Economic Crisis in Africa

Abstract

Sub-Saharan Africa is facing deep economic crisis. A situation has reached where there is total stagnation with zero per cent growth rate and no hope of recovery. Hunger is hovering over vast areas of Africa threatening the lives of 150 million people and every day people are dying of starvation. It is said, that nature and international economic relations are both responsible for the crisis. The problems include drought and expanding desertification leading to scarcity of food and consequently rising foreign exchange expenditure on food purchase. There is shortage of inputs for the very few industries that exist. The burden of external debts is increasing every day and is reaching a stage when repayment would be impossible.

According to a World Bank Report: “Of the 45 states in the sub-Saharan region, 24 have fewer than five million people. African economies are for the most part small in economic terms. These are open economies where foreign trade accounts for about a quarter of the GDP. They are specialized economies, most of them agricultural, dependent on the export of two or three primary commodities. Even in mineral exporting countries, the majority of the population (around 80 per cent) is engaged in agriculture with subsistence production. Only 20 per cent of the population is non-rural, and modern wage employment absorbs a very small proportion of the labour force—in most countries less than 10 per cent.”¹ There is mass-poverty and regional inequality with under-developed structures. Agricultural growth per capita, a key indicator in Africa, has been showing negative rates of growth.

In most African societies the patriarchal, tribal social structure still exists today side by side with the foreign companies (MNCs) holding key positions in the economy of a number of countries. Small-scale production by farmers, livestock breeders and handicraftsmen is still the largest sector of the African economy today. The low level of subsistence farming often with primitive tools and Implements prevails all over the continent. The small cash crop growers are ruthlessly exploited by foreign monopolies, local feudals and the tribal elite. Forced by an unbearable and miserable existence “peasants” abandon land temporarily and are forced to seek work in the cities, plantations or in mines. As the rate of industrial growth is very low, migration from the rural to the tertiary or industrial sector is minimal.

Africa is underdeveloped, that is, Africa's economic potential is scantily developed. For instance, the African continent possesses two-fifths of the world's total hydroelectric potential—more than Europe and the two Americans put together but the present production is ridiculously small—25 billion kwh—that is equivalent to the consumption of a large European city. Similarly African mineral resources have been relatively little exploited and so far research on tropical soils is in the first stages, knowledge of water resources is minimal. African human resources have remained underutilized. Africa lags far behind in education leading to low capacity in technical and economic inventiveness.

Between 1960 and 1979 the per capita income in a number of sub-Saharan countries showed increase while some others had a very low rate of growth and still others showed negative rates of growth. Since 1980 it appears that there has been a constant tendency of decline in the rate of growth in a large number of countries.² Even the oil-producing countries are in trouble.