Africa is the poorest continent in the world. 36% of Africans live in poverty. Africa has nine of the ten least developed countries in the world. The general view of Africa is that it is poverty stricken and war-torn. This isn’t exactly true, but Africa does need to create wealth if its population is to prosper. This begs the question – can Africa become rich? And if it can, how does the continent develop and become wealthy?
Africa can become rich. If African countries can overcome challenges including the uneven distribution of wealth, corruption, lack of infrastructure, better education, improved rule of law, more accountable governments, improved security and more equitable management of natural resources, Africa can prosper.
Now we know that Africa is definitely able to become rich, if it can overcome some of its current challenges, let’s look at what we mean when we discuss wealth in the context of Africa, as well as why the continent is generally poor, and what African countries can do to become wealthy.
Africa’s Wealth: An Overview
In order to understand if Africa can become rich, we need to assess the wealth Africa as a continent currently has. Although the common perception is that all of Africa is poor, this is not the whole picture. Let’s begin with a quick overview:
Africa is the poorest continent in the world. It is the least developed and contains some of the most impoverished countries. However, there is wealth in Africa and some countries are becoming richer. Africa is also highly unequal, with a smaller wealthy elite and large numbers of people living in poverty.
Now’s lets look into more details…
African countries report some of the lowest economic indicators. For example, Africa’s average GDP per person is 1,970 USD per annum and there are 490 million people living in poverty across the continent. In parts of Africa, 30% of the people are unemployed. 30 million children across the continent do not go to school. By many metrics, Africa is not rich.
Although Africa is the poorest continent in the world, there is actually significant wealth on the continent. African countries such as Kenya, Ghana and Nigeria are lower middle-income economies. South Africa has a per capita income of 12,679 USD per annum. There are 125 thousand millionaires across Africa, and 22 billionaires. Although we want to know if Africa as a whole can become rich, it’s important to understand that there is already wealth in Africa, it is just not evenly distributed.
Another important factor to understand when thinking about whether Africa can become rich is that Africa’s economy is growing, fast! In 2019, the whole continent’s average GDP growth was 3.4%. African countries also report some of the fastest growing economies in the world. In 2019, South Sudan’s economy grew by 8.78%, Rwanda’s grew by 7.8%, Ethiopia’s by 7.7% and Côte d’Ivoire’s by 7.4% The World Bank projects that the majority of African countries will meet middle-income status by 2025.
Finally, when thinking about wealth in Africa it is important to remember that the continent was not always poor and underdeveloped compared to the rest of the world. Historians believe that in 1750, Africa was about as wealthy as Europe, with almost equal per capital income. It wasn’t until the industrial developments in Europe in the 19th Century, and then European colonialism, that Africa began to be so much poorer than the rest of the world.
Why Africa Isn’t Wealthy
Before we can really understand if Africa can become rich, we need to understand how and why it is poor. As we said, Africa is the least developed continent in the world. There are many reasons why Africa isn’t rich, these include:
- Wealth inequality
- Lack of transparency and accountability
- Little rule of law
- Inefficient governments
- Mismanagement of natural resources
- Poor infrastructure
- Conflict
Now, let’s look at each of these:
Wealth Inequality
The first reason why African countries are not rich is because wealth is distributed unevenly.
Africa has the immense potential to generate wealth, which can be shown by a growing middle class in some countries and the rise of an ultra-rich elite. However, many African countries are among the most unequal in the world. This keeps many people across the continent from accessing wealth and participating in the growing economies.
Lack of Transparency and Accountability
The second reason why Africa is not rich is because of lack of transparency and accountability in many African country’s institutions.
For governments to run effectively, businesses to be trusted and people to have faith in the organizations within a country, they need to be accountable. Transparency is also key for people to feel that intuitions are responding to their needs. Historians and economists often sight a lack of accountability and inclusivity within African institutions as a reason for the continents lack of development.
Little Rule Of Law
Another reason why Africa is not as developed, or as wealthy as other continents, is because of a lack of the rule of law.
Economists agree that having a strong legal system is crucial to development. The rule of law not only protects citizens from their governments and each other, but also means investors know their assets are safe and unfair practices in business are limited. Many African states rate poorly for the rule of law and this keeps them from being richer.
Inefficient Governments
Bloated and inefficient government and public services is another reason why Africa has failed to develop.
Effective management of government departments and well-ran public services help economies to grow. Many African countries are notorious for their bloated public services and poorly ran intuitions. These have held back many African countries and prevented them from getting richer.
Mismanagement Of Natural Resources
Africa has enormous natural resources. The continent has some of the largest deposits in the world of diamonds, iron, oil, natural gas, gold, uranium, copper and cobalt. These resources are vital to industrialized economies around the world and African countries make significant income from the trade of natural resources. However, many African countries are over reliant on natural resources. This, combined with corruption and nepotism in the resource extraction sectors and poor management of natural resources, has stopped African countries from getting rich from their mineral deposits.
Poor Infrastructure
A further reason Africa has failed to become full of rich nations is because of poor infrastructure and a lack of connectivity across the continent.
African countries have generally failed to invest in roads, railways, airports, energy supplies, utilities, and tele-communications. These are all needed to grow a developed economy. A lack of infrastructure, combined with the difficult geography and vase-expanses of much of the continent, is a key reason Africa is poor.
Conflict
A final reason why Africa isn’t rich is because of widespread insecurity across the continent.
Although there are large parts of Africa that are at peace, there is also long-running, extensive, and intractable conflicts on the continent. The Democratic Republic of Congo, Nigeria, Mali, South Sudan, Central African Republic, Sudan, Somalia, Libya, and Burkina Faso are just some of the African countries with ongoing conflicts. Armed violence holds nations back from development and the extent of unresolved conflicts in Africa is a reason the continent has few rich nations.
What Africa Needs To Do To Become Rich
Can Africa become rich and what do African countries need to do to become developed is one of the most important questions facing the continent. There is no reason why African countries cannot prosper. However, there are a number of challenges that the continent needs to overcome. These include:
- Ensure better integration
- Reduce corruption
- Develop competitive industries
- Increase trade
- Invest in education
- Attract foreign investment
- Encourage entrepreneurship
Let’s go over each of these in a bit of detail…
Ensure Better Integration
The first thing African countries need to do to become rich is to better integrate.
Closer ties – economically, politically, and culturally will boost Africa’s economy. Better integration helps bring Africa’s talents and resources together which will massively benefit the whole continent. Increasing freedom of movement would also help citizens and business become agile – an important factor in developing the continent.
Reduce Corruption
The second area Africa needs to address if it is to become wealthy is reducing corruption.
Africa has some of the most corrupt countries in the world and almost all African nations rate poorly on indexes of actual and perceived corruption. Corruption holds back wealth creation by reducing efficiency, raising the costs of doing business and reducing citizens faith in their governments. Corruption needs to be tackled across Africa is the countries are to prosper.
Develop Competitive Industries
If Africa is to become rich it needs to develop competitive industries.
Currently, too many African countries rely on resource extraction for their wealth. African economies need to transition towards industries that rely on innovation and technology and that are competitive in the global market. Reducing state subsidies of inefficient companies is also key to many African countries becoming wealthy.
Increase Trade
As well as developing competitive industries, Africa needs to alter how it trades if it is to develop and become wealthy.
Currently the continent has an almost balanced trade book, but most international trade from African countries is in raw materials or unprocessed resources. Real value is added when materials and resources can be processed and utilized into products for the market. Currently this is mostly done outside of Africa, but if Africa is to get rich, it needs to change how it trades.
Invest in Education
Another thing African country’s need to do to become prosperous is invest in education.
Currently, 30 million children across Africa do not go to school. Many children who do get an education only receive schooling up to primary level. If Africa is to become rich, it needs to improve education attendance across all levels. A specific focus should be placed on higher education, as African countries need more advanced skills to develop and become richer.
Attract Foreign Investment
For Africa to become rich, it needs to attract more foreign investment.
Although there is wealth in Africa invested across the continent, for African countries to develop and prosper they will need to bring in large scale external financing. Creating an environment where international investors want to put their money, and which is financially secure, is one of Africa’s major obstacles to prosperity.
Encourage Entrepreneurship
The final thing Africa needs to do to become wealthy is develop entrepreneurship.
Giving Africans the skills, resources, education, and environments to develop businesses will boost the continent’s economy. African countries also need to ensure that entrepreneurs and small business owners are able to grow. Entrepreneurship is key to a nations growth and African countries should focus on fostering economies based on developing successful businesses if they are to become rich.
Will Africa Ever Be Full of Developed Nations?
African countries face many challenges when it comes to development. However, African countries also have many factors that can assist them in becoming prosperous. Will Africa ever reach the stage where countries across the continent are fully developed?
It is possible for Africa to be full of developed nations. However, development across the continent is more likely to be uneven, as some African countries develop stronger economies and develop wealth faster. In contrast, there are likely to be countries on the continent that struggle to address their challenges and fail to develop.
As we have discussed, wealth and prosperity in Africa is unevenly distributed. This is true across nations, with countries like South Africa, Kenya, and Nigeria becoming richer, whereas nations such as Somalia, Eritrea, South Sudan, Central African Republic, and the Democratic Republic of Congo seem unable to meet many of the obstacles to development. It is also true within nations, with major cities developing faster than rural areas.
All African countries can develop and there have been many countries in world history that have overcome significant challenges to become prosperous. It is highly likely that over the coming decades Africa will begin build wealth, even if it is unequally. However, it is unlikely in the coming decades we will see Africa full of developed nations.