5 Causes of Economic Issues in Africa

5 Causes of Economic Issues in Africa

Causes of Economic Issues in Africa. Africa has many economic issues that hinder many individuals from realizing their potential. The continent is ranked as the lowest in most of the living standards and spheres in life. In this article five causes of economic issues in the continent are discussed.

Unemployment and underemployment

Unemployment in sub-Saharan Africa stands at about 6%, according to the International Labor Organization. But most of the jobs available are unskilled or low-skilled, in part because the region has the lowest levels of access to higher education in the world.
So, although many Africans are employed, 70% of sub-Saharan Africa’s workforce is vulnerable. The global average for vulnerable occupations is 46%.
Business leaders from 22 out of 34 countries in sub-Saharan Africa told the World Economic Forum’s 2018 opinion poll that unemployment and underemployment were their most pressing concerns.


Under investment in infrastructure


According to the African Development Bank, physical infrastructure across much of the continent poses a challenge to productivity. It calculates that around $130-170 billion needs to be invested in Africa’s infrastructure every year, despite a financing gap of up to $108 billion.
According to World Bank estimates, the lack of funding for roads, telecommunications, water, electricity and others is hampering the continent’s productivity by around 40%. This “critical infrastructure failure” is a major risk for businesses in the region, respondents to the World Economic Forum survey said last year.

Fiscal crises

Nearly 40% of countries in sub-Saharan Africa are at risk of sliding into a major debt crisis, according to the Brookings Institution. And the “number of African countries at high risk [of] or in debt distress has more than doubled, from eight in 2013 to 18 in 2018”.
The region’s overall debt-to-GDP ratio rose to 46% in 2017 from 23% in 2008. As debt levels rise, so does debt servicing pressure; the money that could be invested in the company is used to repay loans. This could make it less likely that the region can achieve the development goals of the African Union’s Agenda 2063.

Political change

“Failure of national governance” is a major risk for businesses, according to leaders in sub-Saharan Africa.
“Since the start of 2015, Africa has seen more than 27 leadership changes, underscoring the continent-wide push for greater accountability and democracy,” according to the Brooking Institution. The two largest economies in sub-Saharan Africa recently held presidential elections.

In May, Cyril Ramaphosa was elected President of South Africa with a commitment to promote economic growth and fight corruption. Earlier this year, Muhammadu Buhari was re-elected Nigeria’s president on a similar pledge to fight corruption, while strengthening national security and the economy.
“Ongoing policy changes present an opportunity to address citizens’ concerns and priorities. However, leaders – and economies – will face significant risks if policy agendas do not deliver results,” the Forum report warns. 

Climate change

Nine of the world’s ten most vulnerable countries to climate change are in sub-Saharan Africa. The region has at least 10 vulnerable coastal cities with a population of over one million, including Accra, Dakar, Durban and Lagos, according to the Forum report.

Africa is expected to be one of the continents hardest hit by climate change, with an increase in extreme weather events threatening the health of its people and economies. At the same time, mass migration resulting from floods or droughts could put pressure on resources such as food, water and shelter in less affected areas.

These five causes are postulated as some of the critical causes of continents economic issues. However, there are many causes of poverty and underdevelopment in the continent. We invite you to continue discussing them as we need collective efforts to liberate African people out of poverty,

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