Why Africans Are Not Rich Despite Africa’s Wealth

While traveling to Africa, I found that the region’s wealth does not translate to the people’s wealth. This is due to many reasons. These include poor management, overpopulation, and unstable politics.

Resources are abundant

Approximately half of the world’s gold supply, two-thirds of the world’s manganese and chromium, and two-thirds of the world’s diamond reserves are in Africa. The continent is also home to many fossil fuels and minerals.

Sub-Saharan Africa is home to about half of the world’s uncultivated land and uses only 2 percent of its renewable water resources. Moreover, the continent contains the world’s largest reserves of natural gas and platinum group metals. Despite the abundance of these resources, however, economic growth in Africa has been abysmally low.

In a recent study of 47 African countries, the authors aim to explain how natural resources affect African economic growth. The authors draw upon historical analysis, various models, and policy studies. They argue that Africa’s economic growth is shaped by how it manages its natural capital. 

Among the challenges in the continent are how to use its resources to meet macroeconomic objectives and ensure societal welfare.

Natural capital plays a significant role in achieving the UN 2030 Agenda. However, many African countries struggle to exploit the continent’s natural resources sustainably. This is because the continent’s natural resources are not adequately managed.

The GEO-6 Regional Assessment for Africa finds that environmental degradation occurs faster than previously thought. There are several reasons for this. Some of these include the instability of rainfall, an endogenous factor. Others include unregulated fishing, illegal logging, and illicit financial flows. To reverse these trends, governments must act more quickly.

Among the countries that have performed the worst are oil-driven economies. Moreover, oil resources are distributed unevenly in Africa. While Nigeria produces the most oil, Angola produces the most mineral wealth. Nigeria generates about 80 percent of its export value from mineral resources.

Angola is also a member of OPEC. Nigeria is the continent’s most prosperous country. However, oil-driven economies have performed the worst despite the abundance of oil resources. In contrast, Malaysia has a resource-abundant stable economy and is one of the rare cases of successful resource-abundant development.

Politics are unstable

Despite its wealth, Africa does not make its citizens wealthy. Inequality and poverty plague the continent. The region is a young continent that will continue to grow. However, it will remain a turbulent one because of its poverty.

Most African countries lack substantive democratic elements, presenting a facade of democracy. This could be one of the factors contributing to the current rise in instability in the area. Several countries have witnessed violent events, such as Kenya and Uganda.

In some African countries, such as Ethiopia, the wealthy own more than everyone else. Africa’s five most affluent individuals have a combined wealth of $29.9 billion. These figures are far beyond the reach of most Africans.

Another reason Africa’s wealth does not make its citizens wealthy is the unevenness of economic growth. 

Often, economic growth in resource-rich countries is stagnant or even harmful. This has been attributed to bad governance. These countries suffer from high levels of corruption and mismanagement.

The political foundations of the resource curse are complex, but a recent study has found that resource booms increase the value of being in power. They also boost resource misallocation in the rest of the economy. The authors suggest that African countries should focus on economic growth rather than poverty reduction.

Inequality is also widespread in sub-Saharan Africa. Countries such as South Africa, Namibia, Zambia, Botswana, and Ethiopia, are among the most unequal in the world. The authors of a recent UNDP report suggest that these countries should adopt progressive taxation and quality education. However, these measures will not be enough to reduce the inequality gap in the region.

One of the study’s most disturbing findings is corruption’s prevalence. The research found that 60 to 80 percent of customs revenues were embezzled. In addition, a quarter of national budgets were not adequately accounted for. 

It is estimated that these resources are siphoned off to fund private accounts. The study also showed that state resources are diverted to fund election campaigns.

African countries are also at a high risk of violent conflict. These factors combine to make the continent a risky place to invest. Many countries will need more international cooperation to address violence.

Overpopulation is a problem.

Despite being the youngest continent, Africa has a population of over 1.2 billion. This is a population increase that is unprecedented in history. The increase in population is expected to accelerate.

Despite this, some African nations are starting to show signs of overpopulation. The total fertility rate in Africa is 88% higher than the standard. This is a massive problem for a continent that has to contend with poverty, hunger, and a lack of economic opportunity.

The population of Africa has grown at an average of 3.5 million a month for the past year. The United Nations Population Division projects that the population will increase by 3.2 billion over the next 25 years. The population of Africa will also be a leading contributor to the total increase of 3.8 billion people over the next decade.

Although there are many causes for the population increase, it is also important to note that improvements in public health have accompanied the continent’s growth. This has lowered the infant mortality rate in many African countries.

Overpopulation is also a problem in Western Europe. In fact, according to a UN report, the average density of people in the UK is 253 per square mile. This is compared to the density of 69 per square mile in Kenya.

There are many ways to address the overpopulation issue. Some countries are already implementing solutions. One example is the Gates Foundation’s plan to fund $4 billion for family planning for 120 million women in the UK.

One way to reduce the population growth rate in Africa is to stop the outflow of resources. This will help to keep more natural wealth within the continent. Another is to improve the education of women. Providing women with education will also help reduce the birth rate.

Lastly, increasing longevity is an essential part of the equation. This is especially true in emerging market countries.

The number one driver of population growth is not high fertility. Lowering the fertility rate and improving the population’s health is the best way to ensure that resources are not drained.

Poor management

Across sub-Saharan Africa, countries fail to reap the benefits of their oil and mineral wealth. Despite this, the region is expected to see a pick-up in growth in 2018. Good governance will be critical to support the region’s economic transformation.

A new study by the Natural Resource Governance Institute (NRGI) analyzed the performance of 28 sub-Saharan African countries. It found that countries in the region are lagging behind other parts of the world when managing billions of dollars in resource revenues. In addition, half of the countries studied do not disclose their social impact assessments.

The study also found that countries more dependent on natural resources have poorer resource governance. In addition, a significant portion of government revenues is allocated to natural resource funds. However, governments do not follow the rules regarding managing assets in these funds. In some cases, governments also fail to disclose their conflicts of interest. This means tens of millions of dollars of supplies are lost due to ineffective controls.

In addition, many African countries lack reforms to prevent corruption. This damages the government’s role in helping to support economic transformation. These reforms should include: protecting whistleblowers, strengthening institutions, and creating a public register of company owners. These policies will help the region accelerate good governance.

Another reason Africa is behind other parts of the world is the scandalously lavish lifestyle of African elites. They sell off their natural resources and use the money to enrich themselves. In addition, many African leaders want to stay in power for life.

In addition, the NRGI study found that countries in sub-Saharan Africa have poorer resource governance than other regions. This is especially true in countries that are assessed for oil and gas. The study also found that countries assessed for mining have less dependence on the resources they produce. In addition, African countries’ political elites often connive with foreign bodies.

These countries need to strengthen their institutions and implement reforms to prevent corruption. They must also strengthen their constitutions and promote human rights and peaceful coexistence.