Cash Distribution Critical To Economic Growth …W/Bank Tells Liberia
The World Bank says after five years of prolonged weakness in the global economy, most countries in the Sub-Saharan region have continued to register relatively vigorous growth, but warned that cash distribution remains critical to Liberia’s economic growth.
Addressing a cross session of media practitioners from across Africa on the global economic expansion and how economic activity was robust in much of Sub-Saharan Africa in 2013, the World Bank indicated that cash distribution will require that the Liberian government expands the usages of its taxes, develop a more comprehensive social pension and conditional cash transfer programs so as to reflect the participation of the ordinary people.
Responding to a question raised by a Liberian journalist on why Liberia was not mentioned as one of the notably buoyant resource-rich countries in World Bank’s new Africa’s Pulse despite having iron ore, rubber and most recently oil, the World Bank team said Liberia needs to improve the emphasis they placed in early childhood development programs, basic social programs which includes health, electricity and access to roads.
The World Bank team noted that the development of some of those schemes and basic services would help in making the ordinary people feel the direct impact of proceeds generated from their natural resources.
World Bank says, “In other countries, government pays for the children school fees. This helps their parents to save some of the money they make from their various place of work; maybe Liberia needs to do more of direct cash distribution.”
Although the region continues to grow faster than many economies around the world, World Bank says growth in Africa is not inclusive when viewed in terms of the population demographic.
The bi-annual analysis of Africa’s economic growth shows that the continent is experiencing strong growth, but that growth must be translated more quickly into reducing poverty in the region.
Journalists from other African countries raised serious concern over the World Bank’s new Africa’s Puls, demanding to know how has this report being released in the wake of alarming poverty rate all over the continent.
World Bank officials alluded to the fact that poverty is eating up Africa but maintained that the way by which some countries have distributed its wealth has been remarkable on the over all, thus rating Nigeria as the largest economic nations overtaking South Africa.
The challenge for many African countries, the panelists said, particularly oil exporters; is to diversify their exports. Oil-exporting countries, the World Bank indicated relies heavily on a single commodity as their revenue source.
For example, Angola, Chad, Equatorial Guinea, Gabon and Nigeria received, on average, more than 92% of their export earnings from oil during 2010-13.
Although, the export revenue share from minerals and metals may not be as high as that from oil, the World Bank says it is still high for some non-oil resource-rich countries like Botswana, Guinea, Mauritania, and Sierra Leone with earnings more than 50% of their revenue from natural resources.
Still addressing questions raised by African Journalists how should government go-about responding to the fact that they have experienced economic growth and its people are living in poverty, the World Bank’s panelists reiterated the role of local governments, stressing that most important thing is for government remove some of the impediments to growth, some of the laws and actions that are not investment friendly.
“We are close, but we are still far away. Government needs to make direct investment back into its market so as to experience that expedient growth involving its citizens,” World Bank stated.
The World Bank also said that despite emerging challenges, economic activity throughout the region continues to expand: GDP growth is projected to reach 5.2% in 2014, compared with 4.7% in 2013, and will rise to 5.5% in 2015.
According to Africa’s Pulse, the growth in the region is broad based and the prosperous economic activity is supported by strong public and private investment demand and robust household consumption.
The rise in commodity prices, and the surge of foreign capital spurred by accommodative monetary policies in high-income economies, is key to the region’s growth dynamics, the report notes. The new wave of Foreign Direct Investment (FDI), according to the report does not only deliver investment and employment but also opens up new opportunities through deeper global trade integration.
Looking Into the Future
At the same time, the World Bank has noted that there are broad areas in which Sub-Saharan Africa governments need to invest to ensure that growth continues and is shared among entire populations.
The report suggests that good governance and institutions; investing in the people of Africa especially the youths; promoting infrastructure across the region; reducing barriers to trade and investment; and making sure there are adequate services and infrastructure for the rapidly expanding urbanization of African cities and secondary cities are key to maintaining and sharing growth within the region.
They added that globalization of services is a potential important source of growth for the African region.
The question that the region faces is, “Has Sub-Saharan Africa tapped this potential?” The region’s service sector which totals $50 billion, trails all other developing regions; however, it is expanding annually at about 12%, on average.
Traditional services such as retail trade, hotels, restaurants, and public administration have recorded a decline from 73% of total services in 2005 to less than 64%in 2012, while modern services in the region have increased by over 10 percentage points from just over 26%of total services to about 36% over the same period. D. Webster Cassell Writes