Tuesday, August 30, 2011
Sub-Saharan African Economics
Today at Ashesi, Dr. Augustin Fosu, who is deputy director of the UN WIDER (World Institute for Development Economics Research) center in Finland, delivered a lecture on the topic of how Sub-Saharan African economies have fared during the credit crunch and ensuing bad times around the world. The story was actually rather encouraging.
Apparently, since the mid 1990's, the GDP (and to a lesser extend, GDP per capita) for Sub-Saharan countries have moved upward at a rate nearly equal to those of the Asian Tigers and BRIC countries. Even during the credit crunch and trade shocks following those events, their economies did not dip as deeply, and even seem to have been more resilient to the dip, recovering more rapidly than other countries. Ghana, in particular is really heating up, as a Ghanaian in the diaspora mentioned here, it has been reported the fasting growing economy in the world this year!
As an expert in econometrics and the data collected by the UN and World Bank, Dr. Fosu had published articles in refereed journals noting that this improvement seems to be coincident with a blossoming of democracy across the continent. If countries are able to navigate the change from autocracy to democracy without descending into chaos (which he admits has happened in several countries), they become more appealing to FDI (Foreign Direct Investment). In early, destitute conditions, external aid is vital, but many of the countries in SSA are now moving beyond such overwhelming reliance on outside help, and are growing well.
Also encouraging is the observation that finally, it seems like this rising tide is starting to float more boats. The reduction in abject poverty is becoming noticeable in many countries, including Ghana.
He cautioned that the distortions of the oil boom and gold price increases might not be managed well for the further support of the poor in Ghana, but was encouraged upon visiting here (he will be a visiting scholar at University of Ghana, Legon this year) to hear debates in parliament about the use of oil revenues. Transparency will likely be an important issue.
When asked about how such money should be spent, he admitted that the strict "savings only" approach used by Norway would not be appropriate in Ghana, as there were still major development challenges needing funding. As it seems everyone who visits Ashesi remarks, he highlighted an improved transportation network. The US Ambassador had mentioned he felt like "fufu" on his way up the mountain, and I have already reported on the bone-jarring trip the Ashesi staff endure twice a day.
Today, I noticed on the way out that the first sandy place which had been absolutely awful in the morning had been smoothed out and filled with more sand this evening. Why sand is used still escapes me, after tonight's rain/dew the place will likely be back to the prior condition. There is also some work being done on the crater pictured at the head of this post.
23 Be sure you know the condition of your flocks,
give careful attention to your herds;
24 for riches do not endure forever,
and a crown is not secure for all generations.
25 When the hay is removed and new growth appears
and the grass from the hills is gathered in,
26 the lambs will provide you with clothing,
and the goats with the price of a field.
27 You will have plenty of goats’ milk to feed your family
and to nourish your female servants.
from Proverbs 27 (NIV)