Every choice individuals make involves an opportunity cost and this extends to choices made by Governments at a macro level, industrialists, Stakeholders, environmentalists, technocrats, technologists, academia and NGOs just to mention a few in Africa. Two major decision making processes will be addressed to: opportunity cost and cost benefit analysis. It has been proven that smart choices made at any level either at the micro level or macro level in an Economy has determined the economic fate of the countries concerned. This is particularly relevant because at the level of the individual, time and earnings are insufficient to satisfy all that an individual wants and desires to consume. At the level of a nation, production inputs necessary to satisfy the goods and services citizens want are scarce. Accordingly, nations as well as individuals have to make difficult decisions regarding the use of scarce resources in the production of goods and services that are demanded. Simply put those Nations that make smart decisions are rewarded economically and those which do not, suffer dire consequences. The truth is choices are necessitated because we as individuals and collectively as communities and nations, always want and desire more relative to the availability of resources to satisfy those wants. This takes us to the realm of Technological Engineering efficiency which dictates that the least possible amount of resources should be used in the production of quality goods and services that are geared toward satisfying fully the wants and needs of customers (Economic Efficiency). When waste is avoided in this case, the remaining resources could be used for the production of extra quality goods and services that will benefit consumers as fully as possible (bottom line in marketing).
Cost Benefit Analysis: Cost-benefit analysis is the exercise of evaluating a planned action by determining what net value it will have for the company. Basically, a cost-benefit analysis finds, quantifies, and adds all the positive factors. These are the benefits. Then it identifies, quantifies, and subtracts all the negatives, the costs. The difference between the two indicates whether the planned action is advisable. The real key to doing a successful cost-benefit analysis is making sure to include all the costs and all the benefits and properly quantify them. It is the fundamental assessment behind virtually every business decision, due to the simple fact that business managers do not want to spend money unless the benefits that derive from the expenditure are expected to exceed the costs. As companies increasingly seek to cut costs and improve productivity, cost-benefit analysis has become a valuable tool for evaluating a wide range of business opportunities, such as major purchases, organizational changes, and expansions. Cost-benefit analysis is a decision support method used to help answer questions that often start with “what if” or “should we.”(Inc.com, 2012).
Opportunity Cost: The concept of opportunity cost is important to all decision-making processes. The opportunity cost of a course of action is the forgone benefit from an alternative action. In order for a benefit to be forgone, the chosen and alternative actions have to be mutually exclusive. This means that one cannot do both actions at the same time. Our lives are made up of choices about mutually exclusive actions, from deciding to go to college instead of working full-time for four years, to choosing between coffee and tea during a quick break. Opportunity cost can be computed in terms of anything – including money, ice cream cones, love, life experience, friendship, and “achievement”. The concept of opportunity cost reflects the scarcity of our resources (bottom line in Economics) – especially time and money. When we integrate opportunity cost into our decision-making, we ensure the most efficient use of our scarce resources (educatorblogwordpress.com, 2008).
It should be noted that the decision making process in both Opportunity Cost and Cost Benefit analysis is not only confined to businesses but also to Technocrats, Technologists, Stakeholders, Policy makers, academiaand Governments in African countries when it comes to making smart choices in National wealth creation and development in the context of scarce resources in the economy.
The question developing countries in Africa should be asking is are they making smart decisions to propel their economies to offer a better living standard for their countrymen or they have failed to live up to expectations? On the flip side most African countries are potentially rich with their richness coming from a wide range of natural resources encompassing fantastic climatic and weather systems with a few exceptions, minerals, bio-diversity and fertile lands. On record, the tropical rain forests which are located in Least Developed and Developing Countries support the greatest bio-diversity on Earth.Despite these advantages the paradox is that most of the poorest people on earth could be found today in Africa and other Developing Countries. Have African decision makers lived up to expectations? No!
Tough choices facing African countries today!
Food Security: Are African countries doing enough to sustaining food security or not on the continent? Africa for a long time has been dependent on subsistence farming and yet the issue of food security has plagued Africa for decades with one of the worst ones being the severe drought and dire food security situation in the Horn of Africa in 2011. Since it is a matter of making smart choices why can’t African nations adopt a more robust approach to this menace by immediately adopting robust water and soil conservation methodologies by adopting drip irrigation, buried irrigation, spray irrigation and sprinkler irrigation, and using treated water for the cultivation of crops in arid and semi-arid regions? Why do so many countries in Africa destroying the eco-system by cutting trees down for firewood; and why is the population growth rate in Africa so high comparable to other developed countries; and why is Africa not taking full advantage of Value Addition methodologies which have been adopted by emerging and developed countries. Further, why is Africa not practicing commercial/mechanized farming that promises to increase crop yields exponentially? R&D is vital to boosting Food security and it should not be shunned by African Policy makers, academia, Industrialist, and elected governments in Africa. Food security is a life and death issue and Policy makers, technocrats, stakeholders and elected government officials need to have a paradigm shift and make smart decisions to prevent future occurrences of food insecurity on the African continent.
Environmentalism: A balance environment plays a significant role in the socio-economic lives in Africa and African stakeholders should take the necessary steps by protecting the environment by adhering to the tenets of Kyoto Protocol that seeks to reduce/eliminate the threat posed by Global Warming. The governments need to come up with proactive forestry laws today that will prevent the destruction of the vegetation cover in Africa. What is preventing them from doing that today?
Diversification of the Economies of African Countries: Some African countries are contented with their over reliance on primary goods (commodity goods) at the expense of processed goods and services (Value Addition) which are associated with these goods. Take a look at the advantages associated with Value Addition Methodologies: value addition creates jobs and it could be the foundation for the cottage industry in Africa and the developing world, a reliable source for foreign exchange, the enhancement of indigenous technology and specialization, has the potential to reduce unemployment through its inherent “multiplier effect”, export diversification also will ensure that African countries have a more diversified economy (no country in the world will like to place all its eggs in one basket). Further, value addition negates the perishability of primary goods (commodity goods) through processing and finally valued added goods value more on the International market than raw materials. Countries like Thailand, Malaysia and other developmental states which less than half a century ago were classified as developing countries with most African countries, chalked rapid economic growth rates through the processing of natural resources into higher value added products. Today most of these countries have left African countries in the developing countries classification and are called Emerging Economies. Further, value addition enhances food security and also offers numerous opportunities for livelihood sustainability. A word of caution, for this process to be successful it has to occur in an atmosphere of transparency, probity, accountability, fairness, morality and integrity. Why should African countries continue to languish in poverty and misery, when they should be placing so much emphasis on Value Addition and diversifying their economies in the process? Case in point countries like Mauritius and Botswana that have diversified economies are doing so well economically with their GDP rates around $14,000 per capita Income; one of the highest in Africa today. To illustrate the significance of a diversified economy turn your attention to Angola that unfortunately is following a path that’s painfully familiar among African oil producing countries from Equatorial Guinea to Sudan. The pattern is: well connected businessmen and unscrupulous government officials grow impossibly rich and the ruling class uses its wealth and largesse to consolidate its own power. Much of this money is diverted into foreign bank accounts and assets abroad while the overwhelming majority of the population stagnates or even grows poorer. As in other parts of Africa, oil no doubt continues to dominate the economy. It currently accounts for around 90% of all exports in Angola, compared with 77% in Gabon, and 95% in Nigeria.The second stage of the oil curse kicks in at this point. Investment in other industries gets crowded out in part because it is hard for them to provide high enough returns to meet the cost of rising rents and salaries. Oil becomes virtually the only game in town and the benefits for workers is surprisingly limited with many of the more lucrative jobs going to foreign experts (Ofosu-Appiah, 2011) . This is a decision making process and African Countries need as a matter of priority to make smart decisions to propel their economies in the right direction.
For African countries to be sustainable they need to at least use 2% of their national GDP for R&D. What is preventing African Countries from achieving these vital goals for the sons and daughters in Africa? R&D will improve indigenous technology; it will also create multiple jobs, modernize African countries and increase the award of vital patents to African countries.
Drawbacks associated with corruption, morality, political Instability, coup d’états, tribalism and nepotism on African Economies: No country in Africa can be said to be corruption free. To say the least corruption abounds in Africa. Case in point Nigeria is the oil giant of Africa. It is also one big problem. Nigeria pumped its first barrel of oil in the 1950’s and has since set records for corruption. The government own anti corruption watchdog, the Economic and Financial Crimes Commission estimates that between independence in 1960 and 1999, the country’s rulers have stolen $400 billion in oil revenues — equal to all the foreign aid to post colonial Africa during the same period. And while a small elite became filthy rich, its members fought one another for the spoils. In 47 years, Nigeria has suffered a civil war that killed one million people, 30 years of military rule and six coups. Meanwhile two thirds of the country’s 135 million people remain in poverty, a third is illiterate and 40% have no safe drinking water and no electricity. Then there is the environmental cost. More than 1.5 million tons of oil has been spilled over 50 years, and the Niger delta is one of the most polluted places on planet earth. Not surprising, disenchantment with the country’s political leaders run deep emphasized Ofosu-Appiah (2011). African countries should be aware of this menace and its deterrence on economic prosperity. African governments, stakeholders, technocrats, technologist and academia need to operate under an environment of probity, accountability, fairness, good governance, morality and integrity at all times. What is preventing African leaders from being corruption free for the benefit of the entire continent?
University/Professional Education in Africa and the Labor Market: Primarily the University is considered the center of cultural life and cultural progress which are geared towards the maintenance and advancement of learning.Universities therefore have the duty to seek the truth and know the truth. This primary role can be fulfilled by:
§ The provision for the maintenance and diffusion of culture in the community
§ Carrying out research in all branches of learning
Arranging to undertake the education of undergraduate and graduatestudents.
Lately there has been a profusion of University graduates and professionals in Africa. While that is a good idea, the situation today is precarious because most of these young graduates cannot find jobs with the reason behind it being the “mismatch of talents”. Universities have been training these graduates and professionals but unfortunately their skills cannot be used in African contemporary economies because their services/skills are not needed. There is a mismatch between the skills that employers want and the skills and talents graduates/professionals have to offer in exchange. There is a caveat that has to be acknowledged by stakeholders in AfricanCountries, and that is the skills to be acquired by these University graduates from African countries should be in tune with both contemporary industrial and requisite developmental manpower skill requirements and needs of the country. That is the dynamics in the interplay of demandand supply in the Labor market has to be taken into cognizance in the determination of the quality, quantity, depth and appropriateness ofuniversity and professional education in Developing Nations. Why can’t developing countries train students based on the current needs of the country? Case in point the emerging shortage of appropriate work skills in African countries have left several University graduates jobless. Jobs may abound but because of lack of appropriate skills these jobs cannot be filled.This is the outcome of a survey undertaken in the last quarter of 2010 involving 1201 organizations in 69 countries globally by PricewaterhouseCoopers (PwC). Case in point in a recent survey two-thirds of CEOs believe they are facing a limited supply of skilled candidates despite the high unemployment situationfacing African nations (Wamari, 2011). Further another account indicates that in another development, Peacefmonline reported on June 15, 2011 that 44.8 percent of graduates from the Ghanaian universities, polytechnics and other Tertiary institutions are said to be jobless as indicated by research data. According to Dr. William Baah-Boateng, the conductor of the study and also a labor economist and senior lecturer at the Department of Economics of the University of Ghana, these graduates are believed to be in the age bracket of 22 and 25. As a result of this vacuum, foreign experts are hired to fill these vacant positions in Africa. By making smart decisions by elected governments and academia more jobs will be created and local graduates and professionals could gainfully be used.
These challenges continue to evolve and African countries should step up to the plate to propel their various economies by always making smart economic choices when it comes to opportunity cost and cost benefit analysis for the benefit of their respective countries and the African continent.
By Emmanuel Botchwey
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