My mind has been deeply troubled and it still is troubled by the situation in Africa. I don't like the fact that most Economic theories rarely work for Africa. The theories that seem to work for our lovely continent are the negative ones, like the vicious cycle of poverty. Politics seems to get in the way of Economic theories.
Zimbabwe's economy is projected to grow 8.9 percent next year if the political environment remains stable and the government lives within its expenditure targets.
Uncertainty over the date and conduct of elections due within the next year is casting a shadow over the economy given Zimbabwe's recent history of violent and disputed polls.
This was the same situation in Kenya (2007), the economy was projected to grow by over 7%. This projection became a dream after the elections turned violent.
Why do elections and politics always change our projections, and carefully planned GDP's? What exactly is ailing our continent.
On the positive side, I was impressed by President Goodluck Jonathan's decision to reject the N5,000 note last month. This averted possible inflation in Nigeria. I was also impressed by Nigeria's budget that was read yesterday. I love the fact that security had an allocation of N921.91 Billion (now that the Boko Haram terrorize the country). Well planned. Congratulations, Mr. President and team.
The Euro Zone crisis has time and again thrown financial markets into turmoil as several countries in the EU and several monetary union blocks continue to face difficulty in servicing their debts. On the other hand, although many emerging and developing countries, like India and China are experiencing relatively robust growth, downside risks remain as well. In fact, global growth projection has continuously been revised downward and is now 4% for 2012-2013.
These developments have implications for our African economy as, aside from the impact on the inflow of Foreign Direct Investments, they could also lead to lower demand for our primary export commodity. We are living witnesses to the extent of volatility that can afflict the international oil market with prices plummeting from US$147/barrel in July 2008 to about US$38/barrel four months later. Thus, although the oil price is currently over US$100/barrel, there is no guarantee what it would be in the future. There are also uncertainties in the area of international food prices which make it imperative that we take steps to safeguard our position through policies that would promote food security.
Despite the drama in the international arena, local politics also affects our African economy. For instance, Kenyans celebrate the fact that the president did not sign the bill to raise the MP's retirement benefit to Ksh. 2 Billion. Kenyans, this is my advice to you: "Wake up! Your president has been signing bills that have been raising their salaries for the last 10 years! Meanwhile, your kids stay out of school for months because the same president failed to take control of the teachers' salaries, many people die at national hospitals because the doctors are on a salary-increment-strike". Please don't get me wrong: I know that the Kenyan president is an economist, and that raising all these people's salaries would cause inflation...but for crying-out-loud, why in the world would he allow the MP's to have their salaries raised over the last ten years?
I think that it is up to us, as economists, to come up with an Economics-Politics integration policy that will not distort all the theories we use.
I have this deep passion for development in Africa, for a developed Africa. I still think that Somalia and Zimbabwe would do much better if they had their own measures of value. I believe that Africa is rich, and that we can turn the tables around.
Africa, a time is coming when all will be well.
