Africa’s C — Costs
What role do high prices play in Africa’s economy?
February 16, 2005
Imported petroleum products also are more costly in Africa. One of the main reasons for this is the small size of most African economies. Serving such small national markets entails high costs.
In addition, small market size also encourages monopolies — which, in turn, tend to raise prices. Furthermore, transport costs within Africa are also very high. In part, this is due to the weak transportation infrastructure on the continent, which makes transporting goods more costly.
Another African reality is that the people who tend to be among the poorer parts of the population live far from the main ports. And yet, by economic logic, they end up paying the highest prices.
These fundamental cost disadvantages are not easy to overcome. They mean that many African countries are handicapped at the very start of the development race.
Founder and CEO, Global Business School Network Guy Pfeffermann is the Founder and CEO of the Global Business School Network. He was the Director of the Economics Department and Chief Economist for the International Finance Corporation from 1988-2003. Since 2003, he has served as the Director of the Global Business School Network of International Finance […]