AFRICAN ECONOMY

How Poverty Affects African Economy?

How Poverty Affects African Economy?

Introduction

Africa, with an estimated population of 900 million distributed in 54 different states, is the poorest area in the world. According to the World Bank, 34 of the 48 countries with lower standards of living in the world belong to this continent and its poverty lines have deteriorated over the past 25 years. Africa is by far the inhabited a continent occupied by a poor majority. Although some parts have improved in recent years, of the 175 countries surveyed in the Human Development Report United Nations in 2003, 25 African countries are in the ranking of the worst in the world in human development (World Bank 2011). This is partly due to its turbulent history:

The decolonization of Africa has long encouraged political instability. This instability is primarily attributed to the Cold War. Since the mid-twentieth century, increases in political corruption and despotism have contributed to the worsening of African poverty. Today, the African situation is dramatic. More than 300 million people live on less than a dollar a day, 30 million children under 5 are malnourished, and 43% of the population has no access to drinking water.

Discussion

The World Bank reports that between 1981 and 2001 the poor doubled from 164 to just over 300 million people, and in countries like Burundi and Ethiopia, income per capita is less than $ 90. Even in the richest countries like Gabon and Botswana, impoverished people are remarkable in number (World Bank 2011). This economic instability has broad effects on living conditions and social and political stability.

According to the UN, the possibility for most of these countries to achieve the Millennium Development Goal (MDG) is remote. For this reason, the international community stood in the centre of global development agenda and agreed to double its aid by 2010 (OECD 2010). The situation in North Africa, with about 200 million people, is better than the rest of the continent, with a more stable economy, tourism and trade is more buoyant, and the incidence of disease is lower compared to other parts of Africa.

Poverty leads to further Poverty

In some countries, oil and natural gas has enabled rapid economic growth. This is the case of Chad and Equatorial Guinea, where GDP has grown more than 10%, or Nigeria, where it grew by 6%. However, in Niger, Central African Republic, Ivory Coast and Eritrea remains underdeveloped, either by the lack of resources or political conflicts or war. Agriculture employs 70% of the population and accounts for 40% of its exports. This sector is very hurt by agricultural subsidies in rich nations, which has an important impact on the decline in commodity prices. From 1970 to late 90's African participation in world trade fell from 3.5% to 1.5% (Fox & Liebenthal 2006).

Increase in Disease

Life expectancy has been reduced from 49 to 46 years mainly due to AIDS. Africa has 70% of cases of AIDS in the world with over 2.2 million deaths a year and increasingly greater proportion of ...