The world’s lowest total gross domestic product (GDP), which measures everything generated in a country or region, is found in Sub-Saharan Africa. Its average GDP per capita, or GDP divided by population, is just under $4,000, or about one-fifth of the global average. However, this chasm may close in the future. In 2018, the region was home to eight of the world’s twenty fastest developing economies. Despite significant GDP growth in nations like Ethiopia and Ghana, wealth in Sub-Saharan Africa remains concentrated. The region’s wealthiest countries, Nigeria and South Africa, account for about half of the region’s GDP.
Is the GDP of Sub-Saharan Africa low?
Approximately half of the African continent is impoverished. Per capita GDP in Sub-Saharan Africa is presently smaller than it was in 1974, having fallen by more than 11%.
Between 1960 and 2002, the rest of the world’s economy developed at a near to 2% yearly rate, but Africa’s performance was abysmal. Growth was negative from 1974 to the mid-1990s, hitting a low of -1.5 percent in 1990-4. As a result, hundreds of millions of Africans have become impoverished, with one-half of the continent living in poverty. Per capita GDP in Sub-Saharan Africa is presently smaller than it was in 1974, having fallen by more than 11%. In 1970, Africa was home to one out of every ten poor people on the planet; by 2000, the figure had risen to one out of every two. In 2000, this trend resulted in 360 million poor Africans, up from 140 million in 1975.
The authors uncover the most crucial elements underlying the disaster by using strong econometric predictors of economic growth in a cross-section of countries. The first source of blame has been a lack of investment. Africa’s investment rate has decreased during the last 40 years. Since 1975, the continent’s investment rate has fallen to 8.5 percent, compared to investment rates of 20 to 25 percent for the average-performing OECD economy and 30 percent for East-Asian nations. Furthermore, the majority of investment was directed toward the inefficient governmental sector. Africa’s investment rate has risen marginally as a result of recent reforms.
Africa does poorly in both education and health, the two key determinants of human capital. The entire primary school enrolment rate in the 1960s was 42 percent, compared to nearly 100 percent in OECD and East Asian countries. Africa’s average 0.9 percent growth rate in the 1960s would have been a lot healthier 2.37 percent, and per capita incomes today would be two-and-a-half times higher than they are now if enrolment rates had been at OECD levels. Since 1960, enrollment rates have improved, implying that economic growth prospects have improved.
In 1960, Africa’s life expectancy was little over 40 years, compared to 67 and 62 for OECD countries and East Asia, respectively. Africa’s annual growth rate would have been 2.07 percentage points higher if it had a life expectancy comparable to the OECD. Similarly, Africa’s annual growth rate would have been 1.25 percentage points higher over the last 40 years if it had not suffered from malaria.
The authors argue that fresh initiatives may be required, citing the failure of large-scale humanitarian operations. More study may, for example, be focused on the continent’s terrible health issues. Africans lack the resources and expertise to develop vaccinations to fight diseases like AIDS and malaria. Rich countries, on the other hand, have little motivation to engage in these areas of research because the findings will benefit individuals who cannot afford to acquire the items. The authors suggest that the situation in Africa may improve if foreign aid funded by bilateral donors and multilateral institutions was redirected to these health issues.
The economic situation in Africa would also improve if the continent’s armed wars, which have plagued it for the past half-century, were to end. Other important factors that could contribute to African economic growth include the maturation of institutions that guarantee the rule of law and property rights; increased educational investments; the reduction of policy distortions that make investments prohibitively expensive; and the reduction of wasteful consumption expenditures.
It is also critical to expose African countries to market forces such as trade and technological diffusion. While African governments can do a lot to open their economies, Europe, Japan, and the United States can help by making it easier for African products to access their markets and decreasing agricultural subsidies.
Income inequality has increased in Africa as a result of its economic stagnation, while it has decreased globally. Regardless of whether one looks at between-country or within-country measures, income inequality occurs. This is due to the fact that the continent’s wealthier states have risen quicker and that wealthy residents in each country have profited more than poor citizens. Nigeria is an excellent example, where the earnings of the poorest 80% of the population have decreased while the incomes of the wealthiest have soared. The wealthy and powerful have little incentive to change their policies as a result of this predicament.
Why is Sub-Saharan Africa’s GDP so low?
Because of a combination of inefficiencies and institutional weaknesses, the rates of return on both capital and labor, as well as overall productivity, in Sub-Saharan African economies remain low.
Is the economy of Sub-Saharan Africa strong?
The GDP of Sub-Saharan Africa is expected to grow by 3.7 percent in 2021 and 3.8 percent in 2022. This is a good comeback after the significant decrease in 2020, but it is still the slowest in comparison to other regions.
What is the debt burden in Sub-Saharan Africa?
According to a recent World Bank report released on October 11, 2021, the debt of low- and middle-income countries in Sub-Saharan Africa reached a record $702 billion in 2020. The debt burden in the region is at its highest level in a decade. The debt of Sub-Saharan Africa was estimated to be over $305 billion in 2010.
Why is Sub-Saharan Africa so impoverished?
While the core causes of poverty in Sub-Saharan Africa are similar to those in other parts of the world, poverty has been increasing in the region due to the long-term effects of external forces such as war, genocide, hunger, and land scarcity.
What is Sub-Saharan Africa’s most important industry?
Agriculture is Africa’s most important economic sector, accounting for 15% of the continent’s total GDP, or more than $100 billion every year.
Which African country’s economy is the most stable?
Kwame Nkrumah, the country’s first prime minister, declared independence. Initially, he headed the country as the British Queen’s representative, but in 1960, Ghana declared itself a republic, and Nkrumah became the country’s first president. However, these years were marked by insecurity, with Nkrumah holding a referendum in 1964 to establish a one-party state. This was followed by his deposition in 1966, the first of numerous military coups in the country.
With Kofi Abrefa Busia as premier, civil rule and the cabinet system were restored in 1969. Another military coup terminated civilian authority in 1972, and numerous more coups occurred during the decade as different military rulers jockeyed for control. When Hilla Limann was elected president in 1979, civil government was restored once more, but the 1980s saw a series of military incursions until elections were held again in 1993. Most opposition parties boycotted these, and Jerry Rawlings was elected president. In 1996, he was re-elected for a second term, and in 2000, John Agyekum Kufuor was elected president for the third time.
As a result, Ghana entered the twenty-first century with more embedded civilian control than at any other period since independence. Kufuor was re-elected in 2008 after serving two terms the maximum allowed by the constitution and was succeeded by John Atta Mills. Since then, John Dramani Mahama (2012-16) and the current president, Nana Akufo-Addo, have occupied the position, and the country is presently governed by a multi-party democratic system. Ghana is now commonly regarded as one of Sub-Saharan Africa’s most stable countries, with one of the most open and pluralistic societies.
Which African country is the wealthiest?
Egypt is the richest country in Africa in terms of total GDP (PPP INT$) for 2021. Egypt is Africa’s third-most populous country, with 104 million inhabitants. Egypt’s economy is a diverse one, with tourism, agriculture, and fossil fuels dominating, as well as a burgeoning information and communications technology industry.
Nigeria is Africa’s most populous country, with 211 million people contributing to its GDPnearly double the population of Egypt. Nigeria is a diverse economy with a lower-middle-income concentrate on petroleum and (to a lesser extent) agriculture. It’s also a developing market with burgeoning financial, service, communications, and technology industries.
What is Africa’s fastest-growing economy?
Ghana’s GDP has been rising since 2016, and is expected to reach $72 billion by 2020. In 2019, it was named Africa’s fastest-growing economy. Because the country is less reliant on oil than some of its peers, it has been able to weather the current downturn in oil prices.
Ghana has been diversifying its economy away from oil extraction in recent years, and its tech-focused products and services are fueling growth.
Ghana is anticipated to solidify its position as a regional IT hub with the opening of Google’s first African AI lab in 2019 and the recent announcement that Twitter will establish its African headquarters in the country. Innovation and start-ups are being emphasized in order to attract tech talent to the country.
Ghana’s IT infrastructure is still developing. MTN Group, a telecommunications operator, plans to cover 98 percent of the country with 4G by the end of 2022 before launching 5G.