The Economic History of Africa
Akhil D -
Hey all! Today, I am going to give an overview of Africa’s modern economic history. Understanding this is critical in understanding DFI investments on the continent and the growing need for DFIs.
The colonial era (1884-1957) laid much of Africa’s modern economic groundwork. Missionaries, education, and laws used by the Europeans still exist today, and the overuse of farmland and natural resources leave many areas severely deprived of any economic potential stemming from agriculture. The decolonization of Africa (1957-1975) has created many new economic consequences. First, decolonization led to the emigration of Europeans thus reducing the amount of human capital. Britain took the most steps to prepare its colonies for independence. The more sudden transfers of power left colonies less prepared to maintain stable, sustainable economic growth.
Since decolonization, the economic outlook of Africa has been mixed. The continent’s economic growth has been slow with its GDP per capita growing just 1% annually, compared to 5% in China and 8% in India. The 2000s saw accelerated growth, but growth stagnated in the 2010s. Moreover, productivity remains lower than comparable regions worldwide. Despite these trends, at least 345 companies have annual revenues exceeding $1B, with growth not looking to slow down. Africa is also the fastest-urbanizing place on earth, with over 500 million people likely to leave the countryside by 2040. Holistically, Africa remains divided economically. Annual GDP growth in the midsize economies like Angola exceeds 4% while the rest of the countries – including Egypt, Nigeria, and South Africa – endure slower and stagnating growth.
The future of African growth will be large and unsustainable without proper planning and preparedness. 13.4% of the continent’s youth are already unemployed, so Africa will need 15 million jobs per year to meet the needs of its growing population.