THE ECONOMICS OF MAINTENANCE AND SUSTAINABILITY IN AFRICAN ECONOMIES

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THE ECONOMICS OF MAINTENANCE AND
SUSTAINABILITY IN AFRICAN ECONOMIES
Contents
THE ECONOMICS OF MAINTENANCE AND SUSTAINABILITY IN AFRICAN ECONOMIES ……………… 1
Introduction ………………………….. ………………………….. ………………………….. ………………………….. 2
Indicators of Sustainable development for Africa ………………………….. ………………………….. …… 3
Africa’s Saddle Path to Sustainable Development ………………………….. ………………………….. …… 4
Maintenance Perspectives ………………………….. ………………………….. ………………………….. ………….. 7
Maintenance crucial to Sustainable Development ………………………….. ………………………….. ….. 7
The Difficulties of Maintenance in the developing Economies. ………………………….. …………….. 8
Maintenance, Quality and the Economic Cycle ………………………….. ………………………….. …….. 10
Discussions and Conclusions ………………………….. ………………………….. ………………………….. ……… 11
Bibliography ………………………….. ………………………….. ………………………….. ………………………….. .. 13

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Introduction
The World Commission on Environment and Development – the Brundtland Commission – in its
1987 report defined Sustainable development as development that meets the needs of the
present without compromising the ability of future generations to meet their own needs . In as
much as the statement has become the most popularly accepted definition of sustainability the
same unfortunately cannot be said in practice, especially about developing regions of the
world. Agricultural practices, mining processes and land management systems in Africa and
other third world regions for instance give very little or no consideration at all to sustainability.
It is for this reason that researchers and policy makers in the field are calling for a reorientation
of macroeconomic policy in order to give the much necessary impetus needed for the
actualization of the sustainable development agenda. In the view of (Harris, 2001),
incorporating sustainability into economic policy will not only contribute to the progress of the
sustainable development agenda but will also harness a more traditional economic goals of
efficiency, increased sustainable consumption and macroeconomic stability. In particular,
government policies should be framed by the principles of positive sustainability – dynamic
efficiency and capital formation that enable standards-of living to perpetually increase,
eventually approaching a golden – rule state wherein per capita welfare grows at the rate of
technical change. (Roumasset, 2007) .
As a matter of fact other theorist before (Harris, 2001) had proposed theories of building
environmental sustainability into mainstream economic theory; mention can be made of
(Panayotou 1998) and (Daly, 1991) who are proponents of the concept into micro and
macroeconomics. It appears therefore that a lot is being done to obtain an analytic economic
theory approach to the sustainable development Agenda among developed regions. One
unanswered question is; at which point is Africa and other developing economies in the global
discussion of sustainable development? This is why the Maintenance and Sustainability Africa’s
(MSA) response to this clarion call is to take a multifaceted and down to the wire approach to
sustainability so as to make this achievable also in the developing regions of Africa. The aim of
this paper is therefore to review existing literature sources with a special focus on: whether

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Africa’s development has taken into account issues bothering on environmental sustainability,
evaluating extent to which the bad maintenance culture hinders Africa’s development, benefits
arising from best examples of maintenance and sustainable approaches and investigate the
need for further research into the issues of public and private property infrastructure
maintenance .
Indicators of Sustainable development for Africa
The United Nation commission on Sustainable Development (UNCSD) with the collaboration of
member states have worked to produce indicators1 which aids in quantifying the progress
made towards achieving the sustainable development goals. The indicators are built around the
three core areas of sustainability: social, economic, and environmental plus a non – conventional
institutional indicators. It is expected that in futu re these indicators will be used to develop a
composite sustainable development index. (UNECA, 2013). Although a very welcome
development, most African countries still face the challenge of data availability due to weaker
capacities of government and other research institutions to effectively collect environment
data. In instances where data exist, such as land, energy , access to sanitation and access to
water, CO2 emissions etc , data is mostly estimated which raises credibility and accuracy issues.
This data availability challenges hinder the effective monitoring of progress toward the
achievement of internationally agreed development goals. The table 1 below shows the
sum mary of the internationally agreed indicators for measuring Africa’s sustainable
development.

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22 countries from all regions of the world were engaged in the testing process on a voluntary basis to gain experience with the section and development of these indicators. Their application and suitability to informing decision making at the national levels were also accessed. More at (UNECA, 2013), page 17.

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Table 1: I ndicators of Sustainable development for Africa
Credit: (UNECA, 2013)
Africa’s Saddle Path to Sustainable Development
Trends of real growth of GDP at market price by sub- region, 1990- 2000
Credit: (UNECA, 2013)

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Achieving sustainable development as defined by the United Nations Conference on
Environment appears to be problematic for many African countries. This is so because of the
threat that climate change, desertification, deforestation, renewable energy and terrorism pose
to the region’s sustainable development . This confirms that the calls to apply the nexus
approach of connecting separate – pillars such as education, water, health, food, gender and
economic growth to the overall sustainable development agenda cannot be over emphasized .
Poverty is still on the increase and social development gains have been reversed mostly due to
excessive dependence on natural resources which further led to resource depletion2 and
environmental degradation and worsened the exposure of weaker economies to external
shocks. (World Bank, 2003) .
Available statistics indicate that every year, Ghana for instance experiences a reduction of
about 100,000 tones in production of cocoa with global reduction trends expected to hit about
one million. In the year 2004, Ghana’s cocoa production declined from one mill ion ton n es to
eight hundred thousand ton n es mainly due to the activities of small scale mining .
The Structural Adjustment programmes (SAPs) and the poverty Reduction Strategies (PRSs) that
many African countries embarked upon during the 1980s were intended to correct the macro
economic imbalances that had occurred because of state -controlled economic policies.
However, because the SAPs and the PRS were originally designed in the framework of the
Highly Indebted Poor Countries (HIPC) initiative, they did not incorporate environmental and
social concerns to check the impact of economic growth on the environment. This partly
explains why the concept of sustainable development especially with the focus on the
environment has not gained roots in the region. The findings on economic sustainability reveal
that although a few countries have experienced notable economic growth rates, the situation
for Africa as a whole is still poor. Africa continues to achieve positive growth rates since 2000.
Despite this improved performance, very few countries have achieved and maintained the

2 Just as capital depreciation is subtracted from GDP to obtain net domestic product, so should the depletion of natural capital be depleted to obtain a more accurate measure of social welfare ( (Weitzman & Lofgren, 1997); (Weitzman, 2003)

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growth rates necessary to reduce poverty. African countries still face the critical challenge of
raising the rates of growth and sustaining them at high rates over extended period in order to
meet the MDGs. (UNECA, 2013)
In Focus 01 : Ghana : social and environmental cost of Growth
In Focus 02 : Africa’s Snail Paced Sustainable development

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Maintenance Perspectives
Maintenance crucial to Sustainable Development
The IFAD Strategic Framework 2007- 2010 defines sustainability as: Ensuring that the
institutions supported through projects and the benefits realized are maintained and continue
after the end of the project (IFAD, 2007J). This definition of sustainability is uniquely important
especially to the African context where net benefits of projects and programmes have had bad
records of lasting for as long as were designed to .
This section looks at various ways of project implementation or facility management and
maintenance that guarantee project sustainability. The section hence describes channels of
improving project implementation processes in order to ensure that the expected net benefits
will not only be maintained or exceeded over the life of the project, but will be sustained after
project completion. The concept of making benefits from projects and programmes last longer
through maintenance approaches is at the very heart of poverty alleviation. This is because in
the real estate industry for example, research works have shown that a manager’s inclination to
neglect maintenance is most pronounced for poorer quality real estate property. To the extent
that initial quality is related to the economic means of an area, directly implies that low- income
neighborhoods are both at higher risk of maintenance suspension and have less likelihood of
maintena nce resumption. Given the surge in public debts for both developed and developing
countries it is expected that future funding levels for maintenance expenditures on public
infrastructure and facilities such as roads, hospitals, school buildings, irrigation and
environmental projects etc. , can drastically be cut in the next few years.
This will have very serious negative implications for Africa’s sustainable development especially
given the already worrying statistics that about 80{baf3accc30e93a1cdb0ca4d2338f5007ee0966378ed61d085f355c4d57316c63} of all public projects are not maintained. In
light of this, it is important for researchers and advocates of sustainable development to
establish the consequences of any such policy, so as to provide a good basis for decision – making
by all levels of government. The MSA firmly believes that continued collaboration, involving
both central and local governments, foreign development partners and NGOs will be vital in

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order for us to make progress by making a comprehensive business case for investment in
maintenance and sustainability in order to engender sustainable development.
In Focus 03 : A Case for Preventive Maintenance
Suppose a company owns a 10-year-old, 7horsepower air compressor. Replacing the
compressor would cost $32,900. Is an investment in preventive maintenance (PM)
justified? Based on the procedures developed by the team, the compressor will last 20
years with proper PM but only 16 years without it. Proper PM will cost $472 per year.
Repairing the compressor will cost $944 per incident. If maintained properly, it will need to
be repaired once every four years. If it is not maintained, the compressor will need to be
repaired every three years. Given these variables, and assuming a time frame of 25 years, is
an investment in preventive maintenance justified? With PM, the equipment will need to
be repaired once every four years at a cost of $944, a figure that translates to $236 per
year. Lacking PM, the compressor can be anticipated to need repairs once every three years
for the same $944 cost, which equals $315 per year. With PM, the compressor will need to
be replaced in year 10. Without PM, it will have to be replaced twice, in year 6 and year 20.
Comparing the two scenarios indicates that the PM scenario has a net present value (NPV)
of $6,359. If the time period is extended to 30 years, the compressor will need to be
replaced twice in the PM scenario. This reduces the NPV to $4,338. In either case, the
investment in PM is clearly justified economically.
Source (Koo & Van Hoy, 2002)
The Difficulties of Maintenance in the developing Economies .
Undoubtedly, one main reasons for which maintenance has still not been instilled as a culture
for Africa and indeed many developing regions is the fact that continuous maintenance requires
a steady and reliable flow of funds. There are several reasons why funds are not often released

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to undertake maintenance services. Those responsible for allocating the budget may have little
understanding of the economic and social importance of maintenance; they may have allowed
the budget process to become politicized, favoring construction, which is more visible and
popular, over maintenance; or they may believe that fiscal constraints justify deferring
maintenance, which only raises future costs . (World Bank, 2005) . Hence, the maintenance
problem in Africa and other developing countries is systemic or institutional, so the only few
projects that actually try to incorporate sustainability into it are projects from development
partners and NGOs, albeit not adequate .
Although most of Africa’s external development partners and NGOs, believe strongly in project
and programmes sustainability, much gains have not been made in this regard. It is a popular
belief that the extent to which local and national governments support and take ownership of
projects and programmes after their completion, is a very critical determiner of sustainability of
the net benefits of such programmes and projects. For this reason, most development partners
and NGOs maintain a strategy of working closely with national, regional and local government
agencies and make efforts to ensure that activities are consistent with and supportive of
government policies. Although this approach is commendable, an overreliance on government
structures for sustainability can be backward. For instance a corporate evaluation of IFAD’s
infrastructure project sustainability challenges, attributes some of the sustainability fail ures
partly to prematurely accepting government assurances that project interventions will be
adequately maintained once in place. (IFAD, 2009)
There is a strong connection between community human resources, the social and financial
capital and the technical standards needed to handle and operate programmes and projects
beyond completion. Most often than not, such technical standards used in service delivery and
infrastructure development are not carefully chosen to determine whether rural folks can
operate and sustain project interventions. Usually, since the rural poor lacks educated human
capital, financial and social resources as compared to their counterparts in urban areas,
projects’ sustainability is mostly threatened after project ends. (IFAD 2006b).

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Separate research works and project evaluations have underscored the fact that one sure way
of ensuring sustainability is by introducing it very early into the project, possibly as early as in
the very project design phase. This process demands thorough assessments of both
governmental and non -governmental institutions involved in project implementation, baseline
assessments of household livelihood security and resilience, appropriate risk analysis, and
formulation of exit strategies are conducted at an early part of the project cycle. However for
many projects executed across Africa, handlers have more incentives to achieve physical and
financial targets and therefore put little priority on facilitating a sense of community ownership
crucial to the sustainability of project net benefits .
Maintenance
, Quality and the Economic Cycle
This section reviews some maintenance, quality and profit perspectives with the view of better
understanding the interrelatedness between them . (Blazenko & Pavlov, 2003) investigated the
extent to which inadequate profit rate affects the decision of real estate managers to offer
maintena nce services for their buildings. In the survey, building quality was used as a proxy for
the rate of depreciation . The research concluded that the level of quality of an asset affects the
decision to or not to maintain. Precisely, the paper concluded that higher quality buildings are
not only maintained longer even in poor economic conditions, but also have a higher
probability of seeing resumed maintenance if the economy improves. The research further
indicated that even in the face of modest economic times, poor quality buildings, tend to have
their maintenance suspended. Additionally, the probability for these buildings to see resumed
maintenance in the future is almost negligible . These two findings implies that unless there is
an outside intervention
, marginal investment properties may be built but never maintained.
This is to a distinctly greater extent true for high depreciation rate properties. (Blazenko &
Pavlov, 2003) . Thus the policy implication is that if projects a re to be effectively maintained, the
cost has to be large enough to cater not only for the project itself but also for subsequent
maintenance. Alternatively, the government agency providing the subsidy may contractually
force the investor to permanently maintain the property.

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Discussions and Conclusions
This review supports popular views that government partners and agencies are not the most
efficient and sometimes most appropriate channels for promoting social mobilization for both
environmental conservation and infrastructure maintenance . The fact that the real work of
ensuring sustainability in many African countries rest on the shoulders of their governments
directly implies that such economies do actually travel less on the road to sustainable
development. (Dasputa, 2007) .
Other economies are pursuing sustainable development but not with recourse to the ideals of
dynamic efficiency and intergenerational equity (Roumasset, 2007) . In countries in which
implementation is done through government line departments, it may be important for her to
embark upon capacity building and training for locals in order make it less technically
demanding and more pro- poor approach to sustainability. (IFAD, 2007J) By imbuing the
principles of sustainability into national plans and goals and policies, economies can break the
vicious circle and transition into a virtuous circle of growth and development.
Poverty reduction in rural Africa is at the very center of the survival of the natural resources
and the environment since most rural populations of Africa depend on a limited natural
resource base. This is why a conscious effort of sustaining the environment and conserving
natural resources is crucial to increasing family incomes and asset streams. To do his
effectively, the capacities and resources of local and community based institutions must be well
built and developed so that they can initiate and or support collective action geared towards
improving the environment and preserving bio diversity.
A very essential component in sustainable project outcomes is a design based on a holistic
consideration of livelihood systems and approaches that makes maintenance and sustainability
self-sustaining . I n short, if households, communities and private developers lack resilience in
periods of natural, economic and social shocks, project impacts can quickly be lost, and for
private property, maintenance measures can be suspended . This is why it is imperative that

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sustainability and maintenance measures are intentionally discussed and built into the projects
during the earliest stages of design. In many cases, this will require: capacity- building for group
members and organizations; investments in productive assets; improvements in access to
markets, financial services and infrastructure; and support for locally appropriate approaches to
resource ma nagement . (IFAD, 2007J)

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Bibliography
Blazenko, G. W., & Pavlov, A. D. (2003). The Economics of Maintenance for Real Estate
Investments. Simon Fraser University. Faculty of Business Administration, Burnaby British
Columbia, 01 – 47.
Daly, H. E. (1991). Elements of Environmental Microeconomics. Chapter 3 in Constanza ed,
Ecological Economics: The Science and Management of Sustainability, New York : Columbia
University Press .
Dasputa, P. (2007). The Idea of Sustainable development. Sustainability Science, 05 – 11.
Harris, J. (2001). Macroeconomic Policy and Sustainability. Global Development and
Environment Institute, Tufts University, 01 -09.
IFAD. (2007J). IFAD Strategic Framework 2007- 2010. Rome.
IFAD. (2009). Sustainability of Rural Development Projects. International Fund for Agricultural
development.
Koo, W. L., & Van Hoy, P. E. (2002). Determining the Economic Value of Preventive
Maintenance. Jones Lang lasalle, 01 – 06.
Roumasset, J. K. (2007). Environmental Resources and Economic Growth. Chapter 8 in China’s
Economic Transition: Origins Mechanisms and Concequences, Cambridge Univrsity Press.
UNECA. (2013). Sustainable development report on Africa: Managing Land based Resources for
Sustainable Development. Economic Commission for Africa.
Weitzman, M. .. (2003). Income, Wealth and Maximum Principle. Harvard University Press,
London England.
Weitzman, M. .., & Lofgren, K. G. (1997). On the Welfare Significance of Green Accounting as
taught by Parable. Journal of Environmental Economics and Management, 32: 139 – 153.
World Bank. (2005). Why Road Maintenance is Important and how to get it Done. Washington
DC: Transport Notes, No TRN -4.

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