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IMPACTS OF SMEs ON AFRICA

Uploaded by CaseyP on Oct 03, 2017







IMPACTS OF SMEs ON AFRICA
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Impacts of SMEs on Africa
1.1 Research Background
According to the IMF growth outlook of the Africa, the sub-Saharan Africa which for the last decade has maintained robust growth rates seems to be slowing down. The IMF notes that apart from Kenya and Senegal that are experiencing the growth rates above 5%, the majority of other countries in the sub-Saharan Africa are experiencing a depressed growth rate. The group trimmed the initial focus for the economic growth rate in Africa of 2.9% to 2.6% (Aboah, White, and Meuwissen, 2015; pp.7). Some of the major causes of the downward review of the economic performance of the continent are the low-performance rates in the Africa two biggest economies. In 2016 for example, the Nigeria economy which is classified as the largest in the Africa continent in terms of the GDP slipped into recession.
The situation has not been any different in Africa second major economy, South Africa which is also in recession. Therefore, without the robust economic performance of these major economies, the contributions by others such as Rwanda, Ethiopia (which have experienced incredible growth rates in the past decade) is small. However, what plagues Nigeria and South Africa economy is what essentially inflicts several other African economies. Notably, except for the South Africa, investments in basic infrastructure in Africa is poor. Much of the continent's population lives in the rural areas (Aboah, White, and Meuwissen, 2015; pp.9). However, the basic infrastructure such as roads and electricity in the countryside of Africa is lacking. Much of the investments in infrastructure is made in the major cities. Even then, much of the infrastructure is put in areas that are in rich suburbs.
Lack of these basic infrastructures particularly when the majority of the population is located has been the Achilles hill in the Africa battle of modernization. Moreover, it makes the trade in Africa expensive. For example, it takes close to a week to transport a container cargo from Kenyan port of Mombasa to the Uganda capital city, Kampala. Therefore, goods will reach the port from China much faster, but it will take days before the products reach the owner in Nairobi or Kampala (Aboah, White, and Meuwissen, 2015; pp.13). The lack of the investments in infrastructure of the rural areas has also dwindled the global multinationals from doing business in Africa. Another factor that has also been slowing down the...

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Uploaded by:   CaseyP

Date:   10/03/2017

Category:   Finance & Investing

Length:   51 pages (11,428 words)

Views:   255

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