Economy - Data Of Africa

Africa facing globalization

admin — Thu, 12 Jun 2025 08:58:50 +0000

Africa has always been part of economic globalization, particularly through its Mediterranean and eastern coastlines.

During antiquity, the powerful Egyptian civilization was, thanks to its geographical position at the junction between the Mediterranean world and Arabia, as well as to the Nile, through which goods transited, at the center of an important trade. Its cities were the bridgeheads of intercontinental trade. Subsequently, the Phoenician merchant cities established from the 1st millennium BC (foundation of Utica in 1100 BC, of Carthage around 814 BC) were the vectors of the economic integration of the continent in the first globalization; thus and for example, in the 5th century BC, the Carthaginians traded desert gold. A little later, defeated Carthage became a great city again, one of the first cities of the Roman Empire.

The Periplus of the Erythraean Sea, a travelogue dating from the 1st century, attests to intercontinental trade from an area extending from Egypt to Tanzania, towards the Arabian Peninsula, India, and the Mediterranean, and involving products such as ivory, spices, cinnamon, incense, styrax, lapis lazuli, topaz, turquoise, silk, indigo, not to mention slaves who ended up in India and China.

In the 3rd century, the kingdom of Aksum traded with several “countries” of the Indian Ocean and the Mediterranean. Trade, particularly in ivory, benefited the development of the kingdom through the creation of market towns. At the other end of the trade routes, the other part also prospered; in the first centuries of the Christian era, the kingdom of Awsan (present-day Yemen) owed its growth to trade with Africa. From the 7th century onwards, the Islamization of sub-Saharan Africa allowed it to integrate even more firmly into international trade, with the Arabs serving as intermediaries with the Western world.

From the year 1000, gold from Monomotapa left for India via Kilwa in whose ports cotton and glass beads were traded. The period corresponding to the European Middle Ages was the golden age of Africa with the great empires of Ghana, Mali, and Songhai. It was also the age of gold. Kanga Moussa, tenth mansa (king of kings) of the Mali empire in the first third of the 14th century, considered one of the richest men in the history of humanity, de facto controlled all trade in precious metal in the Mediterranean basin.

From the end of the 15th century, the continent experienced the Atlantic slave trade and then colonization in the 19th century, the most tragic forms of global integration. The deportations of slaves fueled the development of America and European countries and began their industrialization process, thanks to colonial resources. The volume of trade between Africa and Europe increased tenfold between 1820 and 1850.

After independence, however, Africa did not take the turn towards industrialization. The share of value in its economy and trade mechanically decreased in exchanges in the face of productions incorporating more added value.

At present, the continent’s place in world trade is minimal, around 3% in value, and it represents only 1.6% of world GDP (4.5% in purchasing power parity).

The continent is therefore often presented as “peripheral” or “on the margins.” However, it is also considered as globally (even historically) marginalized while the study of the long term shows evidence of the opposite.

The Organization of African Unity (OAU), created after independence in 1963, became the African Union (AU) in 2002 and brings together all African countries. It is the largest body on the entire continent. It is essentially a political body aimed at promoting cooperation between states.

At a more limited level, regional integration is considered one of the keys to the continent’s economic development. To this end, the continent has, since the 1970s, set up various regional institutions with an integrative vocation (ECOWAS, UMA, UEMOA, SADC, ECCAS, EAC, IGAD for the most important): customs unions, common market, free trade zones, etc. Essentially focused on economic action, these institutions have also, later, taken on a political and diplomatic dimension by contributing in particular to conflict resolution; thus, ECOMOG, under the aegis of ECOWAS, is a regional interposition force similar to the UN blue helmets.

Integration is, however, very late; intra-African trade represents only 10% of exchanges and is polarized around a few countries (South Africa, Ivory Coast, Nigeria, Kenya, Zimbabwe, and Ghana) and concerns a third of oil, knowing that, moreover, informal exchanges create de facto free trade zones.

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The post Africa facing globalization first appeared on Data Of Africa.

The post Africa facing globalization appeared first on Data Of Africa.

African processing industries

admin — Thu, 12 Jun 2025 08:12:17 +0000

The manufacturing processing industry has always been the poor relation of the African economy. Since capital accumulation was lacking—as the continent saw its resources used for European accumulation but not for its own—the manufacturing industry never really got going. Worse still, over the decades from the 1990s to 2010, the share of manufacturing activity in the value-added produced continued to decline, from 13% in 1990 to 10% in 2011.

However, some countries have succeeded—starting from a situation of mining or agricultural income—in developing significant processing sectors, generating more added value: Ivory Coast with fish and wood processing, Senegal with fish processing, Botswana, which is rich in diamonds, with meat processing, animal skin treatment, animal feed, etc., Mauritius with the textile industry, and Tunisia, where industry represents 30% of its GDP. Special attention should be paid to the economic giant of South Africa, which alone represents between 20% and 30% of the continental GDP and has a diversified industry that employs nearly a quarter of the working population and represents nearly 30% of its GDP.

Deindustrialization may not be inevitable, however, because, in the absence of local accumulation, capital could come from abroad. Foreign direct investment, which began increasing in Africa at the beginning of the 21st century, particularly from China, is more diversified than before. It is now less focused on the primary sector (agriculture and extractive industries) and more on manufacturing. For example, since 2008, the main investor in Ethiopia’s manufacturing sector has been China, and in Rwanda, Chinese FDI has targeted processing activities after the tertiary sector.

For now, however, manufacturing is largely at a “standstill,” as the World Economic Forum put it in 2015.

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The post African processing industries first appeared on Data Of Africa.

The post African processing industries appeared first on Data Of Africa.

FDI, Infrastructure and Governance in Africa

admin — Tue, 10 Jun 2025 16:18:11 +0000

According to the United Nations, in 2016, the top five foreign investors in the African continent, in terms of FDI stock, were the United States (USD 57 billion), the United Kingdom (USD 55 billion), France (USD 49 billion), China (USD 40 billion) and Italy (USD 23 billion).

Foreign investment flows to the continent fell by 21% in 2017 compared to 2016. The total value of FDI flows to Africa for 2017 amounted to $42 billion (13 billion to North Africa and $29 billion to sub-Saharan Africa). Intracontinental FDI flows, on the other hand, increased by 8%, mainly thanks to Moroccan and South African companies.

Debt

The 1980s and 1990s were marked by the debt crisis. The rise in interest rates and the decline in export revenues plunged the continent into a financial crisis that led to the implementation of structural adjustment programs. At the same time, public aid to Africa decreased significantly, redirected towards Eastern Europe. It was the era of “Goodbye Bangui, hello Warsaw”. The political and economic organization of States was drastically revised, particularly through the dismantling of state apparatuses deemed costly and inefficient as well as the dismantling of parastatal companies with questionable competitiveness.

This liberal purge creates the ‘adjusted generation’ or ‘deflated generation.’ However, when combined with the reversal of international cycles in terms of interest rates, a resumption of public aid to Africa and a resumption of foreign direct investments since the year 2000 particularly with strong Chinese involvement), which leads to a decrease in the debt burden in the finances of States. By the end of the first decade of the 21st century, Africa is less indebted than developed Western countries, although its debt remains under control.

Infrastructure

The continent suffers from an infrastructure deficit (mainly electricity and transport) which costs it the enormous figure of around two points of annual growth. However, investment in infrastructure is necessary for economic growth, not only for businesses, but also for the well-being of populations People have access to access to water, to which 65% of Africans are connected. Concerning electricity, it has an access rate of only 29%, knowing that “the cumulative production of 48 sub-Saharan African countries does not exceed 68,000 megawatts [68 gigawatts], the equivalent of the electricity produced by Spain” in 2005, including 40 gigawatts for South Africa alone.

African countries continue to face significant structural challenges and multiple severe shocks, including rising food and energy prices driven by geopolitical tensions such as Russia’s invasion of Ukraine, climate issues affecting agriculture and energy production, and ongoing political instability. This challenging environment has led to a slowdown in Africa’s real GDP growth from 4.1% in 2022 to 3.1% in 2023. However, the economic outlook is positive, with growth projected to reach 3.7% in 2024 and 4.3% in 2025, underscoring the strong resilience of African economies. This rebound in growth will be supported by the expected improvement in global economic conditions and effective policy measures. With these outcomes, Africa will remain the second fastest-growing region in the world, with 40 countries projected to achieve rates higher than those in 2023.

Despite these positive trends, Africa still faces challenges in achieving sustainable economic and social transformation. Historical growth rates have been insufficient to offset population growth, resulting in minimal gains in GDP per capita. Structural transformation has been limited, with economies heavily reliant on traditional low-productivity sectors such as agriculture and low-skilled services for growth and employment. To achieve substantial structural transformation, Africa needs to focus on strategic investments in key areas of the Sustainable Development Goals such as education, energy, productivity-enhancing technology and innovation, and productive transport infrastructure. The financing gap for these investments is significant, estimated to be about USD 402 billion per year through 2030, which will require increased domestic resource mobilization and private sector investment. However, given the magnitude of the resources, increasing external financial flows as complementary sources of financing is crucial. In this regard, the report highlights the urgency of reforming the global financial architecture to facilitate equitable, sustainable and inclusive allocation of resources, which is essential to financing Africa’s development goals.

Governance

Governance, along with infrastructure, is the other major area for improvement in Africa.

Since 2007, the index set up by the Mo Ibrahim Foundation has been assessing the effectiveness of public action in African states and, with the scores obtained (from 1 to 100), establishing a ranking. The average score for the continent has changed slightly, from 49.9 in 2007 to 50.1 in 2016. The best regional average is in Southern Africa: 58.9; and the lowest in Central Africa: 40.9.

Africa is one of the continents where corruption is most widespread according to the NGO Transparency International: “3 countries among the 10 worst ranked are in the Middle East and North Africa region – Iraq, Libya and Sudan. In sub-Saharan Africa, 40 of the 46 countries in the region show serious corruption problems.”

Informal economy

Related to governance, the informal economy is an important feature of the continent’s economy.

The informal economy has been defined by the International Labour Office since 1993, with a revision in 2003, which allows for comparable measures from one country to another. Its weight in the continent’s economy is considerable, between 40 and 75% of GDP (20 to 37% if only non-agricultural activity is considered), causing in particular a significant loss of tax revenue. However, the tax burden in Africa is one of the lowest in the world and is probably insufficient. According to the World Bank, “to trigger sustainable development financing, 20 to 24% of tax burden is required. The African average is around 17% (35% in rich countries); the leading African economic power, Nigeria, barely reaches 8%.”

At the macroeconomic level, the informal economy is a means of social and economic resilience 700 in the face of growth that does not lead to subsequent job creation. The proportion of jobs in the informal sector is estimated to be at 66% in sub-Saharan Africa.

At the microeconomic level, in addition to tax avoidance, the informal economy also exists due to operators’ desire to circumvent administrative corruption and to dissociate themselves from poor governance and the systematic misuse of public funds. However, informal sector companies are subject to the same corruption mechanisms as formal sector companies, primarily through bribery.

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The post FDI, Infrastructure and Governance in Africa first appeared on Data Of Africa.

The post FDI, Infrastructure and Governance in Africa appeared first on Data Of Africa.

Economic history of Africa

admin — Tue, 10 Jun 2025 15:58:48 +0000

The exchange of economic goods appears with the transition from the economy of collection (or predation) to the economy of production, at the time of the Neolithic revolution and sedentarization.

As early as 3000 BC, ancient Egypt saw the birth of a powerful state. The head of this state was the Pharaoh, who controlled trade and mining. Wood, rare in the region, was an important element of trade.

In sub-Saharan Africa, the exchange of goods is attested in the late Neolithic and early Iron Age. During the 1st millennium BC, trade encompassed iron and stone (for tools and weapons), leather, salt, cereals, dried fish, fabrics, ceramics, worked wood, kola nuts, and stone and iron ornaments.

During the first millennium BC and the first centuries of the Christian era, North Africa with the Phoenician, Greek, and Roman trading posts and sub-Saharan Africa prospered at both ends of the trans-Saharan trade routes. On the other hand, trade continued towards the Near East. Before the beginning of the Christian era, North Africa, particularly Cyrenaica, was the granary of the ancient world. At the beginning of the Christian era, the kingdom of Aksum was a leading power in world trade; the texts allude to a wide range of exported products: obsidian, ivory, rhinoceros horns, hippopotamus skins, monkeys, turtles, gold dust, perfumes, live animals and slaves.

From the 5th century, sub-Saharan Africa was called the “land of gold”. From the 7th century, Arab-Muslim expansion in Africa was accompanied by an intensification of intra- and intercontinental trade in gold, salt and slaves. Thanks to this, the Ghana Empire became a major continental power from the 8th century. Muslims gained control of the African gold and the Arab slave trade was organized. The major trade centers of the time, Ouadane, Chinguetti, Tichitt, Oualata, Djenné, Gao, Timbuktu, Ségou, Mopti, etc., were located in the Sahelian zone, a contact zone between the Africa of the Arabs and the country of the Blacks. The Mali Empire, from the 11th century, the Kingdom of Kanem-Bornu and the Songhai Empire, from the 14th century, developed on the same economic bases.

With the arrival of the Portuguese in the 15th century, the slave trade economy (exports of agricultural goods and mining products), the plantation economy (use of slave labor on plantations intended for export) and the Atlantic slave trade began. Gradually, the centers of activity moved from the Sahel to the coastal areas. The coastal kingdoms traded with the Europeans and the economy became one of raiding. This, continued by colonization, led to a demographic collapse that started to recover only in the 20th and 21 centuries.

The continent, colonized in the 19th century and until the end of the 20th century, saw its agricultural and mining wealth flow towards the metropolises, to the almost exclusive benefit of the latter. Since Africa did not generally experience settlement colonization, the number of settlers was tiny compared to that of the natives. Internal economic development and local accumulation of capital were therefore not on the agenda. Consequently, the colonial African economy was essentially extroverted and, in a logic of taking advantage of comparative advantages, each colony became highly specialized. These two characteristics persist to this day.

The new states, independent from the 1960s, taking over the colonial borders, are mostly rentier states where oligarchies capture the rent (oil and/or mining) set up at the time of colonization. African wealth allowed the accumulation of capital in Europe, prior to its industrialization, but the African continent was deprived of it. The African economy therefore remains rentier, extroverted and the logic of redistribution prevails over that of accumulation.

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The post Economic history of Africa first appeared on Data Of Africa.

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Contemporary macroeconomic context of africa

admin — Thu, 05 Jun 2025 10:17:32 +0000

The most general characteristic of the continent is that its economy and exports are based on extractive industries. About half of sub-Saharan African countries are net exporters of primary products, and unlike elsewhere, exports of extractive products have increased in importance since the 1990s, making the region one of the most commodity-dependent parts of the world, roughly on par with the Middle East and North Africa. This leads to a strong dependence on international commodity prices. For example, 80% of Algeria’s exports are petroleum products. In 2014, oil and its derivatives, along with liquid or gaseous natural gas, accounted for 53.3% of the continent’s exports.

Africa is rich in oil and minerals, holding 30% of the world’s mineral reserves. It is also abundant in available agricultural land, fueling a new rush on Africa, particularly by Gulf countries and emerging economies like India and China, which are buying up land on the continent. About 5% of Africa’s surface area is owned or leased for long periods by foreign countries. This phenomenon is referred to as land grabbing.

Taking advantage of a bullish supercycle in raw materials, GDP growth in Africa, especially in sub-Saharan Africa, has been continuous and sustained, outpacing the world average since the beginning of the 21st century. “Africa recorded a growth rate of 5.1% between 2000 and 2011, despite the global crisis that caused this rate to fall to 2.5% in 2009. Productivity grew by around 2.7% during the 2000s.” However, there are significant disparities between countries and sub-regions. In 2011, GDP per capita in purchasing power parity in North Africa ($7,167) was almost three times that of sub-Saharan Africa ($2,391). Social inequality is also very high. Growth slowed in 2015 due to the fall in commodity prices, which are the continent’s main source of income, as was the case in 2009 due to the global crisis. Nevertheless, strong demand from emerging middle classes should sustain growth, and the long-term outlook remains positive.

However, the continent is “behind” (34 of the 48 least developed countries are in Africa) and has poor performance. In 2014, GDP per capita in purchasing power parity was $3,513 for sub-Saharan Africa, while the world average was $14,956. In 2018, the African continent’s GDP was estimated at $2,510 billion (USD) by the IMF, representing 2.8% of the world economy.

Consequently, many studies have examined the causes of this phenomenon, which some call the curse of the tropics. Demographic factors (fertility, etc.), political factors (weakness of the rule of law, etc.), historical factors (influence of colonization, etc.), infrastructural factors (insufficient energy production, etc.) have been highlighted, or the curse of borders (states that are too small, landlocked, etc.) has been invoked, or even, noting the weight of extractive industries, the Dutch disease (or curse of raw materials) and the phenomenon of the rentier state that goes with it (capture of rent income by an oligarchy to the detriment of the population).

There are, however, some economic “miracles” that challenge broad generalizations. Botswana, rich in diamonds but landlocked, achieved exceptional economic performance in the 20th and 21st centuries, overcoming the challenges of Dutch disease and being landlocked, while maintaining governance and transparency unmatched by most of the continent. However, Botswana also faces a very high prevalence of AIDS, with a rate of 25.2% among the 15-49 age group. Mauritius, starting from a situation where sugar represented 20% of GDP and more than 60% of export revenues, focused on industrialization in the textile sector, then on services, including tourism. Its growth was 5% per year for 30 years, and its per capita income, which was $400 at the time of independence, is now $6,700 (estimated at $18,900 PPP in 2014). Its education system is efficient, and its ranking in the World Bank’s Doing Business ranking (28th) is better than that of France (31st). Rwanda is another miracle. After the 1994 genocide that left it in ruins, the country, firmly taken back in hand since then by Paul Kagame, has managed to develop strongly despite an extremely high population density of 420 inhabitants/km2, more than ten times higher than the average for the continent. By focusing on education and achieving the demographic transition, Rwanda has become a model of redistribution and inclusive growth in Africa, showing that economic backwardness is not inevitable.

The continent therefore has no insurmountable geographical, cultural or structural handicaps, no curse that would overwhelm it; it is the policy that created Rising Africa and which will allow it to prosper in the future.

For the time being, the delay is very real, the very use of the term “miracle” indicating that these are only counter-examples in an Africa that remains the “continent of poverty”. Even if poverty is declining, the proportion of poor people living in Africa is nevertheless increasing, showing that this decline is less rapid than elsewhere on the planet. Among the millennium goals, the indicators concerning food insecurity and poverty are those which are progressing the least.

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