Cover Image
close this bookSustaining the Future: Economic, Social, and Environmental Change in Sub-Saharan Africa (UNU, 1996, 365 pages)
close this folderPart 1: Economy and society: development issues
close this folderUrbanization and industrialization: What future for Sub-Saharan Africa?
View the document(introductory text...)
View the documentIntroduction
View the documentThe continuing rapid rate and scale of urbanization
View the documentThe urban environment
View the documentThe limitations of industrialization
View the documentThe impact of structural adjustment
View the documentSub-Saharan Africa as the global periphery
View the documentImplications for urbanization and industrialization
View the documentReferences

Sub-Saharan Africa as the global periphery

Furthermore, it is important to underscore the seriousness of the African situation in comparison with other third world regions. Africa has become the outer periphery of the world economy, the poorest continental region of the world (Simon 1992, 1993) and commensurately marginal politically (Harbeson and Rothchild 1992). A glance at some World Bank and OECD data underscores the point.

Sub-Saharan Africa's dismal economic performance, relative both to all low-income countries and to other continental regions of the South, is starkly illustrated in table 5.1. Whereas the region experienced the fastest growth of value-added in industry until 1973, it has been the slowest growing since then and even declined during 1980s. In fact, during the 1980s, Sub-Saharan Africa's results for all three sectors were the poorest. This situation is clearly unsustainable, given population growth rates and rising expectations.

The rate of return in industry has been so low that transnational corporations (TNCs) disinvested during the 1980s (Bennell 1990; Simon 1992, 1993). Even in South Africa, sanctions proved little more than an expedient political flag under which TNCs withdrew. The Sub-Saharan countries now account for an insignificant percentage of the industrial foreign direct investment (FDI) portfolios of most TNCs, given the strong performance of the Pacific Rim economies, for example. Thus, in respect of global industrial FDI by United Kingdom firms, Sub-Saharan Africa's share fell from around 4 per cent in the mid-1970s to 0.5 per cent in 1986 (Bennell 1990). I see little prospect of major new net FDI flows into Sub-Saharan Africa as a whole in the foreseeable future, despite the severity of structural adjustment having been predicated largely on the assumption by the IMF and the World Bank, in particular, that creating the "right" economic conditions would prove attractive to large-scale FDI. Yet, although still the world's least urbanized continental region (30-35 per cent), Africa (and Sub-Saharan Africa) - the poorest continent - is actually experiencing the most rapid rate of urbanization (O'Connor 1991; Gilbert and Gugler 1992; Simon 1992).

From table 5.2 it is evident that, although the net indebtedness of the Sub-Saharan countries is comparatively small in US dollar terms, it is extremely serious and unsustainable relative to the size and structure of the continent's economies - as measured by debt service ratios. Moreover, Sub-Saharan Africa's position deteriorated dramatically during the 1980s and is now worse than that of Latin America, the continent that precipitated the debt crisis and that has shown modest improvement over the 1980s on some indicators. Table 5.2 includes three slightly different forms of debt service ratio in order to highlight both the consistency of the region's deterioration across these variables and the sensitivity of the magnitude of such change to the particular variable(s) used. Table 5.3 shows the extent of Sub

Table 5.1 Sectoral growth rates, 1965-1989 (average annual percentage change of value-added)

 

Agriculture

Industry

Services

Country group 1965-73 1973-80 1980-89a 1965-73 1973-80 1980-89° 1965-73 1973--80 1980-89
Low-income economies 2.9 1.8 4.3 10.7 7.0 8.7 6.3 5.3 6.1
Middle-income economies 3.2 3.0 2.7 8.0 4.0 3.2 7.6 6.3 3.1
Severely indebted middle-income economies 3.1 3.6 2.7 6.8 5.4 1.0 7.2 5.4 1.7
Sub-Saharan Africa 2.2 - 0.3 1.8 13.9 4.2 - 0.2 4.1 3.1 1.5
East Asia 3.2 2.5 5.3 12.7 9.2 10.3 10.5 7.3 79
South Asia 3.1 2.2 2.7 3.9 5.6 7.2 4.0 5.3 6.1
Latin America and the Caribbean 3.0 3.7 2.5 6.8 5.1 1.1 7.3 5.4 1.7

Source: World Bank (1990: 162).
a. Figures in italic in the 1980 89 columns are not for the full decade.

Table 5.2 The external debt burden' 1990 and 1980

Region/ineome categorya

Total external debt as % of exports of goods and services

Total debt service as % of exports

Interest payments as % of exports

  1990 1980 1990 1980 1990 1980
Sub-Saharan Afriea 324.3 96.8 19.3 10.9 8.9 5.7
Low-income countries, of which 218.5 105.1 20.1 10.3 9.3 5.1
1 Mozambique 1,573.3 - 14.4 - 7.7 -
2 Tanzania 1,070.7 317.8 25.8 19.6 10.9 10.0
3 Ethiopia 480.3 136.2 33.0 7.6 8.1 4.7
4 Somalia 2,576.2 252.0 11.7 4.9 5.8 0.9
9 Malawi 328.5 260.8 22.5 27.7 9.1 16.7
17 Nigeria 242.7 32.2 20.3 4.2 12.1 3.3
18 Niger 464.2 132.8 24.1 21.7 8.9 12.9
25 Kenya 306.3 165.1 33.8 21.4 14.8 11.3
27 Ghana 353.4 116.0 34.9 13.1 9.9 4.4
34 Lesotho 41.2 19.5 2.4 1.5 0.8 0.6
Lower-middle-income countries, of which 179.0 115.2 20.3 18.8 8.4 9.1
45 Zimbabwe 155.0 45.4 22.6 3.8 9.6 1.5
46 Senegal 236.8 162.7 20.4 28.7 8.1 10.5
48 Cote d'lvoire 487.4 160.7 38.6 28.3 13.3 13.0
56 Congo 352.5 146.7 20.7 10.8 10.5 6.7
71 Botswana 22.9 17.S 4.4 1.9 1.6 1.1
Upper-middle-income countries, of which 132.1 159.6 17.9 31.0 8.2 16.6
93 Gabon 138.4 62.2 7.6 17.7 5.0 6.3
East Asia and Pacific 91.1 88.8 14.6 13.5 5.8 7.7
South Asia 281.5 162.9 25.9 12.2 13.1 5.2
Bangladesh 448.2 345.6 25.4 23.2 7.7 6.4
India 282.4 136.0 28.X 9.3 15.9 4.2
Europe 125.7 90.6 16.9 15.9 6.8 7.1
Middle East and North Africa 180.3 114.9 24.4 16.4 8.1 7.4
Latin America and Caribbean 257.4 196.8 25.0 37.3 13.3 19.7
Mexico 222.0 259.2 27.8 49.5 16.7 27.4
Brazil 326.8 304.9 20.8 63.1 8.2 33.8

Source: World Bank (19Y2).
a. Regional and income category averages are weighted hy size of flows.

Table 5.3 Official development assistance (ODA) by region and origin, 1984-1990 (current US$m)

  1984 % 1988 % 1989 % 1990 %
Europe:
Net disbursements (all sources), of which 414.7 1 522.6 1 356.7 1 1,496.5a 3
from DAC countries 302.0 73 477.1 91 358.7 101 783.5 52
by multilateral agencies 74.3 18 86.0 16 39.7 11 41.5 3
Africa:
Net disbursements (all sources) 11,375.2 37 17,694.0 38 18,286.2 39 25,512.0 43
from DAC countries 7,515.9 66 12,532.1 71 12,654.0 69 16,561.9 65
by multilateral agencies 2,823.3 25 4,924.6 28 5,528.8 30 6,104.2 24
Africa north of Sahara:
Net disbursements (all sources) 2,424.3 8 2,527.2 5 2,445.9 5 7,146.4b 12
from DAC countries 2,156.0 89 2,205.9 87 2,090.8 85 4,142.3 58
by multilateral agencies 211.0 9 286.1 11 355.0 15 265.4 4
Africa south of Sahara:
Net disbursements (all sources) 8,211.1 27 14,801.6 32 15,304.3 32 17,879.4 30
from DAC countries 5,216.1 64 10,123.5 68 10,220.7 67 12,146.3 68
by multilateral agencies 2,506.7 31 4,482.4 30 4,983.5 33 5,626.1 31
North & Central America:
Net disbursements (all sources) 2,248.4 7 3,213.6 7 3,380.4 7 3,991.1 7
from DAC countries 1,775.3 79 2,697.3 84 2,865.0 85 3,471.8 87
by multilateral agencies 473.2 21 515.9 16 514.5 15 519.6 13
South America:
Net disbursements (all sources) 1,101.6 4 1,639.4 4 1,885.6 4 2,078.0 3
from DAC countries 774.5 70 1,271.6 78 1,518.0 81 1,631.9 79
by multilateral agencies 329.6 30 368.1 22 368.3 20 446.2 27
Middle East:
Net disbursements (all sources) 3,456.2 11 2,441.5 5 2,305.4 5 4,118.2c 7
from DAC countries 1,537.1 44 1,913.9 78 1,806.9 78 2,200.5 53
by multilateral agencies 233.7 7 232.8 10 364.0 16 560.2 14
South Asia:
Net disbursements (all sources) 4,544.7 15 6,718.9 14 6,309.8 13 6,334.6 11
from DAC countries 2,184.2 48 3,991.2 59 3,658.7 58 3,343.3 53
by multilateral agencies 2,310.3 51 2,767.5 41 2,693.7 43 3,004.4 47
Far East:
Net disbursements (all sources) 2,852.4 9 5,520.9 12 6,292.2 13 6,997.9 12
from DAC countries 2,205.2 77 4,326.4 78 5,086.1 81 5,595.4 80
by multilateral agencies 547.8 19 1,200.0 22 1,208.1 19 1,364.2 19
Oceania:
Net disbursements (all sources) 971.7 3 1,436.4 3 1,361.6 3 1,348.5 2
from DAC countries 912.4 94 1,291.3 90 1,273.6 94 1,214.7 90
by multilateral agencies 59.3 6 144.9 10 87.8 6 133.5 10
TOTAL
Net disbursements (all sources) 30,984.9 100 46,370.1 100 47,281.1 100 59,828.2 100
from DAC countries 19,693.8 64 33,155.9 72 34,228.1 72 40,225.7 67
by multilateral agencies 7,637.0 25 11,326.9 24 11,736.3 25 13,447.1 22

Source: OECD, Geographical Distribution of Financual Flows to Developing Countries: Disbursements, Commitments, Economic Indicators, 1987/1990. Paris, 1992.
Note: Neither the annual totals nor percentages for all regions add up exactly to the global totals because of various unspecified and unallocated disbursements.
a. Turkey received a dramatically increased allocation in 1990.
b. Egypt received a dramatically increased allocation in lsso.
c. Syna received a dramatically increased allocation in 1990 (back to levels of 1987 and earlier).

Saharan Africa's current high aid reliance relative to other regions, a picture unlikely to change much in the near future.