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Africa: Development Issues and Policy Options
Sub-Saharan Africa has been a focus for U.S. development assistance fordecades. Many believe that U.S. interests in the region are increasing, partly becauseof its oil resources and the international terrorist threat. However, at the beginningof the twenty-first century, Africa faces grave challenges that potentially threatenlong-term stability, including the world’s most serious HIV/AIDS pandemic,widespread rural poverty, and high levels of urban unemployment. In constant dollarterms, incomes in Africa are only about $100 higher than in 1960. Recently, grossdomestic product (GDP) has been growing, but at rates well below the 7% or betterneeded to make significant headway against poverty.The reasons for slow growth and poverty in Africa are the source of muchanalysis and debate. Some emphasize factors largely beyond Africa’s control, suchas a difficult geographical endowment that has limited growth in manufacturing,agriculture, and trade. Dependence on primary product exports has made the regionvulnerable to cyclical price trends and global economic downturns. Meanwhile, theHIV/AIDS pandemic and the “brain drain” to developed countries have taken awaylarge numbers of adults in their most productive years. The colonial powers mademinimal investments in African infrastructure, and left the region divided into some48 separate countries — several of them landlocked — complicating prospects foreconomic integration and growth. Trade barriers imposed by developed countries toAfrica’s exports of cotton and other primary products have also come in for criticism.Many analysts blame Africa’s economic problems primarily on the limitedcapabilities of African governments, inappropriate economic policies pursued intothe 1990s, and corruption. They maintain that further free market reforms areessential if the continent is to grow more rapidly. Some stress Africa’s heavy burdenof foreign debt, which required the payment of $12 billion in debt service in 2002.Africa’s difficulties have limited foreign investment in the region, hampering thedevelopment of an export manufacturing sector that could provide jobs and growth.Development experts and advocates are recommending a number of measuresto accelerate growth in Africa, including increased foreign assistance; debtforgiveness; the easing of trade barriers; expanded HIV/AIDS programs; and supportfor capacity building, both in terms of human capital and infrastructure. Investmentpromotion programs and expanded applications of research and technology also havesupport. Each of these approaches has its critics and some could face politicalproblems in the donor countries. In both Europe and the United States, for example,there is strong opposition to any proposal perceived as having the potential to export jobs, as some fear would happen if trade barriers were eased. Moreover, someexperts doubt that existing assistance agencies in the developed countries have theknowledge and capacity needed to help Africa grow. Thus, Africa’s ability to escapeits current economic dilemmas remains very much in question. For background onthe U.S. foreign aid program in Africa and information on current legislation, seeCRS Issue Brief IB95052,
Africa: U.S. Foreign Assistance Issues.
This report willbe updated as events warrant.