African Economy

Africa's Economy and Economic Profiles

As of July 2005, there were estimated to be 887 million people, or 14% of the world's population, living in 54 different African countries. According to the African Development Bank, GDP (Purchasing Power Parity) for Africa in 2007 was US$2.572 trillion in 2007. The continent as a whole has an economy that is slightly smaller than Germany - but if we remove South Africa and Egypt, the richest countries in the continent with a GDP of $467 billion (South Africa) and $404 billion (Egypt), we get a $1.7 trillion economy, smaller than Italy but with more than 13 times as many inhabitants. The next largest countries are Nigeria at $293 billion GDP and Algeria at $224 billion. The smallest economy is Liberia at $1.3 billion. When we look at GDP per capita, which is a measure of how rich the average person is in a country, we find that Africa is the poorest region on earth. The average GDP per capita is $2,975. Only Libya is in the top 100 nations, with a GDP per capita of $12,300, compared to $45,000 in the US and $80,000 in Qatar, the richest nation per capita. Zimbabwe is the poorest country in Africa and the world, wtih $200 per capita GDP, followed by Congo at $300 GDP per capita and Liberia at $400 GDP per capita. In fact the sixteen poorest countries on earth are all African.

Major sectors of African economy include agriculture, mining and construction, manufacturing, investment and banking, communication and information technology. In agricultural sector almost 60 percent of employees are engaged, among them about three-fifths are subsistence farmers. Here subsistence farmers earn a small level of income for the family by producing minimal product, but they fail to re-invest in agriculture. Cash crops are grown in large farms but most of the crops are exported to the Western states and millions of population in the country starves of hunger. Africa is rich in mines and mainly exports minerals and petroleum. There are also several reserves of gold, diamonds and copper. Manufacturing in this country is carried out on low scale. Only three to four nations in the continent have considerable manufacturing sectors. Only 15 percent of total labor force is employed in manufacturing sector.

African economy and global financial crisisGlobal markets can influence African economy. A big question arises as can Africa survive the global financial crisis? When it comes to global financing African countries are last in the list. Africa as a whole has initiated its growth rate, and was a popular destination for investment for Asian countries as well as for frontier investments. According to several economists, Africa could easily withstand the first phase of financial crisis. The export demand and finance access could be affected in the long run. The enthusiasm of frontiers investors to invest in African countries has diminished considerably after the financial crisis and this was evident from the stock operates ranging from Lagos to Lusaka. Though all these don’t have a direct impact on the population of Africa, but the rising prices of food and fuel in the world economy were affecting even the remote areas of Africa. If prices of commodities that are exported by Africa fall then this can lead to adverse situation in economy of Africa.