1-5 are: Botswana, Cameroon, Central African Republic, Comoros, DRC, Republic of Congo, Equatorial Guinea, Ethiopia, Gabon, The Gambia, Ghana, Guinea, Guinean Bissau, Kenya, Malawi, Mali, Mozambique, Namibia, Niger, Nigeria, Rwanda, Seychelles, Togo, Uganda, and Zambia. Most of these countries are not only face extreme capital scarcity but have also shown some progress in opening up their economies during the past 3 decades.

The countries with medium investment efficiency level of ICOR 6-9 include: Benin, Burundi, Cape Verde, Eritrea, Mauritius, Sierra Leone, and Swaziland. Mauritius is among the Upper Middle income countries and top reformers in the sub region. Lower investment efficiency may imply an over investment in the economy where marginal investment needed to generate a unit output was greater during the past three decades than during the earlier years of its economic expansion.

Investment efficiency was the lowest in the following countries during the past three decades: Angola, Chad, Cote d’Ivoire, South Africa and Tanzania. All of these four countries have experienced some form of economic and political upheavals during the past three decades. Preliminary data analyses showed that South Africa’s ICOR was comparable with that of China for the post-Apartheid period, but the number was very high for the pre 1994 period, i.e. 1980-1994 pulling the country’s overall performance significantly down. Investment efficiency was very low during the Apartheid rule in South Africa, due to global isolation and heavy state control over the economy. Thus if we exclude the pre 1994 period South Africa’s investment efficiency will fall within the first group of best performers. Poor performance by Angola, Cote d’Ivoire and Tanzania reflects the continued impacts of civil war and socialist mode of production in the case of the later which contributed to wasteful investment.

Investment required to achieve a minimum growth threshold of 7 percent

While Africa’s growth performance is the second best in the world at present, the continent still lags behind other regions in terms of socioeconomic development. Over 380 million people in Africa today live below poverty line, while youth unemployment is as high as 70% in some countries. Most economies are still heavily dependent on rain fed subsistence agriculture with extremely limited investment on irrigation. Weak economic structure reinforces poverty and poses a major risk to the sustainability of the current growth fuelled by commodity price boom.

African countries will not be able to address this fundamental economic challenge with current growth rates of 5% or less. They should achieve a minimum of 7% annual growth rate individually or collectively for the coming two decades to make a dent on poverty and unemployment. With an average ICOR of 5.23, the sub Saharan Africa region therefore requires a minimum fixed investment of 35% of GDP over the coming two decades collectively or by each country. Given the current actual average regional fixed investment rate of 20% of GDP, the desired investment rate of 35% over the coming two decades seems insurmountable, but not unrealistic. China’s economic growth during the past three decades was fuelled by fixed investment of over 40% of GDP. China’s massive investment was financed by extraordinarily high household and public savings which at times reached 50% of GDP. The major challenge for Africa, in this respect, is a culture of low savings, which we expound in the following section.

Saving-investment gap in Sub Saharan Africa

When domestic household and public savings fall short of the fixed investment needs of a country, this leads to a saving-investment gap. This gap is exacerbated when export earnings of a country fall short of import demand leading to a second, foreign exchange gap. Most developing countries in Sub Saharan Africa are often characterized by both gaps. Except five countries, i.e. Botswana, DRC, Gabon, The Gambia, Namibia, and South Africa, the rest of 41 sub Saharan African countries had an average saving -investment gap ranging from 1% to nearly 30% of GDP during the past three decades.

The saving-investment gap, however, significantly varies across the countries in the sub region. Countries that faced relatively lower saving-investment gaps ranging between 1-5% in the sub region during the period under review include Angola, Cameroon, Central African Republic, Comoros, Republic of Congo, Cote d’Ivoire, Eritrea, Ghana, Kenya, Mali, Nigeria, Swaziland and Uganda. The lower gap by some countries reflects increased savings from oil revenues, while lower gap by others simply mean lower level of investment.

Countries in the sub region with the average saving investment-gap of 6-10% during the stated period include Benin, Burkina Faso, Burundi, Central African republic, Ethiopia, Guinea, Guinea Bissau, Madagascar, Malawi, Mauritius. Niger, Rwanda, Senegal, Sierra Leone, Tanzania and Zambia, while those with average saving-investment gap of above 11% include Cape Verde, Chad, Equatorial Guinea, Lesotho, Mozambique, Seychelles and Togo.

The poor performance of the sub region in terms of the saving-investment gap reflects two major challenges: First, most countries are characterized by low saving and low investment and hence are at the risk of being trapped in vicious circle of poverty if the they do not raise their saving and investment rates immediately; and second if they raise their investment levels without a concomitant increase in domestic savings they may be trapped in vicious cycle of debt which could undermine the value of their investments, provided money borrowed is invested in economic development. Since the recent economic crisis proved that most of the aid pledged by non-African donors is unlikely to be delivered, the only sustainable solution to Africa’s development challenge is aggressive domestic resource mobilization for development. This could be supplemented by foreign direct investments, if the countries in the sub region speed up the current economic and political reforms.

Concluding remarks

Africa is rising. After 5 decades of civil strife and economic stagnation, the first decade of the 21st century shone a new light on the continent. Africa is no more a hopeless dark continent. Like its diamonds in the West, South and at the center, the continent is shining.

It is also shining as a second fastest growing continent in the world. However, there is no time for complacence as Africa is still the least developed continent in the world plagued with high level of poverty, unemployment, political instability and corruption. To sustainably address these fundamental socio economic challenges the region should at least grow by 7% per annum for the coming two decades. However, this is unlikely to be achieved with the current investment rate of 20% and the saving rate of 14% of GDP.

While the return to investment in Africa is high, it is such low levels of investment and saving that are holding the continent back. Given higher returns to investment, Africa’s economic transformation will depend on radical shift in the saving culture of its people, further economic and political reforms, and accelerated fixed investment.

   Dr. Wolassa Kumo
The cradle of mankind, Horn of Africa, remains the land of untold human tragedy. While we still have a vivid memory of the 1984 famine in Ethiopia that killed over a million people, 12 million more people are facing agonizing famine once more. The death of over 29000 Somali infants during the past few months will always remain a scar on the conscience of Somali politicians, the leaders of Horn of Africa and the continent, as well as, the global community. While leaders of these countries bear prime responsibility for such calamities, lack of political will on the part of the international community, particularly the African continent, is ignominious. There is enough food in the world to feed everyone on the planet, but there is no political will to distribute it. It is, nevertheless, recognized that while continued relief aid by the global community can save lives it cannot prevent another famine and is, therefore, paradoxically undesirable.

The current famine is triggered by the most severe drought that hit the region in 60 years, but it is not caused merely by climate changes. The current famine in the region is the result of deeper structural and geopolitical anomalies. First, Somalia, the hardest hit by the current famine, does not have a functioning state, and hence a functioning market. Lack of functioning state and market undermines food security and expose the people to vagaries of nature. Nature just took toll of the already vulnerable people; it did not cause the vulnerability.

Second, economies of the Horn of Africa countries are characterized by severe structural weaknesses. Over 80% of the population in Ethiopia, Eritrea, Somalia, Sudan, Uganda, and Kenya lives off traditional subsistence agriculture. However, no concrete measures have been put in place to improve the productivity of this vital sector by the governments of the respective countries during the past five decades. Subsistence agriculture in Horn of Africa is still today characterized by archaic technology, hand ploughing and oxen driven farming, with insignificant use of mechanization and irrigation technologies. According to IFAD (2011) only 1% of the land in the Horn of Africa region is irrigated, versus 7% in Africa and 38% in Asia. Thus underinvestment in agriculture and in adequate management of natural resources including soil, water and forestry are the main reason behind chronic food insecurity in the region and the recurrent famine we witness in the region today.

Agriculture contributes 44% of GDP and 85% of employment in Ethiopia; 33% of GDP and 80% of employment in Sudan; 21% of GDP and 75% of employment in Kenya; 22% of GDP and 82% of employment in Uganda; 17% of GDP and 80% of employment in Eritrea; and 65% of GDP and 71% of employment in Somalia. Clearly, Horn of Africa’s economy is predominantly agrarian and therefore the least developed economy in the world. Sustained and higher economic development in the sub region therefore depends crucially on the transformation of the predominantly traditional agriculture. The current famine haunting the sub region is therefore the direct consequence of decades of failed agrarian policies pursued by the countries in the sub region.

Key macroeconomic indicators provide further testimony to such failed economic policies. The combined GDP of the 7 Horn of Africa countries in 2010 was US$139 billion, while the total population of the seven countries in the sub region in 2010 was 222 million, with the implied average nominal per capita income of US$626. The sub region contributes 22% of the continent’s total population, but only 9% of the continent’s nominal GDP. The GDP of the 7 Horn of Africa countries is only about 60% of the GDP of Nigeria, itself not a shining economic star.

The much praised fast economic growth during the past decade in Ethiopia and Uganda has not made any dent on the level of underdevelopment and poverty either nationally or in the sub region. The major economic hub in the sub region, Kenya, is plagued with endemic corruption as well as low investment that for decades stifled any economic progress in this otherwise dynamic economy. According to the IMF World Economic Outlook Database (April 2011), Kenya’s average annual real economic growth for the period 2001-2010 was just 4% compared to over 7% recorded by Uganda and Ethiopia. Investment increased to 22 % of GDP in both Ethiopia and Kenya in 2010 slightly lower than Uganda’s 24%, but still falls far short of that needed to fundamentally transform the structure of the economy. In other smaller countries in the sub region, such as Eritrea, investment remains below 10% of GDP while the war-torn Somalia has not seen any meaningful investment in two decades.

Therefore, while undesirable, climate change was not the root cause of the current misery in Horn of Africa. It is the failure of the governments of the region to collectively or individually address the fundamental structural weaknesses in their respective economies and ensure political stability, in the case of war-torn Somalia, during the past decades that are behind the current malaise.

During the past two years most Horn of Africa countries, such as Ethiopia, Sudan, Kenya and Uganda leased large chunks of fertile lands to investors from emerging economies of Asia and the Middles East to produce food for export or biofuel. While the host governments and foreign investors claim that this constitute proper investment in agriculture to ensure food security, civil societies in Africa and the west label it as “Land Grab” that is bound to further undermine food security in the continent. It is premature to conclude, given a relatively short period of time since global land lease began, that land lease contributed to the current worsening food insecurity in the sub region, but the signs are worrying that it may worsen food insecurity in the future. Leasing large portions of fertile land to few foreign conglomerates in countries where 80% of the population live under subsistence farming, does not fundamentally address the structural anomalies of these economies and is therefore bound to fail.

The transformation of traditional agriculture as an engine of growth and development was emphasized by Theodore Schultz (1964), who states that all resources of the traditional type are efficiently allocated, and hence the rate of return to increased investment with the existing states of the art is too low to induce further saving and investment. According to Schultz, therefore, the development of traditional agriculture depends on breaking the established equilibrium. Based on a theory of the price of income streams, he suggests that breaking such established equilibrium requires the introduction of modern inputs in the form of human and material capital, not leasing the most fertile land to foreign conglomerates whose primary concern is food or fuel security at their own homeland. We are not sure to what extent the recent massive land lease arrangements in Africa have been based on economic theories or pragmatism, what we are sure is that they are not the most innovative of the policies to address the structural imbalances in African economies.

Correcting such imbalances in African economies need African solutions; of course, with the right mix of foreign direct investments in all sectors of the economy, while the root causes of the chronic famine in the Horn of Africa can only be addressed by (IFAD, 2011):

•   Protecting and restoring degraded land resources.

•   Improving water management and expanding irrigation

•   Improving animal, plant, and range management practices of small scale farmers to make them less vulnerable to hazards and climate variability

•   Strengthening community-based animal health services.

•   Identifying viable and acceptable alternatives to pastoral livelihoods.

Further, appropriate land use policy including tenure security, and agriculture development centered industrialization strategy are key to ensuring sustainable rural development in the sub region. Horn of Africa is a home for millions of pastoral farmers. As indicated in the last bullet above, recurrent rain failures and drought have made the survival of pastoral communities increasing precarious over the past five decades. It is time for governments of the Horn of Africa countries to act decisively to create a viable alternative livelihood to the pastoralists in the sub region. Governments must mobilise resources both domestically and globally to permanently address the pastoral problems of Horn of Africa. Such supports must be sustained and be backed by provision of other basic services such as education, health, clean water and economic infrastructure. Failing this, the governments of the region and the international community should brace themselves for the worst during the next drought cycle.

   Dr. Wolassa Kumo
1. Introduction

Sub Saharan Africa is a home to 47 of the 53 countries in the continent. In 2009, based on GNI per capita, the World Bank classified countries into four categories: (a) low income, with GNI per capita of $995 or less; (b) lower middle income $996 – $3,945; (c) upper middle income, $3,946 – $12,195; and (d) high income, $12,196 or more. During the same year, 31 of the 47 countries in Sub Saharan Africa were low income economies. These countries include: Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Democratic Republic of the Congo (DRC), Djibouti, Eritrea, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Sierra Leone, Somalia, Togo, Tanzania, Uganda, Zambia, and Zimbabwe.

The rest of the sub Saharan African economies belong to middle income and higher income groups. About 10 countries have been classified as lower middle income economies. These include: Angola, Cameron, Cape Verde, Congo Republic, Cote D’Ivoire, Lesotho, Nigeria, Sao Tome and Principe, Sudan, and Swaziland. These are predominantly oil rich economies which recorded fastest economic growth during the past decade. Among the remaining six countries: Gabon, Mauritius, Namibia, Seychelles, and South Africa are upper middle income economies while Equatorial Guinea is the only non OECD high income economy from the African continent and is the richest country in Africa owing to the discovery of vast oil and gas reserves in early 1990s. With the third largest oil reserve discovered in the African continent, Equatorial Guinea is regarded as the “African Kuwait.”

Clearly, the sub Saharan African economies are heterogeneous and hence the old “Least Developed Country” (LDCs) classification does not reflect the reality on the ground anymore and must be abandoned with immediate effect. According to this outdated classification, many lower middle income countries are still classified as LDCs, while they have already surpassed the GNI per capita threshold. It is absurd to keep Equatorial Guinea in the least of LDCs due to the economic vulnerability and human development index while it has already achieved the high income status. Apart from this, many of the current low income economies have recorded remarkable economic growth since 2001 and hopes are high that they will catch up soon. The LDC classification holds connotations of backwardness and hopelessness for a continent which already suffers from huge image problems. Presenting a positive image about Africa is as important as the inflow of the development funds. Therefore, UNCTAD and other organizations that repeatedly emphasize about the LDC characteristics of sub Saharan Africa must adopt the more positive approach. At present , most sub Saharan African countries are either emerging middle income or developing low income economies, and as such must be classified accordingly.

The remaining parts of the article is organized as follows: section 2 scrutinizes the trends in real GDP growth in low income and lower middle income sub Saharan economies for the past decade. Section three reviews the challenges of commodity driven economic growth in these countries while the last section concludes the article.

2. The real GDP growth in low income and lower middle income sub Saharan economies

Many low income and lower middle income sub Saharan African economies recorded remarkably higher economic growth between 2001 and 2009. Based on the size of the annual average percentage change in GDP at constant prices between 2001 and 2009 (calculated based on the IMF World Economic Outlook Database, April 2010) the Sub Saharan African economies can be categorized into six groups: (a) those with real GDP growth above 10%, (b) those with 7.0-9.9%, (c) those with 5.0-7.0%, (d) those with 3.0-5.0 % , (e) those with ! 3%, and (f) those with !1% of GDP growth rates during the stated period.

The fastest growing low income and lower middle income economies between 2001 and 2009 were Angola and Sierra Leone with annual average GDP growth rate in excess of 10%. Equatorial Guinea, Africa’s only high income economy, was also the economy that recorded the highest growth rate during this period. These three countries were the top performers in economic growth in Sub Saharan Africa during the past decade and belong to our group (a) above. We may regard these economies as the “African Tigers” although the growth in Sierra Leone must be taken with caution as it has shown persistent decline during the past few years following volatility in its mineral exports.

The second group that closely follows the “African Tigers” is group (b) with annual average growth rates ranging between 7% and 9.9%. These countries include: (a) Chad, (b) Ethiopia, (c) Mozambique, (d) Rwanda, (e) Nigeria, and (f) Uganda. The growth in Chad and Nigeria is driven by oil exports while the growth in Mozambique is anchored by mineral exports. Rwanda and Ethiopia’s growth is propelled by a fast growing service export, while Uganda’s growth is based on export of agricultural commodities. Most of these six economies are on track to achieve the Millennium Development Goals of halving poverty in 2015 and if they sustain the current level of growth, they may graduate from the low income group in two decades or less.

The third group of medium growth low income economies include Burkina Faso, The Gambia, Ghana, Mali, Niger, and also Cape Verde and Sao Tome and Principe from lower middle income group. These economies grew between 5.0% and 7.0% for the period 2001-2009. The growth performance of many countries in this group was dampened by the recent global financial and economic crisis that led to sharp contractions in GDP in 2009. Within this group, Ghana’s growth is expected to improve faster following the recent discovery of oil reserves.

Many sub Saharan Africa countries, however, recorded real GDP growth rates of less than 5% on average for the period 2001-2009. These countries belong to the groups (d) with average growth of 3.0-5.0% including Benin, Botswana, Burundi, Cameron, DRC, Congo, Kenya, Lesotho, Malawi, Mauritius, Namibia, Senegal and South Africa; group (e) with average annual growth of Less than 3% including Comoros, Gabon, Guinea, Guinea-Bissau, Liberia, Madagascar, Swaziland and Togo; and group (f) with average annual growth of less than 1% including Central African Republic, Cote D’Ivoire, Eritrea, Seychelles and Zimbabwe.

Most of the lower and upper middle income sub Saharan African economies recorded growth rates of less than 5% per annum during this period. Some middle income countries experience similar challenges to those of low income economies such as high level of unemployment, low savings and investment and lower integration to the global economy among other things.

The worst performers in economic growth during the past decade, however, are: Central African Republic, Cote D’Ivoire, Eritrea, Seychelles and Zimbabwe. Although Seychelles is one of the upper middle income economies, its growth performance during the past decade was dismal owing to tight monetary policy, currency devaluation and large current account deficit, and declining private sector investment among others. Poor economic growth performance in Central African Republic, Cote D’Ivoire and Zimbabwe was linked to the continued political instability in the three countries during the past decade. In fact, Zimbabwe recorded decline in real GDP for the period 2001-2009 on average as a result of which the country has now been downgraded to low income country status. However, the recent positive developments in political climate are expected to improve growth performance in Zimbabwe going forward. Eritrea, which became independent from Ethiopia in 1993, did not live up to its promises with dismal growth performance of less than 1 % for the past decade unlike its bigger neighbor, Ethiopia, which recorded over 8% GDP growth during this period on average. The five worst performers have been characterized by macroeconomic and political instability and have to work hard to turn their economies around during the second decade of the century.

Economic growth in fast growing low income and lower middle income economies was largely driven by commodity price boom. Many analysts worry that heavy dependence on commodity may expose these economies to external shocks and may severely limit the sustainability of such growth. The next section highlights the challenges of relying on commodity driven growth in sub Saharan Africa.

3. The sustainability of commodity driven growth in sub Saharan Africa

Most of the low and lower middle income African economies that recorded higher growth during the past decade were either oil or mineral exporters. Economic growth driven by the commodity price boom exposes the economies to the external trade shock where growth prospects will be dependent on exogenous, foreign demand. However, the good news is that most of the commodity exports from these countries are going to China and India and other fast growing economies with insatiable appetite for raw materials. This is unlikely to change in the immediate future. Even then the African economies should not be complacent. The fundamental structural weaknesses of these economies must be addressed as a matter of urgency. Countries must revisit their industrialization strategy not only to raise the share of manufactures in total output but also to reduce the current high and unsustainable level of unemployment in these economies. This also requires transformation of the traditional subsistence agriculture that currently supports over 70% of the population in most of the low income and some of the middle income sub Saharan economies.

Another challenge is the low level of domestic savings. In most low and middle income economies in Africa the level of domestic savings is less than 15% of GDP as opposed to 40% in China. This implies that these countries rely on foreign capital to finance domestic expenditure and investment. Given the current low level of FDI attractions, this means that most funds come either in the form of aid or loans which may complicate development efforts by leading to dependency and debt traps. Related to this is the underdevelopment of financial institutions required to mobilize domestic resources for development.

Widening current account deficits particularly for non-oil exporting low income economies is another development bottleneck. While higher oil prices will spur growth in oil rich economies, it widens the trade deficits of non-oil and mineral exporting countries forcing them to borrow or depend on aid inflows to finance investment and other expenditure. In this regard, the challenge faced by non resource rich countries is formidable.

High level skills and technological gap constitute another critical challenge to sustainable development in sub Saharan economies. At present most of the sub Saharan economies face critical shortage of high level skills required to lead technological transformation. As a result, there is a growing technological gap between Africa and the rest of the world. To sustain the current growth moment African economies must spend an increasing higher resources on high level skills generation.

Last but not least, sub Saharan Africa faces massive infrastructure gaps. Roads, railways, airports, ports, energy, water and sewerage, and telecommunication are underdeveloped. Investment in economic infrastructure not only directly alleviates poverty by improving access to the services by the poor, but also fosters investment by the private sector, which is regarded as an engine of growth and development in market economies.

4. Concluding Remarks

After decades of stagnation, many sub Saharan African economies have recorded impressive economic growth for almost a decade. The continued discovery of oil and gas and other mineral resources in several of the low income economies coupled with the sustained rise in the prices of these commodities afforded great opportunity for growth and revival. The discovery of vast oil and gas reserves in the coast of Equatorial Guinea in early 1990s, ensured sustained and fast economic growth for over a decade as a result of which the country emerged as the only African and non-OECD high income economy. The discovery of oil reserves in Angola, Sudan, Chad, Ghana, in addition to the traditional oil exporters, Nigeria and Gabon buoyed the growth performance in these economies. This also implied improved accountability by resource rich countries compared to earlier years where revenues from oil have been vastly squandered.

The recently discovered coal reserves in Mozambique are considered to be one of the largest in the world. Sierra Leone and the Democratic Republic of the Congo are endowed with vast diamond resources while South Africa has over 40% of the World’s gold reserves. Zambia is the second largest producer of copper in the world, although its growth performance is far lower than many resource rich countries in the continent. Due to lack of political stability, the DRC has still remained one of the poorest countries in the continent with per capita income of less than US$140 in 2009 in spite of its vast mineral resources. The recent discovery of diamond in Zimbabwe provides a great shot in the arm for the economy if the rival politicians come to their senses and reintegrate the economy into the global market. Africa also has one third of the world’s cobalt, significant deposits of uranium and other strategic minerals, all of which will anchor the current growth momentum.

The expansion of service exports in place of traditional commodities by countries such as Ethiopia and Rwanda must also be encouraged as should Uganda’s innovative agriculture export led growth.

However, there still remains a lot to be done to ensure that the current impressive growth in sub Saharan economies are to be sustained and become catch-up growth. One of the most important strategic measures is an urgent diversification of the domestic output and export. Improved revenues generated through commodity exports must be wisely used to improve agricultural productivity, increase the size of manufactured output and create jobs.

Apart from this, governments must create conducive climate of doing business for the private sector, both domestic and foreign, through significant reductions in bureaucratic red tapes and improved investment in economic infrastructure as sustained economic development cannot be achieved without a strong and viable private sector.

Finally, the current macroeconomic and in particular monetary and fiscal policy resilience in many low and middle income economies must be maintained in the future. In particular, lower inflation rates, exchange rate stability, lower interest rates and improved tax revenues together with improvements in the performances of financial intermediation and capital markets will ensure that this time sub Saharan Africa will take off into self sustained development.

————————————————————————————————————————————————

———————————————————————————————————————————————–

   By: Dr. Muhammad Shamsaddin Megalommatis
   [ Enlarge ]
In four articles titled “Opposition Party Offices Closed in Fake Ethiopia Elections, MP Dr. Jigi Demekssa Reveals,” “MP Dr. G. Jigi Demekssa Calls US, EU: Support to Fake Ethiopia Contradicts All Democratic Ideals,” “There Are No Elections but Real War in Ethiopia Today, Denounces MP Dr. Getachew Jigi Demekssa,” and “MP Dr. Getachew Jigi Demekssa: Task of Every Oromo is the Elimination of the Abyssinians from Oromia,” I published several parts of an interview that I was honoured to have with the leading Oromo parliamentarian, Dr. Getachew Jigi Demekssa. In the present article, I publish the fifth part of Dr. Getachew Jigi Demekssa’s interview which will be completed with the next article.

Dr. Demekssa was forced to leave his country and fight from abroad for freedom, liberation, national independence and secession of Oromia. Dr. Demekssa’s revelations should become a matter of utmost concern for international bodies, governments, statesmen and politicians, diplomats and intellectuals, journalists and Human Rights activists worldwide.

The forthcoming electoral fraud in Abyssinia (Fake Ethiopia) is a Shame for the Mankind in its entirety. Reaction must be taken in order to hold responsible and accountable the perpetrators of the electoral fraud, who are also charged with the most odious Crime against the Mankind: the diffusion of the racist theory of Ethiopianism, the falsehood of an Ethiopian nation within which they intentionally attempt to exterminate once forever more than 15 different African nations with great past and noble traditions.

Interview with Dr. Getachew Jigi Demekssa — Part 5
OFDM Executive Committee Member
Head of the Political and Organizational Dept.
MP for Ethiopian Federal Parliament
Chairman of Oromo Parliamentarians Council

21.   Do you expect developments in the Sudan (South, Darfur, Kordofan, etc.) to affect Abyssinia?

Yes, any change in the Sudan can affect or exercise pressure or influence on Ethiopia; unfortunately, the Sudanese government has failed so far to realize the secret cooperation between the US, EU governments, and the racist Abyssinian tyranny, which poses a major threat for Sudan’s existence, and consists in a real conspiracy for the outright majority of the East African peoples and ethno-religious groups.

More precisely, to give you an example, at the moment, the TPLF regime has been involved in the South Sudan, acting as an agent for the US, and providing training, logistic and political support to groups that want to secede from Khartoum and offer South Sudan’s rich natural resources to Western companies, multinationals and conglomerates. The criminal Tigray Mafia that rules the colonial state of Ethiopia plans to extract some profit in the process.

Despite the fact, the Sudanese government has not reacted as it should in order to protect the Sudan’s national interests. Sudan could effectively and irreversibly outmanoeuvre the US, EU and Ethiopian machination and energetically demolish Ethiopia by offering great support to the OLF.

In fact, the Oromo Nation and the peoples of Sudan share a common Hamitic — Kushitic History, Culture, and above all, socioeconomic and political interests of the utmost importance.

Contrarily, neither the peoples of Sudan nor the Oromos and the other Hamitic — Kushitic or Nilo-Saharan peoples of the Ethiopian colonial tyranny have anything in common with the outcast Abyssinian tribes who — with the help of the colonial France and England — expanded in the late 19th century at the detriment of so many nations and ethno-religious groups.

Quite unfortunately, and despite the existing common need for cooperation and concert between Khartoum and the Oromo political leadership, the government of Sudan has properly speaking sold the Oromo Nation to the enemy of all the African nations in the name of the present, delusional stability and sustainable development that several intruders portrayed to the Khartoum authorities as real, thus deceiving the Sudanese.

Without freedom and liberation of the Oromos and without the emergence of an independent “Kushitic Republic of Oromo Ethiopia,” there will never be peace, stability and sustainability in the wider Horn of Africa region. This reality must be made understood to the Western governments that have caused so many troubles to the entire African continent.

22.   Do you expect developments in Kenya (collapse of the governmental alliance) to affect Abyssinia?

The government of Kenya is a most corrupted authority; to judge upon its nature, there is not much difference between them; for PNU and ODM, what is at stake is neither constitutional nor political differences, but their respective leaders’ personal financial interests and their greed for money which leads them to corruption.

If you remember, after the last election and the subsequent death of thousands of people, what counted in the agreement for the coalition government were not the real hot issues, namely the people who lost their lives, Kenya’s possible democratization or the equitable socioeconomic development of the country, but about the different ministerial positions and the resources one can control from each of them.

People all over the world imagine Kenya is a peaceful country in East Africa, but there hasn’t been any significant development there because of the corruption. If at a certain moment the ODM decided to leave, this could lead to the breakdown of the coalition government. There would be a major political and constitutional crisis of course, but still Kibaki’s government would continue ruling the country.

Bonaya Adhi Godana (born September 2, 1952, in Dukana, Kenya and murdered April 10, 2006, in an air crash in Marsabit, Kenya) was Kenya’s foreign minister from January 1998 until 2001. From 2002 till his death in 2006, he was the deputy leader of the opposition KANU party. Except him, 13 other influential persons, doctors, generals and MP’s were also killed in that air crash. President Kibaki’s Party of National Unity announced that it “would continue ruling as if nothing happened”. According to different sources, the air crash was machinated by the Ethiopian and Kenyan security forces in close cooperation in order to eliminate the well educated, smart, and politically highly influential Oromos from the Kenyan government. The cause of the air crash was never really investigated by third parties that would issue an objective and impartial report. In Kenya, the corruption has become an inherent part of the culture starting from the presidential palace and reaching the small shop keepers.

23.   Do you expect developments in Somalia (rise of the Shabaab in the South) to affect Abyssinia?

The Somali Shabaab and other groups do not have any relations with the racist and tyrannical Tigray administration of Ethiopia. The Somalis have been without government for ca. 20 years; their struggle to re-establish a national government in Somalia is absolutely rightful because every country and every nation have the right to form their own parliament, government and other institutions. In this case, the US and the Abyssinian dictator Zenawi wanted to put in place a puppet government to serve their interests and catastrophic plans for the entire region. The fake transitional federal government (TFG) of Somalia cannot bring any positive result for the brave Somali nation.

24.   Do you expect developments in Eritrea (War with Abyssinia or Djibouti) to affect Abyssinia?

For Eritrea, a war with Djibouti is unnecessary; it can trigger regional destabilization and cause great damage for all the countries in the area, not just for one. The Abyssinian dictator Zenawi carried out a provocative propaganda for the dispute between Eritrea and Djibouti. The Eritrean government is not made of fools who want to trigger a war with Djibouti. Sometimes, the conflicts are due to external machinations and countries are pushed to war by the third parties, as it happened in the case of the First Gulf War between Iraq and Kuwait. This is an unnecessary development that leads to impasse and disaster. Similar disputes and developments in the Horn of Africa region are promoted by lobbies and establishments that deploy every effort to divert and cancel the rightful struggle of the region tyrannized nations for freedom and national liberation. If unpredicted developments happen, we will be in front of a totally different situation.

————————————————————————————————————————————————

————————————————————————————————————————————————

   Jendayi Frazer
The discredited and disreputable Assistant Secretary of State consists in America’s most calamitous liability and represents worldwide the most repugnant figure of merciless and inhuman accomplice of the criminal Amhara and Tigray gangsters who rule Abyssinia (the illegal pseudo-state of ‘Ethiopia’) tyrannically.

Even worse, due to publicly undefined reasons of gravely deteriorated health and because of her fear for judicial procedures that may be undertaken against her after she leaves office, the morbidly obese Jendayi Frazer has totally ‘lost it’!

Mens Sana in Corpore Sano!

The Ancient Romans and Greeks knew it very well; the aforementioned quotation in Latin is owed to the illustrious Roman poet Juvenal who in his Satire X (356) immortalized it: “a healthy mind in a healthy body.”

The related excerpt in English translation is as follows:

“It is to be prayed that the mind be sound in a sound body.
Ask for a brave soul that lacks the fear of death,
which places the length of life last among nature’s blessings,
which is able to bear whatever kind of sufferings,
does not know anger, lusts for nothing and believes
the hardships and savage labors of Hercules better than
the satisfactions, feasts, and feather bed of an Eastern king.
I will reveal what you are able to give yourself;
For certain, the one footpath of a tranquil life lies through virtue.”

(More: http://en.wikipedia.org/wiki/Mens_sana_in_corpore_sano)

Jendayi Frazer certainly never read Juvenal, because she would find herself ? for the first time in her lifetime ? in front of a mirror. The problem is not that she never had the courage, the interest or the cultural level to read Juvenal; the problem is that never a colleague or a subordinate or a superior bothered to remind her of Juvenal’s Satire. Probably this is due to the fact that they may consider her as beyond any therapy, as she is the most clownish and the most pathetic of all the outgoing president’s men.

However, the Satire takes an end when one Genocide follows the other, and Africa is being deliberately doomed from north to south and from east to west.

Unhealthy and unbalanced, Jendayi Frazer did not fit the job that was entrusted to her ? very thoughtlessly. Invaded by her anti-Somali hatred, infected by an extreme anti-Kushite, anti-Oromo, anti-Afar, anti-Sidama, and anti-Eritrean rancor, motivated by her ignorance, and guided by the blindness which is due to her sickness, Jendayi Frazer is responsible for the Ogaden Holocaust, the Oromo Genocide, the Somali Chaos, and the grave deterioration of America’s image in Africa.

Seldom one person triggered such rejection and such antipathy against a country that had it all it needed to be highly evaluated and greatly loved by all Africans.

The extreme unbalance that prevails in Jendayi Frazer’s mind is the reason for her biased policies and directives, activities and commitments.

The Mooyaha Genocide at Ogaden

Study for a moment Jendayi Frazer’s unbalanced stance: she accuses Zimbabwe’s Mugabe for political violence, and Zimbabwe’s deteriorating economic situation, and she keeps silent for the Mooyaha Genocide at Ogaden.

At the moment the Abyssinian troops entered (on the 17th of December 2008) Mooyaha (near the town of Ararso, 50 Km north west of Dagahbur, Ogaden), rounded up the villagers, and started gunning them down indiscriminately, killing forty eight (48) civilians mostly comprised of children women and elderly men, Jendayi Frazer talks about Zimbabwe’s Mugabe.

It is comical, hypocritical and evil to dare compare Zimbabwe, targeted by the corrupt and racist English land owners (Jendayi Frazer’s real masters), with the monstrous Abyssinian tyranny that makes Hitler’s worst deeds pale in comparison.

Worse, it is a shame for the entire country that, although mentally unbalanced (“a healthy mind in a healthy body”), Jendayi Frazer insults President Mugabe, making allusions about his mental health, when obviously her mental healthy is the poorest possible to be attested in the world.

To add perjury to incontinence, Jendayi Frazer meets at the Nairobi airport the unrepresentative, unelected, totally rejected, and provenly criminal pseudo-president Abdillahi Yousuf of Somalia and the corrupt pseudo-premier Nur Hassan Hussein in an effort to spread further disorder and chaos in Somalia, the country that paranoid Jendayi Frazer has been determined to destroy and demolish.

In fact, all Africans should react to the presence of that mentally unbalanced and spiritually rotten person in Africa. African leaders must take the impious case ‘Jendayi Frazer’ to all courts of Justice, describing the female monster of the State Department as Africa’s no 1 enemy, and prohibiting her from landing on Africa in the future.

I republish here two reports, one composed by Michael Heath, on Jendayi Frazer’s villainous and lewd insults against Zimbabwe’s Mugabe, and another on her meeting with the Somali traitors who impersonate the ‘president’ and the ‘premier’ of Somalia from the portal garowe online.

Jendayi Frazer must be declared persona non grata throughout Africa.

Mugabe Has ‘Lost It,’ Can’t Be Part of Zimbabwe Deal, U.S. Says
By Michael Heath

Dec. 22 (Bloomberg) — Zimbabwe’s President Robert Mugabe has “lost it” and the U.S. can’t support a unity government that would involve him, the top American envoy for Africa said.

Jendayi Frazer, an assistant secretary of state, said Mugabe is “completely discredited” and the U.S. doesn’t believe there can be “credible power-sharing” with him as he won’t relinquish control.

Mugabe and opposition leader Morgan Tsvangirai agreed Sept. 15 to form a unity government in a move supported by the Bush administration. The deal has since stalled in disputes over control of key ministries.

Frazer, in comments to reporters in Pretoria, South Africa, cited continued political violence, Zimbabwe’s deteriorating economic situation and the spread of cholera that has killed more than 1,100 Zimbabweans for the U.S. decision.

“The power-sharing agreement should be implemented and it needs to be implemented with someone other than Robert Mugabe as the president,” she said.

Frazer cited accusations from Mugabe’s government that Western nations used biological warfare to start the cholera epidemic to indicate the president has “lost it.”

Cholera, mainly spread through contaminated water and food and poor sanitation, causes severe diarrhea and vomiting that can be fatal. The first cases in the Zimbabwean outbreak were reported in August. A collapse of the country’s economy has led to shortages of chemicals for water-treatment plants.

‘Worsening Daily’

Zimbabwe, ruled by Mugabe since 1980, is in its 10th year of a recession. Mugabe won a presidential election this year after Tsvangirai backed out of a run-off, citing police intimidation of his supporters. The leader of the Movement for Democratic Change won the first round of the election, without garnering the 50 percent needed to avoid the run-off.

Zimbabwe’s humanitarian crisis is “worsening daily,” Tsvangirai said last week. “People are dying of cholera and over 5 million people face hunger. Zimbabwe needs urgent and immediate foreign assistance.”

The U.S. was poised to help rescue Zimbabwe’s economy as soon as a power-sharing deal was completed, Frazer said.

Frazer also said she had urged Zimbabwe’s neighbors to step up pressure on Mugabe’s government.

Tsvangirai said last week his party may suspend negotiations with Mugabe unless abductions of party activists are halted immediately.

“At least 42 people have been abducted by people we believe to be state agents in the last seven weeks,” he said by telephone from Botswana. “The police have refused to obey court orders compelling them to produce or search for those who’ve been abducted and, in fact, the abductions are continuing.”

To contact the reporters on this story: Michael Heath in Sydney at Hidden Email Address

Last Updated: December 21, 2008 21:43 EST

Frazer meets with Somalia leaders ‘at Kenya airport’

Nairobi, Kenya Dec 22 (Garowe Online) – The U.S. government’s top African affairs diplomat, Ms. Jendayi Frazer, held separate meetings with interim Somali President Abdullahi Yusuf and disputed Prime Minister Nur “Adde” Hassan Hussein Monday at an airport in Kenya, Radio Garowe reports.

Ms. Frazer was reportedly ‘on transit’ when she held private meetings with the Somali leaders, who have been feuding for months with Yusuf refusing to recognize Nur Adde as Prime Minister.

The meeting was originally supposed to be held at the U.S. Embassy in Nairobi, but it was unclear why the venue was changed to Jomo Kenyatta International Airport.

Journalists were not allowed to attend either of the two meetings Ms. Frazer held with the Somali leaders, but a source close to Mr. Nur Adde said the ongoing political dispute was discussed at length.

“Discussions were centered around the IGAD decision to impose sanctions on the President [Yusuf] as well as Yusuf’s decision to appoint a new Prime Minister,” the source said.

The Inter-Governmental Authority on Development (IGAD), a regional bloc in East Africa, issued a statement yesterday declaring new and immediate sanctions against the Somali president, days after Kenya announced similar sanctions.

Somalia’s leadership dispute has largely crippled a weak interim government, which the world fears will collapse if Ethiopian troops withdraw within weeks as planned.

In recent months, Islamist guerrillas have gained new territory in southern and central Somalia, dealing a blow to the Bush administration’s “war on terror” policies in the Horn of Africa region.

Ms. Frazer, the U.S. State Department’s Assistant Secretary for Africa affairs, has been deeply involved in the Somali conflict and has paid visits to Baidoa and Hargeisa, in Somaliland region, over the past two years.

———————————————————–