For all your business information, Trends and Tips from around the world.

Business in Focus is now published at For all your business information, Trends and Tips from around the world, Check out our new blog HERE |

Thursday, November 15, 2007

Is Africa Chocking on its own development?

Majority of African countries have reported increased economic growth rates over the past year signalling a wave of new foreign direct investments on the continent. This is good news given that increased returns from such investments will fuel Africa’s quest for development. However, this has had some negative connotations because benefits of such growth are not visible in major cities across Africa. A case in point is the Kenyan capital city, Nairobi, which has seen its population increase by 6% per annum to 3 million and is projected to hit 4 million within the next 3 years, according to a recent UN Habitat conference held in Monterrey, Mexico in 2007. Being a regional headquarter to several international companies and organizations, Nairobi is one of the most influential cities in Africa. In 2007 alone, major international companies like Google Inc. and Coca-Cola relocated their Africa headquarters to Nairobi, which also plays host to the United Nations Environmental Program (UNEP) and UN-Habitat.

Development trends of major African cities have been fuelled mostly by centralisation of important ingredients that spur economic growth. Most resources are revolving around capital cities, which report tremendous growth each financial year at the expense of the rest of the economy. Economic growth is not uniform since such centralisation has had the effect of reversing progress made in terms of economic growth given that everyone is running to the city for opportunities at the cost of the city’s infrastructure, which can hardly support the increased activity. This has turned Nairobi city into a pocket to mouth economy because any monetary gains made in the past are being used to repair damage caused by increased strain of the same resources.

A recent World Bank report estimates that over 5,000 vehicles are registered to Kenyan roads every month, against a back drop of an already over used, narrow and dilapidated road network. Another problem this trend presents is the importation of second hand vehicles which are deregistered from their home countries due to high fuel consumption, old age and high carbon emission into the atmosphere. The result has been increased wastage of time due to preventable traffic jams, environmental damage and an advent of respiratory diseases. With very low earning power, a majority of the city residents cannot afford treatment. Resources that could have been used to develop other regions to create uniform economic growth for the country are being diverted to revert problems of preventable respiratory diseases, damaged roads, increased crime, drug and alcohol abuse among other preventable issues.

Given the above recount, one way of ensuring that growth rates reported reflect the situation on the ground is to decentralise management of the economy in such a way as to create more economic opportunities at the grassroots level thus minimising rural to urban migration. Moving or replicating key economic growth boosters such as roads, information and telecommunication technology (ICT) and government administration from the capital city will present better prospects for growth. Unfortunately, devolution of resources and government is an emotive political issue especially in Africa where there are unfounded fears that different cultural affiliations may create chaos, anarchy or even war; as is the case in Kenya, which is preparing for elections in December 2007 where presidential aspirants are using devolution as a basis for the next government. Devolving government administration and economic centres to areas that desperately need growth would serve to develop these areas thus improve the overall picture of success.

A classic example of a successful devolved approach to resource planning at local level is Norway, which reported the highest quality of life worldwide according to the 2006 Human Development Index (HDI), published annually by the UN, and ranks nations based on their citizens' quality of life rather than traditional economic figures. Norway has managed to successfully devolve its resources and legislation enabling it to report an all-inclusive economic growth year after year. If this has succeeded in the developed world, Africa should not be an exception.

No comments: