Progress and financial growth in Africa
Africa's Economic Landscape: Challenges and Opportunities
Africa, the world's second-largest and second-most populous continent, presents a unique economic landscape with both challenges and opportunities. In 2021, the continent had the highest dependency ratio compared to all other regions, with 78 percent of the population being dependents for every 100 persons of working age. This ratio is projected to decrease to 60 percent by 2050.
The dependency ratio is just one of the many indicators used to measure a region's development. The Human Development Index (HDI), for instance, is a significant indicator of human well-being across countries, calculated based on life expectancy, average years of schooling, and gross national income (GNI) per capita.
One of the key challenges facing many African countries is their reliance on a few export goods as their main sources of income. This vulnerability is exacerbated by fluctuations in global commodity prices, as seen in the fall of the average oil price from 110 US dollars per barrel between 2011 and 2013 to an average of 48 dollars per barrel in 2015/16.
Moreover, most African countries fall into the low or lower-middle-income categories based on the World Bank's classification by GNI per capita. Economic integration, however, offers a potential solution to these challenges. It enlarges the markets for products and inputs, allowing companies to expand their production, improves negotiations with international organizations and other countries through the sharing of costs and expertise, and enables manufacturers to leverage economies of scale.
Economic integration also has the potential to significantly accelerate economic growth in Africa. Real economic integration would lead to increased competition, economies of scale, higher investments, political stability, and political and economic influence on global partners.
However, the path to economic integration is not without its obstacles. The gaps between agreements and actions in regional economic blocks are the result of excessive or hasty commitments by member countries and also due to the lack of mutual accountability. It is important for all regional economic blocks to identify the current gaps and devise a reasonable plan to address them.
Good governance is a key element for the diversification of an economy. Countries like Botswana, which has been politically stable since its independence in 1966, serve as examples of the positive impact good governance can have on economic development. Without good governance, there is little hope for economic diversification and significant improvements in people's lives.
Economic development in African countries is reflected in improved access to basic needs, social services, infrastructure, reduced income inequality, and enhanced overall standard of living. Despite the challenges, Africa continues to make strides in these areas. For instance, in 2021, the literacy rate in Zimbabwe was 90 percent, while in Chad it was 27 percent.
The United Nations created the category of 'least developed countries' (LDCs) in 1971, focusing on developing countries whose economic development is hindered by deeply rooted and widespread development challenges. Currently, 46 of the 54 African countries are classified as LDCs. However, the Seychelles is the only African country currently classified as a high-income country.
In conclusion, Africa's economic landscape is characterised by unique challenges, but also significant opportunities for growth and development. Economic integration, good governance, and a focus on human development are key to unlocking Africa's potential and improving the lives of its people.
