Why is Africa Still So Poor? - #8

May 27, 2021

Africa is in a much better place in the 21st century with a burgeoning Tech scene and lots of foreign investments in the Fintech space, however, Africa is still facing many issues and there are some trends worth mentioning. Africa is the least prepared for climate change while probably suffering the most under it, ⅓ of all children are malnourished, ⅓ of children don’t finish high school, extremists find it easy to recruit the vast number of poor unemployed young people, epidemics are common across the continent with Ebola being just one among many, and the economic development of Africa is limited to certain countries.

African countries are looking at the economic successes of East Asian countries and are adapting East Asian policies for their own countries. This is resulting in factories, agricultural centres, and tech centres being opened across many African countries. For example, Africa is able to take advantage of its proximity to Europe’s timezone to take over various administrative jobs from European-based companies for a lower price.

A new generation of Africans are entering the job markets that are better educated and better skilled than any African generation that came before. With these hard-working and talented people, African governments have created economic policies to harness the talents of Africans by letting them set up their own businesses in a free market which generates wealth by Africans, for Africans, in Africa.

One of such examples is the hyacinth plant, an invasive species on Lake Victoria. African scientists developed a method of turning this invasive plant into protein-rich animal feed. This feed is now being sold across the world. In the 21st century developments like these are creating a fast-growing middle class with rising spending power. This middle class will want to buy things with that extra money and this will allow Africa to sell more goods to other Africans, which in turn allows Africans to create industries specifically suited for the African market - A market often neglected by rich countries.

And while Africa is still in the position where it mostly exports raw materials, it is currently experiencing an economic development that, if it continues, will finally bring an end to the large-scale poverty that has systematically plagued Africa for centuries. Africans are not just hopeful of the future but for the first time since colonisation, are actually gaining the tools that will create this future.

Africa has the potential to go much further. The world’s youngest and fastest-urbanizing continent, Africa will have 24 million more people, on average, living in its cities each year between 2015 and 2045 – more than India and China combined – according to a 2016 McKinsey & Company estimate.

This implies major increases in consumption. Already, spending by consumers and businesses in Africa totals $4 trillion. Household consumption is expected to grow by 3.8% annually until 2025, reaching $2.1 trillion, and business spending should grow from $2.6 trillion in 2015 to $3.5 trillion in 2025. Altogether, a McKinsey report predicts $5.6 trillion in African business opportunities by 2025.

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