African dream
Encyclopedia
The African Dream is the hope of a united Africa that will be recognized as a business partner
and not the world's poorest and most underdeveloped continent. A prosperous Africa that does not rely on aid but has the capacity to give aid to other continents. An Africa considered as a serious competitor in the global market
place and organizations seeking capital in Africa. African companies offering competitive remuneration and returns therefore attracting professional skilled labor at home and from abroad.
in Africa is enormous, but many investors remain unaware of the past record and current opportunities, argues the UN
Conference on Trade and Development
(UNCTAD). Although external investment in Africa has been increasing in recent years, it still lags far behind the flows to other developing regions, in part because of the generally negative image of the continent portrayed in the international media, explains the UNCTAD
report "Foreign Direct Investment in Africa: Performance and Potential". 'Africa's profitability is one of the best kept secrets in today's world economy
.' There is still a lot of room for growth in the African markets which has to be exploited. In the past fifty years, more than $1 trillion in development-related aid has been transferred from rich countries to Africa, and this assistance has not improved the lives of Africans. Across the continent, the recipients of this aid are not better off as a result of it, but worse off. Poverty levels continue to escalate and growth rates have steadily declined—and millions continue to suffer. There is a sharp contrast between African countries
that have rejected the aid route and prospered and others that have become aid-dependent and seen poverty increase. Over-reliance on aid has trapped developing nations
in a vicious circle of aid dependency, corruption, market distortion
, and further poverty, leaving them with nothing but the "need" for more aid. The profitability of foreign companies in Africa has been consistently higher than in most other regions of the world, reports the UNCTAD study. Since 1990, the rate of return
on foreign direct investment (FDI) in Africa has averaged 29 per cent, and since 1991 it has been higher than in all other regions, in many years by a factor of two. The only problem is that investors remain unaware of the opportunities that lie untapped. African economies are forecast to grow by an average of 6.2 per cent in 2008, according to the latest edition of the Economic Report on Africa (ERA 2008), the annual joint flagship publication of the United Nations Economic Commission for Africa
(ECA) and the African Union
(AU), launched. Titled "Africa and the Monterrey Consensus: Tracking Performance and Progress", the ECA noted that African economies continued to sustain the growth momentum of previous years, recording an overall real GDP
growth rate of 5.8 per cent in 2007. Although 30 countries recorded higher economic growth
rates in 2007 than 2006, growth performance varied substantially across countries and regions. The report also noted that economic growth recovery in Africa has not yet translated into meaningful social development and has not benefited vulnerable groups. Africa's growth performance was driven mainly by robust global demand and high commodity prices. Other growth factor
s in Africa include continued consolidation of macroeconomic stability and improving macroeconomic management, greater commitment to economic reforms, increased private capital flows, debt relief
and increasing non-fuel exports. Africa has also witnessed a decline in political conflicts and wars, especially in West and Central Africa
, though peace remains fragile in some parts of the continent. Key challenges to Africa's growth in 2008, according to the report, included the risk of sharper slowdown in the US economy and a fall in global commodity demand and prices. Also, high oil prices will hurt oil importers through the current account and inflationary pressures. In addition to political instability in some countries, inefficient public infrastructure
and unreliable energy supply
at the national level as well as poor integration of transportation and energy networks at the regional level continue to pose important constraints to Africa's growth.
economics professor Robert Lawson found that investment generates higher economic growth rates in freer countries than in less free countries. Further, he found that even in the least free countries, private investment still generates economic growth more efficiently than public investment
. Unfortunately, development aid
can discourage private investment by hampering the economic freedom that is necessary to attract it. Noted development economist P.T. Bauer
long contended that government-to-government aid promoted statism
by politicizing economic life and enlarging the relative size of the public sphere. Recent research by Matt Ryan and Benjamin Powell supports Bauer's claim that higher levels of economic aid depress economic freedom scores. Yet it is higher freedom that is necessary to attract investment and grow. Aid and debt forgiveness will not promote the institutional environment of economic freedom and property rights
that Africa needs to grow. There are humanitarian organizations working towards achieving the African dream and dedicated to empowering lives and eliminating poverty through non-profit service programs that utilize individuals' skills and passions by providing education and small-scale business.
Business partner
Business partner is a term used to denote a commercial entity with which another commercial entity has some form of alliance. This relationship may be a highly contractual, exclusive bond in which both entities commit not to ally with third parties...
and not the world's poorest and most underdeveloped continent. A prosperous Africa that does not rely on aid but has the capacity to give aid to other continents. An Africa considered as a serious competitor in the global market
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
place and organizations seeking capital in Africa. African companies offering competitive remuneration and returns therefore attracting professional skilled labor at home and from abroad.
The current African scenario
The potential for highly profitable foreign investmentForeign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
in Africa is enormous, but many investors remain unaware of the past record and current opportunities, argues the UN
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
Conference on Trade and Development
Trade and development
Trade is a key factor in economic development. A successful use of trade can boost a country's development. On the other hand, opening up markets to international trade may leave local producers swamped by more competitive foreign producers.-Overview:...
(UNCTAD). Although external investment in Africa has been increasing in recent years, it still lags far behind the flows to other developing regions, in part because of the generally negative image of the continent portrayed in the international media, explains the UNCTAD
United Nations Conference on Trade and Development
The United Nations Conference on Trade and Development was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues....
report "Foreign Direct Investment in Africa: Performance and Potential". 'Africa's profitability is one of the best kept secrets in today's world economy
World economy
The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one....
.' There is still a lot of room for growth in the African markets which has to be exploited. In the past fifty years, more than $1 trillion in development-related aid has been transferred from rich countries to Africa, and this assistance has not improved the lives of Africans. Across the continent, the recipients of this aid are not better off as a result of it, but worse off. Poverty levels continue to escalate and growth rates have steadily declined—and millions continue to suffer. There is a sharp contrast between African countries
Africa
Africa is the world's second largest and second most populous continent, after Asia. At about 30.2 million km² including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area...
that have rejected the aid route and prospered and others that have become aid-dependent and seen poverty increase. Over-reliance on aid has trapped developing nations
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
in a vicious circle of aid dependency, corruption, market distortion
Market distortion
In neoclassical economics, a market distortion is any event in which a market reaches a market clearing price for an item that is substantially different from the price that a market would achieve while operating under conditions of perfect competition and state enforcement of legal contracts and...
, and further poverty, leaving them with nothing but the "need" for more aid. The profitability of foreign companies in Africa has been consistently higher than in most other regions of the world, reports the UNCTAD study. Since 1990, the rate of return
Rate of return
In finance, rate of return , also known as return on investment , rate of profit or sometimes just return, is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or...
on foreign direct investment (FDI) in Africa has averaged 29 per cent, and since 1991 it has been higher than in all other regions, in many years by a factor of two. The only problem is that investors remain unaware of the opportunities that lie untapped. African economies are forecast to grow by an average of 6.2 per cent in 2008, according to the latest edition of the Economic Report on Africa (ERA 2008), the annual joint flagship publication of the United Nations Economic Commission for Africa
United Nations Economic Commission for Africa
The United Nations Economic Commission for Africa was established in 1958 by the United Nations Economic and Social Council to encourage economic cooperation among its member states following a recommendation of the United Nations General Assembly.It is one of five regional commissions.The ECA...
(ECA) and the African Union
African Union
The African Union is a union consisting of 54 African states. The only all-African state not in the AU is Morocco. Established on 9 July 2002, the AU was formed as a successor to the Organisation of African Unity...
(AU), launched. Titled "Africa and the Monterrey Consensus: Tracking Performance and Progress", the ECA noted that African economies continued to sustain the growth momentum of previous years, recording an overall real GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
growth rate of 5.8 per cent in 2007. Although 30 countries recorded higher economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
rates in 2007 than 2006, growth performance varied substantially across countries and regions. The report also noted that economic growth recovery in Africa has not yet translated into meaningful social development and has not benefited vulnerable groups. Africa's growth performance was driven mainly by robust global demand and high commodity prices. Other growth factor
Growth factor
A growth factor is a naturally occurring substance capable of stimulating cellular growth, proliferation and cellular differentiation. Usually it is a protein or a steroid hormone. Growth factors are important for regulating a variety of cellular processes....
s in Africa include continued consolidation of macroeconomic stability and improving macroeconomic management, greater commitment to economic reforms, increased private capital flows, debt relief
Debt relief
Debt relief is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. From antiquity through the 19th century, it refers to domestic debts, in particular agricultural debts and freeing of debt slaves...
and increasing non-fuel exports. Africa has also witnessed a decline in political conflicts and wars, especially in West and Central Africa
Central Africa
Central Africa is a core region of the African continent which includes Burundi, the Central African Republic, Chad, the Democratic Republic of the Congo, and Rwanda....
, though peace remains fragile in some parts of the continent. Key challenges to Africa's growth in 2008, according to the report, included the risk of sharper slowdown in the US economy and a fall in global commodity demand and prices. Also, high oil prices will hurt oil importers through the current account and inflationary pressures. In addition to political instability in some countries, inefficient public infrastructure
Public infrastructure
Public infrastructure is a general term often qualified specifically as:* Aviation infrastructure - air traffic control technology in aviation* Critical infrastructure - assets required to sustain human life...
and unreliable energy supply
Energy supply
Energy supply is the delivery of fuels or transformed fuels to point of consumption. It potentially encompasses the extraction, transmission, generation, distribution and storage of fuels...
at the national level as well as poor integration of transportation and energy networks at the regional level continue to pose important constraints to Africa's growth.
Efforts being made
Recent research by Capital UniversityCapital University
Capital University is a private liberal arts university of the Evangelical Lutheran Church in America located in Bexley, Ohio, founded in 1830. In addition to its rigorous liberal arts program, the university also offers a reputable adult degree program in Columbus, Ohio. It is one of the oldest...
economics professor Robert Lawson found that investment generates higher economic growth rates in freer countries than in less free countries. Further, he found that even in the least free countries, private investment still generates economic growth more efficiently than public investment
Government bond
A government bond is a bond issued by a national government denominated in the country's own currency. Bonds are debt investments whereby an investor loans a certain amount of money, for a certain amount of time, with a certain interest rate, to a company or country...
. Unfortunately, development aid
Development aid
Development aid or development cooperation is aid given by governments and other agencies to support the economic, environmental, social and political development of developing countries.It is distinguished...
can discourage private investment by hampering the economic freedom that is necessary to attract it. Noted development economist P.T. Bauer
Peter Thomas Bauer
Peter Thomas Bauer, Baron Bauer was a developmental economist. Bauer is best remembered for his opposition to the widely-held notion that the most effective manner to help developing countries advance is through state-controlled foreign aid.- Life :Bauer was born as Péter Tamás Bauer in Budapest,...
long contended that government-to-government aid promoted statism
Statism
Statism is a term usually describing a political philosophy, whether of the right or the left, that emphasises the role of the state in politics or supports the use of the state to achieve economic, military or social goals...
by politicizing economic life and enlarging the relative size of the public sphere. Recent research by Matt Ryan and Benjamin Powell supports Bauer's claim that higher levels of economic aid depress economic freedom scores. Yet it is higher freedom that is necessary to attract investment and grow. Aid and debt forgiveness will not promote the institutional environment of economic freedom and property rights
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
that Africa needs to grow. There are humanitarian organizations working towards achieving the African dream and dedicated to empowering lives and eliminating poverty through non-profit service programs that utilize individuals' skills and passions by providing education and small-scale business.