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NAMIBIA UNIVERSITY OF SCIENCE AND

TECHNOLOGY

CIS610S ASSIGNMENT 1

CRITICAL ANALYSIS OF
INEFFECTIVE
CORPORATE GOVERNANCE AT AIR NAMIBIA
GROUP 3: Anise Holtzhausen 201069016
Hitiwa Natangwe 212018280
Shikongo Marx 213048191
Meki Phinias
212006843AbrahamShivute212003259

1. INTRODUCTION
The revival of economic growth across Sub Sahara Africa (SSA) since the beginning of the
millennium is a heartening development. Sustaining over it an indefinite future is both a
necessity but also a challenge of the first order. Sustainable development is briefly defined by the
level of knowledge about the countrys economy. Knowledge Economy is based on creating,
evaluating, and trading knowledge. In a knowledge economy, labor costs become progressively
less important and traditional economic concepts such as scarcity of resources and economies of
scale cease to apply.
Knowledge about the economy is a consequence of few parameters in the country namely:
Standard of educated individuals, economic system used in the country, foreign investors,
corruption severity and allocation of top government positions, advances in Information and
Computer Technology. These factors lead to economic instability e.g. inflation, poverty, reduces
GDP turnover, increased debts.

2. CAUSES OF POOR ECONOMIC DEVELOPMENT IN SUB


SAHARA AFRICA
2.1
LEVEL OF INFORMATION COMPUTER TECHNOLOGY (ICT)
There are serious concerns about the current future capacity of developing countries to couple
ICT to generate and sustain their participation in global markets. Manuel Castells warns of an
imminent and catastrophic fragmentation inequality, poverty and social exclusion for the Sub
Saharan region in the new global economy (Castell 2000). The problem of social exclusion,
which is caused by inadequate or lack of ICT, exists between and within national contexts
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(Hendry 2000). This is particularly true of Mali where the internal distribution of ICT access is
extremely uneven (Index report UNDP 2000:45-49).
The internet is the main medium for knowledge economy. One of the most important claims
made for the internet is that it enables economic interaction irrespective of the geographic
location. According to this statement, countries in underdevelopment regions like Sub Sahara
Africa (SSA) should also be able to connect and compete in the knowledge disregard of their
geographic location. This is only partly accurate since it fails to give adequate recognition to a
range of conditions that prevent access to the Internet and global economy e.g. poverty, low
economic growth, lack of foreign investment and resource scarcity. South Africa is one of the
Sub Saharan countries that is in some ways vastly better off in terms of internet diversity (Is
South Afica ready to compete in knowledge economy?, 2008).
2.2
STANDARD OF EDUCATION
The literacy level in Sub Sahara Africa has fairly increased for the past decade. The level of
education or educated individuals i.e. professions especially in the field of economics has an
impact of the level of knowledge of the economy hence economic development. Research shows
that about 38 % of adult population in Sub Sahara Africa or 153 million adults, lack the basic
literacy and numeracy skills needed in everyday life. Ethiopia and Nigeria are amongst the top
ten countries in the world with the highest number of illiterate adult (Filser, 2008, pp. 3-6).
In addition, the regions secondary school enrollment ratio was the worlds lowest at 34% in
2007. Country levels range from less than 11% in Niger to more than 97% in Seychelles and
South Africa. The regional share of technical and vocational education in secondary enrollment
was also among the Worlds lowest, at 6% in 2007 (Education for All Global Monitoring Report,
2010).
2.3
HUMAN CAPITAL
Human capital is arguably the stepping stone to a viable and growth promoting system. Physical
investment institutions are important complements: the previous cannot be effectively utilized
where technical and managerial skills are deficient, and the latter cannot be implemented when
human capital is scarce or questionable quality. The salience of human capital is increased by the
necessity of diversifying into a higher-value, knowledge about the economy and research
intensive activities.
Quality is more closely correlated with economic growth. Workers with high cognitive,
technical, communications, and team skills are better able to: assimilate, push the knowledge
frontier, work in groups and make efficient decisions that build the technological capacity for
competitiveness within Africa or the World at large.
2.4
CORRUPTION DOMINANCY
Corruption has been a predominant factor leading to poor sustainable development in Sub Sahara
Africa. In certain countries like Zimbabwe; the pervasiveness or perception of corruption by
government diplomats, politicians, civil servant and judges is the great source of economic
instability. Corruption has been practiced either through access to valuable benefits and the use
of ones position for private gain by accepting illegal payments. Findings show that eighteen
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managers at the City of Harare were gobbling close to US$500 000 in monthly salaries
(Mangudhla, 2014). Furthermore; Campaign group Partnership Africa Canada (Pac) conducted a
study in 2012 which concluded diamonds worth over US$2 billion had been looted out by
President Robert Mugabes allies. These factors degrade the economy of the country hence
leading to economic crisis.
Corruption is quite prevalent in Sub Sahara Africa for various reasons. Firstly, the probability of
being caught and punished is extremely low since the civil servant and judges can be victims of
corruption. Secondly, the incentives for corrupt behaviors are generated by the policy
environment, coupled with the wide preference and lack of accountability that government
employees have.
2.5
INTRA/INTERNATIONAL TRADES
One important trend has been the growth of International trade, or the globalization of economic
activity. Thus world exports grew at a complex annual rates (i.e. about 12.7 percent) a year in
dollar terms (Little et al., 2010) over the quarter century from 1985 to 1998. While most of this
growth in the world exports was based on manufactured goods, many Sub Saharan African
economies rely mostly on exports of primary products like oil, minerals and agricultural
commodities to finance their International trade. As a result the export share of these economies
has declined. In addition, these economies are particularly vulnerable to the effects of
fluctuations in price of their exports. Thus fluctuations in oil prices have had a significant impact
on the Nigerian Economy, while oscillating coffee prices have affected Cameroon and Kenya
(World Trade Commodities, CNN. March 2016).
At the same time, the international monetary order and the international and availability of credit
have gone through a number of changes that have had a significant impact on the growth and
stability of the Sub Sahara economy (see Little et al., 1993, Chapter 3-5).
2.6
URBANIZATION
Urbanization is the prevalent factor hampering sustainable development in Sub Sahara African
countries. This is common in low to moderate income countries that have mixed economic
systems. On the other hand, in the hub of the labor-intensive subsistence farm economies, we do
find urban districts with modern manufacturing and processing operations. This enclave in turn
attracts futile and unproductive labor from the rural sector. This contributes to congestation and
overpopulation of major cities e.g. Luanda in Angola.
However, the urban areas are not only experiencing a severe increase in population but they
serve as an enclave for underemployed and poorly paid rural workers. Moreover, the urban
growth of Sub Sahara Africa has increased the premium on urban spaces and has thus made it
difficult for urban poor individuals to afford adequate housing. This lack of adequate physical
facilities degrades quality of life for most cities and impedes economic development in a variety
of ways. Indeed, because of these problems it is possible that urbanization may to some extent
contribute to economic instability in Sub Sahara Africa.

3. MEASURES TO TACKLE POOR ECONOMIC


DEVELOPMENT IN SSA
3.1
USE OF GOVERNMENT POWER
An efficient use of government official power can contribute powerfully to sustainable
development since the misuse can create serious problems of credibility; erode the constituency
for development programs and humanitarian relief, and could further economic instability. The
consequence of corruption is evident in South African as President Jacob Zuma suffers the
consequence of the use of the government to build himself a modest rural town in KwaZuluNatal province worth R65 million. He now faces charges for using government resources for
personal benefits by the International Court, hence criticism by fellow South Africans.
3.2
RULE OF LAW
The rule of law is extremely important for sustainable development because the constitution and
system of law defines the parameters of the legal framework within which economic and
political activities must take place. With reference to Professor Ayittey (2001), the rule of law
does not exist in many African nations where economic, political leaders and their government
flout the law.
3.3
ACQUITION OF LOANS
Debts or a loan is a necessary handmaiden but the conciliator of economic success- even
survival- in the world today is the capacity to mobilize knowledge and to use it to fullest. Loans
to strengthen the economy can be acquired through the World Bank or any other world financial
institutions. The acquired capitals have to investment in the most predominant sectors of the
economy e.g. the Namibian government can borrow money to strength the mining sector to build
mineral processing plants; this would be a great investment as this sector contributes to about 50
per cent of the countrys economy. This benefit the country since the dominance of foreign
Mining companies will be minimized hence there will be no need for export of raw minerals for
processing which in turn are sold back at extremely high prices.
3.4
ENHANCING THE LEVEL OF EDUCATION
Sub Saharan countries should aim at achieving high literary level of literacy and raising primary
enrolments and most importantly post-secondary and tertiary institutions. This will increasingly
enhance the learning outcomes as well building a foundation for future development. For
example, in 2012 the late Namibian Minister of Education Dr. Abraham Iyambo (at that time)
initiated the idea of free education from grade 1-7 which was implemented and currently
underway (The Namibian Newspaper, 2012). This will increase the rate of achieving and
acquiring higher order skills and expertise. Moreover, there will be an enhancement on
knowledge economy thus adding value in existing economic activities and create room to
embark into new industries and services.
By increasing the level of education and its quality countries in SSA may be able to stimulate
innovation, promote the diversification of products and services hence maximizing returns from
capital through more efficient allocation and management.
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3.5
MOBILIZATION OF HUMAN CAPITAL
Human capital is a key strategy to enhance knowledge economy and achieving sustainable
economies in Sub Sahara Africa (SSA). Human capital, effectively connected, would enable Sub
Sahara Africa economies to increase allocated efficiency and maximize the returns from limited
physical capital. In addition, it is only through knowledge economy and informed judgment that
SSA countries will be able, that African countries will be able, to cope with profound threats
from disease, unemployment, urbanizing population and climate change.
The key economic success in a globalized world lies increasingly in how effectively a country
can assimilate the available knowledge. This can be achieved by building a comparative
advantage in selected area of the economy with good growth prospects and in how it can enlarge
the comparative advantage by pushing the frontiers of technology through innovation.

4. CONCLUSION
Lack of knowledge about the economy is the significant factor leading to poor sustainable
economic development in Sub Sahara Africa. The leading factors to poor sustainable
development are evident in the content and various measures have been outlined. We can
conclude that knowledge economy and poor economic developed are correlated. The level of
education in Sub Sahara Africa defines knowledge economy and it is quite low in the region.
Prevalent corruption is the region has led to economic crises in countries like Zimbabwe for
decades. The utilization of ICT is relatively low which make it hard for countries to complete
economically especially on the global scale. Furthermore, exports commodity exports can lead to
high but not sustainable economic development. Various measures to address the latter issue
have been discussed. Enhancing the education level with help in developing knowledge
economy, optimizing human capital with improved quality as workers will be equipped with high
cognitive and technical skills to build moderate technological capacity for economic competition.
Reduction of corruption through the International court will deduce the effects of corruption on
the economy. In conclusion, knowledge economy and sustainable economy are mutually
dependent factors.