Low Economic Growth Due to Poor Governance

Over the years, poor governance has led to decreased economic growth in many sectors.  From rampant corruption to the implementation of detrimental economic policies, poor governance and its impact on African economics has played a major role in the development of Africa.  A large reason for these detrimental economic policies is due to botched institutions.  Instead of acting in the best interest of citizens and the country, elected officials act to pass laws that support the elite.  As a result, the general public is negatively effected in addition to the state of the economy as a whole.  These institutions exist, in large part, due to weak institutional framework; including a lack of any kind of transparency or accountability from its institutions.  Because of these botched institutions and a small tax base, elected officials regularly make decisions to reap short-term benefits rather than long-term benefits.  These short-term solutions impose a longer-term cost for various Africans across the continent than the longer-term solution would.  An example of this would be the budget-deficit controls implemented by many African countries today.  Since the vast majority of African countries do not have a sustainable and efficient tax system, many rely on monetizing through the central bank or through the preset of the massive public debt.

Due to poor governance and more specifically, the factors mentioned above, foreign investment also suffers.  One of the major reasons the American economy thrives is because of foreign investment and loans, especially from China.  Today, multinational corporations and governments are afraid of investing in the African economy because of the poor political environment and quality governance.  The lack of these resources, in turn, further worsens the economic conditions in many African countries.  Factors such as political instability and insecure sustainability, in particular, hinder private sector parties from investing their resources in Africa.  As a result of all these lack of resources, most African countries are forced to receive aid from foreign countries or international relief establishments, such as the World Bank.  This further increases Africa's economic dependence on foreign parties and enslaves them to the will of others.  Even though human slavery was abolished decades ago, it is clear that slavery still exists in the form of economic slavery in Africa.

Sources: Picker, Les. The Economic Decline in Africa. N.p., n.d. Web. 05 May 2017. <http://www.nber.org/digest/jan04/w9865.html>.