Business Strategies in Africa

1
   
Towards a Growth Strategy for Africa
 
Marcel Fafchamps, Francis Teal, and John Toye
   
REP/2001-06
   
Centre for the Study of African Economies
Department of Economics, University of Oxford
Manor Road Building, Oxford OX1 3UQ, United Kingdom
csae.enquiries@Economics.ox.ac.uk
    November 2001

     

  2
Executive Summary

Now that China and India have found ways of growing out of poverty, attention has again
turned   to   Africa.   The   purpose   of   this   report   is to ask which engines of growth can be
activated in sub-Saharan Africa today.  

After   two   decades   of   stagnation   in   the   continent,   discouragement   is   taking   hold.   The
focus of policy has shifted further and further away from growth-oriented interventions
towards   welfare   assistance.   Yet,   in   the   long-run, a growth strategy   is   the   most   cost-
effective way of dealing with poverty. This is true for two fundamental   reasons:   first,
growth lifts many of the   poor out of poverty; second, it generates the government
revenues necessary for anti-poverty measures. A donor strategy that focuses exclusively
on short-term poverty alleviation is a dead end, condemned to last indefinitely.

Rapid growth, when it happens, is disruptive. Measures are needed to protect vulnerable
groups   against   disruption.   In   a   growing   economy,   educating   the   poor   is   a   good   way   of
helping them partake to increased aggregate prosperity. In a stagnating economy, the net
effect on poverty reduction is less clear. The rapid increase in education which occurred
in sub-Saharan Africa from 1960 to 1990 was not sufficient to generate growth.  

Exporting   out   of   Africa   is   currently   the   only   promising   avenue   for   growth.   It   is   not
entirely understood why exporting countries grow faster, why technical progress is more
rapid in export oriented countries, and why exporting firms are more efficient. It may be
due to... [continues]

Read full essay