Foreign Aid In South Africa

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Southern African countries characterize one of the most impoverished and least-developed regions in the world. It is therefore important for Southern African countries to achieve economic growth and development. But as a developing region, it is faced with challenges that make it difficult to stimulate and sustain economic growth. Economic progress/growth is an extremely vital way of raising people’s income and reducing poverty by creating jobs and opportunities. With the exception of South Africa, the countries in Southern Africa have mostly failed to achieve economic progress and are considered developing countries or third world countries. Botswana has also shown remarkable economic growth in the past years but the sustainability of the…show more content…
M. Ekanayake (2..) contends, the main role of foreign aid is to stimulate economic growth in order to supplement domestic sources of finance such as savings resulting in increased amounts of investment and capital stock. Most countries in Southern Africa have a big challenge when it comes to internal funding for development undertakings. Due to high population increases in Southern Africa, there is need for rapid economic development of which the countries are unable to cope and achieve on their own because of low savings and investments which is exacerbated by high population increases. Therefore foreign aid can help reduce the shortage of domestic saving and investments. Since most Southern African countries are developing, they need the assistance of foreign aid (from developed countries and financial institutions such as IMF and World Bank) in the form of financial and technical assistance. The technical assistance is also very important as countries may be given funding and not have the technical know-how to utilize the funds appropriately. This also helps in skills transfer and sharing of knowledge to avoid a situation where recipient countries are dependent on the donors for utilizing…show more content…
(2012) found out that economic aid that is aimed at production sectors and economic infrastructure contributes to economic growth by increasing domestic investment. Technological innovation and industry development are key to achieving economic growth. It is especially through the development of industries that countries are able to diversify their economies and also grow their economies. But the development of these industries and technologies requires large sums of money which Southern Africa does not have. This is where foreign aid becomes essential for Southern African countries to overcome their lack of technical advancement through the assistance of international aid. By development industries the countries will be able to reduce the unemployment rate that is rampant as well as increase productivity and develop human capabilities as
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