Mainly, the economy of Africa is based on the trade, industry, agriculture, and human resources of the continent. The continent is filled with an abundance of resources. Africa has a population of 1.307 billion, which is 16 percent of the world’s population (2019). In the nominal method (2020), Africa’s GDP is $2.58 trillion, and when it comes to PPP (2017), it is $6.36 trillion. 70 percent of the Africans make a living through agriculture. However, despite being richly endowed, it remained the poorest continent in the world. Nearly 50 percent of the African population is living on less than $1.25 per day. Though it is blessed with a rich charity of natural resources, it has failed to implement and to satisfy the basic needs of certain people.
Although Africa is struggling with its economy, its people are gradually getting smart in using money. Most of the African people are using Ecocash for their transactions, which makes it easier for them to support the economy. This option is feasible and easy for the users as the Ecocash charges are minimal. This will gradually help the country to grow its economy.
As of 2018, Africa’s biggest economy is considered from Nigeria, followed by South Africa in terms of nominal GDP. In terms of PPP, Egypt is the second biggest after Nigeria. Nigeria and South Africa take part in almost half of Africa’s GDP. East Africa is mentioned as the continent’s fastest-growing by far. Morocco is the top intra-African investor. It has gained the popularity of having the highest proportion of entrepreneurs in the world. The greatest improvement is, it may become the home to the world’s largest free trade area. At present, Ethiopia is the fastest growing economy in Africa. As per the data in 2019, the GDP growth is 3.7 percent, and GDP per capita measures as $1970 in the year 2020.
The economy is a very sensitive organism
Until the late 2000s, Africa’s economic growth and development was a big failure. Now it has been more than 10 years, it started its growth and gave a counter “Africa rising” to the entire world. African economies were grown in the period of the 1950s to 1970s. It experienced a growth decline in the1980s and accepted its growth in the early 1990s. In the history of African economies, the period of the 1980s and 1990s named “lost decades.” After the end of the colonial period, Africa sustained its main growth in 1967 – 1968, and after the losing decades, it regained the growth in 1998. In 1998, 25 percent of African economies sustained its growth. West and east parts of Africa were the best performing sub-regions in 2010.
Even though the world’s economic growth had decreased in 2012, the growth in Africa remained robust because of high commodity prices and domestic demand. The region encountered growth at more than 5 percent on an average between 2013 – 2015. 4.9 percent increase in 2013, and slowly it is strengthened to 5.2 percent by 2015. In the year 2017, the development bank of Africa estimated the average growth is increased by 3.4 percent, and it expected an increase of 4.3 percent as of 2018.
Africa is rich as well as poor
Strength of the African economy
Entrepreneurship is the key to the African economy. In the future, entrepreneurs will chase the digital economy and unicorn start-ups. Working-age people in Africa, nearly 22 percent, are initializing businesses, and this is the highest entrepreneurship rate in the world. So the growth in the African entrepreneur ecosystem comes to the private sector.
Climate is the biggest factor that influences the agriculture sector, which affects economic activity. As the most number of people involved in the agriculture sector, it nearly contributes 20 to 30 percent to every country’s gross domestic product. Africa’s large quantity of enriched resources mainly includes diamond, sugar, salt, gold, iron, cobalt, uranium, copper, bauxite, silver, petroleum, cocoa beans, wood, tropical fruits, and many others, which became the backbone of the country’s economy. The oil discoveries played a vital role that increased the value of commodities.
Reasons to be the poorest continent
The maximum number of people of Africa live below the poverty line. Though it has good resources, it failed to utilize them, and it has not managed to capitalize on its wealth. The infrastructure is poor and underdeveloped in the continent. From the data of 2015, most of the poor countries are from sub-Saharan Africa, with a poverty rate of 41 percent. The top poverty lined countries have a rate above 30 percent. The African people have faced chronic hunger situations due to conflicts, instability, and climatic effects like drought. This led to food shortages for people. Another main reason is corruption. Much corrupt business practices are done by the targets of politicians from resources and mineral-rich places. Mismanagement of land and misused money had a great impact on the economy. Most of the land is in the hands of European settlers, which was occupied in the late 19th and early 20th centuries.
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Facts to be known about the economy of Africa:
- Approximately 90 percent of the new foreign direct investment (FDI) projects are placed in 10 countries of Africa.
- It has decreased its investment in the outside world. The outflow of South Africa has decreased by 30 percent in 2015 and by 58 percent in 2016. The investment in the outside world from Nigeria is also decreasing since 2015.
- The top three investors in Africa are Chinese, UAE, and Italian.
- The continent has the highest number of entrepreneurs in the world.
- Political stability is increasing which helps the booming of the economy.
- It has the largest labor force in the world. It is expected that Africa’s labor will be bigger when compared to any individual country by 2035. It’s young and improving workers play an important role to boost the economy.
- The educational sector has been increasing at a better rate than before.
- It has only 28 percent of stable jobs and it needs a good number of job creation.
In the new economy, information, education, and motivation are everything.
Though its population is much smaller than Asia, it has the highest growth rate than any other continent. Improving different sectors, increasing stable jobs, and solving problems like unemployment, weak educational systems, bad health care systems, mainly gender discrimination, etc can make a good place for economic growth.