Factors Affecting The Divergent Economic Trend Of Africa

Economic Success Stories

Why have some African countries experienced increases in standard of living, while others have remained mired in poverty?

It has been found that there are 55 countries in Africa. There are less than 10 countries out of these 55 countries have economic success stories (Botswana, Gambia, Mauritius, Rwanda, Uganda, and Zambia). Some of these countries have independent media. Banik (2013) stated that, in the year of 1990, there were only 4 African nations democratic. Today after 26 years, 15 new additions have been made in this list. At this rate after 10 to 20 years, Africa will become a fully democratic country. 2015 is the year marked as the 20^th year of economic growth of Sub-Saharan Africa (Mkandawire, 2015). During this time period, the average economic growth of Africa is 5.2% (Mkandawire, 2015). It is considered as the fastest growing continent due to this huge economic growth. It gives rise to a new buzz in Africa named as “Rising Africa.”  However, the picture of inequality in Africa is very complex. It has been found that 7 out of 10 most unequal countries of the world exist in Africa (Bornschier, 2015). It is been reported that the amount of economic inequality in Africa is increasing rapidly compared to other continents. It has been found that the number of extremely wealthy families in Africa is increasing very rapidly. However, the economic difference between the urban and rural areas of Africa is also growing at a rapid speed (Mkandawire, 2015). It has been found that the integration between occupation and education remains low in Africa. 

Banik (2013) depicted that Africa is an anomaly among developing countries, which signifies that it has a good infrastructural facility along with huge social and economic problems. This can be seen through the evidence that only six African countries attained the Fraser Institute’s latest Economic Freedom; however, the 17 of the African countries are at the bottom of the list. The theory of economy primarily emphasizes on the availability of utility, commodity, wealth, land, value, capita and labour (Enowbi Batuo & Asongu, 2015). It can be stated that over the last two decades, Africa is improving their nation’s condition as a result, they have hosts many events like African Utility, where conference and trade exhibition for African power and water are being conducted. The prime objective for these gathering is to develop the T&D, metering, finance, reliability, clean energy, water supply or energy efficiency so that the quality of living of the African country can be enhanced (Enowbi Batuo & Asongu, 2015).

Economic Growth of Sub-Saharan Africa

Moreover, for the seventeen under-developed countries in the Africa, their nature of being remained closer to nature and desire to remain with the natural phenomena make them backward compared to other countries.  Bornschier (2015) criticized that in Botswana, Gambia and Mauritius, African Development Foundation (ADF) supports female African entrepreneurs. It emphasizes on establishing power plants; in African countries like Guinea-Bissau, Mozambique and Niger is suffering from climate issues and regular change in the colonialism and their lack of adopting technological advances is the major reason of their poverty and low standard of living.

From the poverty report of Africa, it has been found that:

Most of the countries of Africa are not doing well while considering economic development despite the availability of enormous amount wealth in the continent. These countries are Algeria, Angola, Burkina Faso, Burundi, Cameroon, the Central African Republic, Chad, the Democratic Republic of the Congo, and the Republic of the Congo, Côte d’Ivoire, Ethiopia, Gabon, Guinea-Bissau, Mozambique, Niger, Togo, and Zimbabwe. Wide verities of minerals are available in these countries like Gold, Palladium, diamonds and Coltan (Volmink & Dare, 2012). Despite of the enormous amount of wealth, all these countries mired in abject misery, chaos, poverty and deprivation (Iradian, 2015). It has been reported that the number of people living under 1.25$ per day is increasing from 350 million in 1996 to 415 million in the year of 2011 (Enowbi Batuo & Asongu, 2015). The Sub-Saharan Africa is identified as the poorest region in the world (Banik, 2013). It has not changed in 25 years. In the year of 2003, the United Nations Developing Program (UNDP) had warned that this prevailing rate, it would take 150 years for Africa to reach Millennium Development Goal (MDG), which was agreed by UN members to be completed within 2015 (Volmink & Dare, 2012).

It has been found that the nonmonetary dimensions of African countries are improving but not at satisfactory rate. In the year of 1995, the adult literacy rate of these countries is increased 4% (Easterly, 2012). In addition, the gender gaps in these countries are also shrinking rapidly in these countries. Newborn babies are expected to live six years longer. In addition, it has been found that prevalence of malnutrition among 5 year old babies are decreasing by 6% and become 39% (Talbot, 2015). On the contrary, the amount of enrollment of students in schools still remain low in most of the countries. In addition, it has been found that still 40% of the adults remain illiterate. It has been found that, resource enriched countries of Africa have worse human welfare indicators compare to other countries.

Inequality and Wealth Distribution

In order to explain this divergent trends of the countries in Africa, Bornschier (2015) mentioned that majority of the benefits of economic growth is captured by rich people in most of the countries of Africa. It increases economic inequality between people of Arica. The rich people (only 1%)  is becoming more reach and poor people are becoming more poorer. There are five factors discussed below to analyze the inequality trend of economy and increase of poverty in majority of the countries of Africa.

The first reason is the rapid population growth in in Sub-Saharan Africa. It has been found that the population growth rate of the region is approximately 2.6% (Easterly, 2012). While African countries are generating more income, it is distributed among ever-increasing amount of people. The income of this region is increasing faster than it population. For this reason, the amount of average income in this region is increasing. It has been found that people live in extreme poverty is falling from 60% in the year of 1996 to 47% in the year of 2011 (Heshmati, 2015). However, Bornschier (2015) argued that the rate at which poverty is falling is lower than the rate of population increase. For this reason, the number of poor people in most of the countries of Africa is increasing. According to the world forecast report, the growth forecast for the region is only 4%. However, the population growth is 2.6%. For this reason, the per capita growth of the country becomes only 1.4% (Rule et al., 2015). In comparison, the world has economic growth of 2.9% and population growth of 1.1% (Volmink & Dare, 2012). It means per capita income is 1.8%. This result indicates that the per capita income rate of Africa will remain lower compare to the rest of the world.

The second factor is the depth of poverty in African countries. It has been found that most of the poor peoples of Africa exist far below the minimum income level (Rule et al., 2015). In the year of 2011, it has been found that the average income level of poor people is 74 cents per day while in the rest of the developing countries it is 98 cents (Rule et al., 2015). Hence, even if their income is increasing, it is not enough to push them over $1.25 brink. This has held the poverty reduction program in African countries.

Poverty in African Countries

The third reason is the economic disparity in most of the African countries. (Easterly, 2012) argued that although, inequality is not rising in most of the countries of Arica, it is already far beyond high level. Pieterse (2015) mentioned that, countries where economic disparity is high, economic development is able to deliver as much poverty reduction as it is expected. Talbot (2015) stated that the degree of inequality in the countries of Sub-Saharan Africa is worse than it looks. According to Zartman (2015), due to the fact that the Sub-Saharan African region is divided in to so much countries that the difference between their income level becomes masked. Heshmati (2015) indicated that, if Africa were a single country, then this economic disparity would become much worse than Latin America. It has been found that the income level of people of Africa vary enormously. For this reason, only a small fraction of poor people will be able to cross the margin of poverty level at a time. On the contrary, countries like India, where a large number of people live just below the average income level of $1.25. It means small amount of increase of income level can cause a flood of people to cross the poverty level (Pieterse, 2015).

These three factors are able to explain why this huge amount of economic growth of Africa is not able to reduce the poverty level in this continent compare to the rest of the world. However, these factors are not able to explain why the number of people in Africa is actually increasing since the start of the century. The next two factors will explain this point.

The fourth major factor is the degree of mismatch between the region of growth occurrence and the region where poor people of Africa actually live. Iradian (2015) stated that, the acceleration of economic growth has certainly become advantageous for some of the countries of Africa. They are such as Ethiopia, Rwanda and Mozambique (Pieterse, 2015). However, countries like Madagascar and Congo have not seen any economic growth in the last 2 decades (Heshmati, 2015). For this reason, the number of poor people has in these countries accordingly. Hence, as long as these countries are becoming able to establish a sustainable economic development, the number of poor people in Sub-Saharan Africa will never reduce (Talbot, 2015).

The fifth major factor is the quality of data collection. It has been found that estimation of the poverty is estimated from the household survey that most of the countries of Africa are very infrequently (Ostby et al., 2012). In addition, operational glitches often affect the credibility of the result. For example, In country Nigeria, at first it was surveyed that only 25% of the total people of Nigeria live behind the poverty line. However, this survey had some well-documented flaws. From a latest survey result, it is analyzed that the poverty level of Nigeria is considerably lower. It has also been found that poverty rate of the country is falling at higher rate than it is actually estimated. Spaull (2013) mentioned that the dissonance between the economic growth and number of poor people has become a striking phenomenon that requires explanation. The result of the analysis only indicates that the economic growth has only benefitted reach people. 

Non-Monetary Dimensions of African Countries

In the theory of economic politics, William Keech (1995) mentioned that over the last few decades various efforts have been made by many welfare organizations, international institutions and donors in order to help Africa to reduce its economic disparity. However, most of them met with disaster. Zartman (2015) mentioned that, efforts must be continued but it is required to avoid pitfalls. There are several pitfalls in the attempt has been identified. Correction of these pitfalls can help to improve inequality among countries of Among Africa. These pitfalls are described below:

Shed Political Correctness (African people require straight talk)

It has been found that there are many people in the continent of Africa, who do not want to highlight issues of the country due to maintain political correctness. In the theory of political economy, James Caporaso and David Levine (1992) had mentioned that most of the people fear to criticized their leaders as they would be marked as “racist.” They need to understand that, they will not be able to help Africa, if they do not talk honestly about the continent. Fosu (2012) mentioned that, most of the people of Arica understand that their countries are suffering from severe leadership failure. Houweling and Kunst (2013) argued that, during 1960, there were more than 220 head of state in Africa. However, people of Africa recognized only 10% of them as “good leaders” (Ostby et al., 2012).  Even majority of them has faced utter failures- an assortment of Jaguar Marxists, Swiss Bank Socialists, vampire elites, crocodile liberators and briefcase bandits (Zartman, 2015).

Countries need Avoid Obsession with Charisma and Rhetoric Leaders (Countries need to focus on institutions)

It has been found that in past, especially in the west Africa, It has become a tendency to embrace any African leader who recognized himself as anti-communist (Spaull, 2013). There are various examples such as Samual Doe (Liberia), Danial ara Moi (Kenya) and Mobutu Sese Seko (Congo). It has been analyzed that most of the Charismatic leaders of Western Africa were hostile in nature (Fosu, 2015). It has been found that there were various external factors that cause post-colonial stagnation in Africa (Ostby et al., 2012). These factors influence these leaders to become hostile. They are such as unjust international economic system, Western imperialism and colonialism, inadequate foreign aid and the severe impact of slave trade.  For instance, Mugabe blames British colonialism for his country’s distresses.  It has been found that the West responded by boosting $600 to the economy of Africa. However, Hurst (2015) argued that, it had very little impact on the economy of Africa. There are various initiatives have been taken to rescue the continent from economic disparity, but they only make rich people richer and poor people poorer. Houweling and Kunst (2013) mentioned that, Sub-Saharan Africa tends to follow ten years of attention deficit cycle.

Hurst (2015) stated that, in every decade anti-poverty activist, rock star and heads of different countries gather to develop a super to develop mega plan to improve the condition of Africa. For instance, in the year of 1985, Unite Nation held a special session on Africa. In the year of 1996, UN had $25 billion as special initiative for the poor countries of Africa. However, the result remained the same. Only a few countries benefitted from the initiative. Most of poor countries remain unchanged. Many countries after that also tried to help Africa. For example, in the year of 2005 former British Prime Minister Tony Blair announced 2005 as the “year for Africa.” Countries like France has proposed an international tax reduction for the companies who will develop their business in poor countries of Africa like Algeria, Angola, Burkina Faso, Burundi, Cameroon (Fosu, 2015).

However all these initiatives will remain ineffective until these countries are able to analyze their own problems (Aron & Muellbauer, 2012). They have to stop depending on leaders and try to develop different associations that can take of the economic condition of their countries. (Houweling and Kunst (2013) mentioned that solution of the problem of Arica lies within itself, not along the inner sanctum of China’s wall and corridors of the World Bank. All the countries need to retune their economy and need t develop their own heritage of free trade, free enterprise and free markets. The African countries have huge amount of resources (Lloyd & Hewett, 2012). They just have to use them properly so that business organizations become interested towards these poor countries. It will increase job opportunity, education and per capita income of a nation (Sala-i-Martin & Pinkovskiy, 2012). It can become helpful for these countries to reduce the differences between their economic conditions.   

Government (It is the biggest problem, not the Solution)

It has been found that corruption in government sectors and inside the government is one of the major problems that countries like Algeria, Tanzania, Angola, Burkina Faso, Burundi, Cameroon are facing. They are the major reason behind these economic differences. For example, US president J.W. Bush had visited the country Tanzania during 18^th February 2008 (Lloyd & Hewett, 2012). He had found that the country was receiving $698 million in the MCA grant but the country did have any cabinet. It had been found that the entire cabinet of the country was dissolved due to a corruption scandal. The scandal was  about an electricity contract worth $172.5 million, which was given to a Texas based organization that never existed (Aron & Muellbauer, 2012). There were some other countries like Uganda and Kenya that have dubious “success stories.” Booysen et al. (2012) stated that, leaders like Mr. Mubarak encouraged ministries of Egypt to loot public money by developing organization that provide constrictions. He secured the loyalty of security heads of Egypt that made his work easier (Booysen et al., 2012). He had distributed all the looted money among the top level of ministries. For this reason, the era of Mubarak will be known as the era of thievery in the history of Egypt (The Washington Times 2002).   Accorsi et al. (2012) stated that no solution can be obtained by making partnership with corrupted governments. If they are asked to develop economy of the country, they become busy to fill their pockets. If they are asked to seek foreign investments, then they will seek a foreign county to invest the loot (Lloyd & Hewett, 2012). It has been found that, in Africa every Member of Parliament (MP) enjoys a wide range of allowances and perks. In the country Nigeria, a senator enjoys $2 million salary (Lloyd & Hewett, 2012). In Kenya, the salary of a MP is $350,000 which is more than the salary of Barrack Obama’s salary (Accorsi et al., 2012).  

In conclusion, it can be stated that, Africa mainly has three sectors. They are such as modern, informal and traditional regions. It has been found that all the development activities take place in modern sectors. However, majority of the poor people live in the informal sector. The economic development of Africa is incomplete by ignoring these two sectors. It has been found that in majority of the poor countries of Africa, people oriented development like increasing literacy program, improvement of roads for communication and foreign investments never happen. The leaders of poor countries like Ivory Coast are busy to fill their pockets and develop unnecessary things. Many leaders do not want to speak ill about their country to maintain their political career. However, they have to understand that straight talk, honest plan and action is all required to reduce the economic disparities between the countries of Africa.

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