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Analysis of Africa’s Economy

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Published: Tue, 12 Dec 2017

Several economists around the world are wondering whether the majority of Africans are benefiting from investment and profits originating from the continent. African leaders have been in the media claiming that Africa is experiencing one of the highest economic growth rates in the recent past. However, a growing gap between the rich and the poor, increase in cost of living and cost of consumer goods has disproportionate effects on working people as well as the poor. Countries such as Nigeria and Ghana that have reported to be undergoing economic growth are experiencing internal crisis linked to a rising cost of living and need to increase government expenditure on infrastructural development (Ndulu 5).

Despite the fact that Nigeria was named as the largest economy in Africa, its women, youth, farmers and workers are increasing their demand for access to quality life, resources and wealth. Furthermore, several alarming reports indicate that the economic growths in various parts of Africa are more complicated than the leaders’ indicate. As result, a research was conducted to unearth the issues behind the economic problems, how African governments and leaders can address them (Ndulu 37).

The major problem investigated is the interconnection between economy, social and political leadership with the current economic situation across Africa. It was crucial to analyze case studies and literature reviews containing information on African Economy. They analyzed relevant trade publications, annual economic reports, newspapers, magazines and on-line databases. Because of the time factors, the researchers relied mostly on web for data because it is faster and economical. Volunteers from public and private sectors, African economists, workers, International Monetary Fund, World Bank and African Development Bank provided necessary literature through the publications. The large pool of participants allowed the researchers to obtain wide range of data that was then crosschecked against other data to ascertain its validity.

It was necessary to analyze data from various African countries such as Nigeria, Ghana, Kenya, Democratic Republic of Congo and South Africa. Nigeria was preferred because it is the economic powerhouse of Africa while Ghana is on the right path to democracy in Africa. Kenya seems to growing both democratically and economically while Democratic Republic of Congo was considered because it has vast natural resources. It was also necessary to compared the economies of such countries, analyze the various natural resources found in those countries, evaluate various sources of income. Finally, analysis of the relationship between democracy and economic growth, natural resources and economic growth and the relationship between economic growth and living standards of individuals was crucial (Ndulu 179).

The research process indicates that African economy is likely to grow up to 4.7% during this year and accelerate to 5% in 2015. However, the growth in economy does not translate to infrastructure development, job creation, improved standards of living as well as reduction of high poverty level as well reducing inequality in Africa (African Development Bank 1). West African countries like Nigeria and Ghana continue to experience highest levels of economic levels ranging between 6.7% – 7% and are likely to increase further by 2015. The economic growth is due to investment in minerals and oil, democratic governments and good leadership. East Africa is equally experiencing economic growth that has increased up to 6% from last year (Economic Commission for Africa 39). Kenya’s economy has grown due to increased consumer spending; Tanzanians economy has grown due to higher consumption and investment in natural gas. Lastly, Uganda economy is being enhanced by development in telecommunications, transport, construction as well as construction of burgeoning oil industry. In the southern region of the continent, the growth is likely to go up from 3.6% to 4.2% due to increased investments and rising mineral mining in South Africa. Economic growth in Africa will be weakest in North Africa due to political instability in the regions and fleeing of investors (Ndulu 193).

The research notes that Africa economy is driven by exports, mineral exploitation and commodity production, but the rate is not yet optimal. This is because job creation is weak and the growth has not addressed poverty issues, poor living standards and rising inequality(Westenholz-Bless & Achola 97).. The informal sector is still very large yet opportunities remain limited for those seeking employment. This is evident by high rates of youth unemployment as well as wide gender disparities in employment and earnings. Furthermore, increased pressure on labor markets due to increase in population pressure means no any sufficient impact can be felt by the majority citizens. The researchers established that weak job creation is brought about by overreliance on agriculture and mining as source of employment. Overreliance on farming leaves various countries susceptible to weather-related shocks. In addition to this, civil wars continue to pose a huge threat to economic activities in countries like the Democratic Republic of Congo, Central African Republic, South Sudan and Somalia (Ndulu 200).

Though Nigeria is believed to be the economic powerhouse of Africa, the country has serious unresolved problems linked to distribution of wealth and living conditions of the majority Nigerians. According to the graph below, most Nigerians are unsatisfied with their government because the rates of poverty and unemployment are highest in Nigeria compared to other African countries despite the fact that it is the economic power house of Africa (see figure 01). Furthermore, the rate of employment seems to be increasing yearly. Unequal distribution of resources in the country has led to an internal conflict in northern part of the country. The conflict was associated with the majority northerners, who are poor, led to stagnated economic growth in the region. There has been other instances of bombing and abduction of schoolchildren in Nigeria as way of protesting against unequal distribution of resources and declining job opportunities. This has compelled most youths to engage in criminal activities to obtain money to cater for their expenses.

Source: University of Twente. Nigeria Energy Study Report, Enabling Urban Poor Livelihood Policy Making: Understanding the Role of Energy Services. May 2014, Figure 01.

Africans must rise up and determine their own destiny without any fear. From the results of the findings, there is a clear relationship between a peaceful democratic country and economic growth. Countries like Ghana and South Africa have experienced economic development due to peaceful elections and responsible leaders who encourage investors to invest in the countries. Rwanda that was on brink of self-destruction due to civil war in 1994 is now experiencing high rates of economic growth due to good leadership. This is a clear indication that security of a country is directly related to economic growth. Security ensures everyone gets an opportunity to go to work, students go to school and other economic activities take place. In addition to this, it gives the country a humble time of producing quality goods to sell abroad. As result, the country obtains revenue from the economic activities that lead to economic growth (Hughes, Mills & Street, 01).

Africans must also avoid overreliance on minerals and farming as the main source of livelihood. Countries like Uganda and Kenya have created job opportunities in sectors like road construction, trade activities, and telecommunication sector and transportation industry. The situation shows various job opportunities that can be created outside the traditional ones. In order to avoid uncertainties that come with climatic changes, Africans should utilize their rivers and lakes to create irrigation schemes. They should borrow irrigation technology from Israel that is a desert country yet it produces more food than it can consume. Lastly, Africans should observe family planning methods. The report indicated that most parents give birth to more children than they can take care of. This increases pressure on the limited resources in the continent (Hughes, Mills & Street 1).

Works Cited

African Development Bank. Nigeria Economic Outlook. 2014. Web. 15 May 2014.

Economic Commission for Africa. Economic Report on Africa 2008: Africa and the

Monterrey Consensus: Tracking Performance and Progress: Overview. Addis Ababa: Economic Commission for Africa, 2008. Print

Hughes, Ian. Mills, Greg. & Street, Michael. “The solution to Africa’s woes lies with Africans, not the west.” The Observer mag. 10 March 2013. Web. 12 May 2014.

Ndulu, B J.The Political Economy of Economic Growth in Africa, 1960-2000. Cambridge: Cambridge University Press, 2008. Print.

University of Twente. Nigeria Energy Study Report 2005, Enabling Urban Poor Livelihood Policy Making: Understanding the Role of Energy Services. 2005. Web. 12 May 2014.

Westenholz-Bless, Claire. & Paul P. W. Achola.Fundamentals of Social Research Methods: An African Perspective. Cape Town, South Africa: Juta Legal and Academic Publishers, 2007. Print.


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