AFRICA’S continued underdevelopment is often attributed to various factors ranging from colonisation to lack of resources.
In response to these challenges governments in Africa have often come up with national development plans.
But do these plans work?
I raise this question based on observations that African economies are lagging behind all developing and developed countries.
The Human Development Index of 2008 shows the standard of living for most African states has worsened as compared to 1975.
The most common excuse raised by small economies like Lesotho has been lack of economically valuable resources.
But being endowed with resources is neither necessary nor sufficient for good economic performance.
Let’s consider Nigeria and the DRC which are both huge in size and immensely endowed with resources but are not the main economic powerhouses of Africa.
In contrast, Singapore which is 640 square kilometres with no resources, has managed to change from a developing country to a developed country between 1975 and 2005. Countries like Sierra Leone and Liberia are small and are endowed with valuable natural resources but have proved that resource endowment is not sufficient for good economic performance.
It is argued that if colonialism never happened, African countries would have been developed.
But countries like Ethiopia have never been colonised and fall on the lowest rung of economic indicators.
Countries like Malaysia, Ghana and Nigeria were all British colonies that got their independence in 1960.
Surprisingly, their GDP per capita growth rate has grown by 86 percent, 18 percent and 56 percent, respectively, between 1960 and 2005.
So does colonisation have a significant impact on economic performance?
In my opinion, the problem of poor economic performance is caused by lack of long-term economic planning and trivialisation of the political process in economic goals.
Poor economic planning is usually caused by deficiencies in national development plans which include unrealistic economic targets, failure to have precise targets, unclear targets to both public and the people responsible for their implementation, that is, they are not measurable and do not have a time-frame.
The Poverty Reduction Strategy (PRS) of Lesotho is a recent example of poor development planning. The overwhelming priority for the PRS was poverty reduction.
But the document did not focus enough on economic growth which is crucial for reducing poverty and for offsetting potential falls in Sacu revenue and miners’ remmitances.
It also did not pay enough attention to other components of the government’s roles that are crucial but incapable of reducing poverty, such as safety and security and forestry.
Whilst these sectors were included in the PRS, they were not analysed fully.
The budgeting process requires difficult trade-offs and prioritisations as desired expenditure always far outstrips available resources.
Since the PRS was incomplete, it was unable to comprehensively inform the budgeting process. It did not adequately address several sectors because it was unable to inform these inter-sectoral trade-offs.
Also, the planned activities in the PRS were based on an expectation that donor partners would scale up aid to Lesotho.
For various reasons, including the prioritisation of HIPC debt relief countries by the international community, these extra resources did not materialise.
Therefore, the planned activities were not constrained by a realistic resource ceiling. This meant that the action plans contained within the PRS were too aspirational compared to available resources, and these action plans were not sufficiently prioritised to effectively guide the budget allocation process within a smaller available resource envelope.
Some might remember the two National Development Plans (1970-1975 and 1975-1980) by the late Chief Leabua Jonathan’s regime which led to the construction of roads, Lesotho Highlands Water Project, airports, hospitals, irrigation systems, development banks, food processing agencies, government complexes and so forth.
Some of these are still operational even up to now. Short-term economic planning leads to high recurrent expenses with no infrastructural progress.
It does not lead to economic development since it focuses on correcting market failures.
Moreover, it leads to politically motivated business cycles which are one of the main reasons economists have argued in favour of an independent central bank.
National development plans provide a way of having coordinated anchors, poverty alleviation, reduction in unemployment, infrastructural development and so on.
Plans introduce a time dimension and discipline to the political process whereby public servants are required to provide performance monitoring reports on their implementation of the economic goals as stipulated in the plan.
In addition, development plans provide information relevant to investors and members of the private sector for decision making.
This reduces the wastage of time inconsistency and provides certainty about future prospects of the economy if they are easily accessible to the public and people abroad. Plans provide the most adequate mechanism of mobilising domestic resources especially in small developing economies.
They bring awareness of whats needs to be done and urge the public to join the government in the quest to achieve economic goals.
Members of the public are more likely to comply with tax policies when there is certainty about the structure of the fiscal policy for the next five years.