Why is Africa “rich” yet still “poor”?

Going back to the 1970s a bit, many African countries had the same GDP as Asian countries after they were devastated by wars and exploited by colonialists. After only 30-40 years, Asia developed vigorously while Africa was left far behind. Up to today, many African countries, especially those in the sub-Saharan region, remain at the bottom of the poverty line. Below are the main reasons causing its deadlock.

When it comes to natural resources, Africa is considered “rich” or “extremely rich” as it accounts for more than 30% of the world’s mineral resources, including gold, diamonds, oil, and gemstones. For example, Tanzania is known for gold, Congo is known for copper, Namibia is known for Uranium, and Botswana is known for diamonds (see a map of African minerals). Yet nearly 50% of its population, especially those in the sub-Saharan region, live below the poverty line (earning less than $1.25/day). For instance, the Central African Republic has consistently been ranked as the poorest country in the world, the lowest in the Human Development Index (HDI), and the unhealthiest in the world for many years.

First, Africa, to a certain extent, failed to catch up with the Green Revolution. Asian countries, on the other hand, was able to ensure food security through their investment in agricultural development. This is because once agriculture is secured, labor and capital surplus are utilized on industrial and service investments; such investments become the backbone of an economy. Meanwhile, African countries, especially those in the sub-Saharan region, face critical challenges as it is situated right near the equator, resulting in a different land, climate, and weather conditions along with drought, flood, and lack of farming experience (due to the habituation of gathering and hunting). In the farming mindset, cultivation becomes more difficult. In detail, small-scale farming mindset and small households threaten cultivation ability, leading to low productivity despite its gift from nature with rich soil and ideal weather conditions (sub-Saharan Africa is not as hot as everyone thinks!). Another theory criticizes African leaders for not being keen on developing agriculture as Asian politicians and technocrats. Instead, they aim to exploit available resources rather than agriculture development (for example, many agricultural products in Uganda are imported from other countries like China. Imported goods are even cheaper compared to home-made, making domestic products less competitive).

Second, corruption, abuse of power, and inefficiency of competent authorities lead to ineffective resource management. Most of the revenues from the exploitation of resources (oil, coal, gold, etc.) fall into political elites, and national income is not properly distributed to the lower classes. Additionally, the trickle-down process is slow, and in some cases, it does not even happen. On the contrary, for Asian countries, thanks to redistribution policies through taxation and social welfare programs, economic development has supported the process of social development. The Blood Diamond film somewhat explains such processes where big economic contractors collude with local officials to not only exploit laborers but also exploit the abundant resources of a country. Looking to Northern European countries, thanks to governments’ ability to effectively manage resources, transparency, and accountability, revenue is used effectively. To explain a little, Nordic countries, before World War II (WWII), depended on agriculture and the poor. However, they sold their resources for the sake of the reconstruction process in Europe and were not devastated severely by the war. This was led by the left-wing democratic party which focused on social development, and the countries became as developed as today. In development studies, scholars often use a term, called “the resource curse,” to describe countries that are rich in natural resources yet are likely to suffer from bereavement, war, and trauma. The Boko Haram civil war in Nigeria is a typical example. However, this does not apply to all cases.

Third, there are also influence of external factors. After some fieldwork, the World Bank and IMF proposed structural adjustment packages, investing in socio-economic development, on the condition of designing a market economy and building democracy. Looking back at the effectiveness of these programs, however, it can be said that these programs failed, miserably. The privatization of national companies with capital flooded from Western countries and was later characterized as neo-colonialism, resulting in local businesses’ bankruptcy, rampant unemployment, and a shortage of output. Also, these programs employed a top-down approach, rather than bottom-up, which seeks solutions from the actual needs of people. Consequently, these programs quickly failed, and the request to establish democracy going against multi-tribal grain/nature/traditions has made many African countries separate more than ever. Being here for a while, I noticed that rather than introducing their nationality, one might tell which tribe they were born in. Another example is Nigeria. There are more than 50 parties, representing different tribes. Although only 4-5 main parties run for election and active activities, internal conflicts make the government focus on gaining power rather than investing in long-term development programs. Although there is no clear evidence that the type of State (dictatorship or democracy) is associated with a country’s development, internal conflicts and political instability have a significant impact on investing and executing policies and declaring uniform policies.

Throughout this article, we have seen some examples of countries that have a plentiful amount of resources but do not grow from the resources. The term in the world of developers is called “resource curse.” Jeffrey Sachs and Andrew Warner point out in their research that the relationship between resources and economic growth rate depends on how income is used, which political system is operated, what the government capability is, and whether the national stage is early or late industrialization. The resource, therefore, can be viewed either as a “curse” or “blessing”. Take the Nordic countries, for example. Thanks to the efficient use of oil and coal, along with transparency and income distribution policy pioneered by the Social Democratic Party, they successfully turned from agro-based economic countries into industrial economy based countries after WWII. On the other hand, a rich-in-oil country Nigeria started the Boko Haram Civil War over a dispute about resources. Oftentimes, governments and multinational corporations claim the ownership of resources (oil) on the land of indigenous people (tribes and other tribes). Yet, indigenous people, who are arguably the true owner of resources, do not benefit from such exploitation. Poverty, low investment in education and health care services, corruption, and religious differences (Islam and Christianity) set fire to pointless disputes. The Civil War has existed for more than a decade.

All in all, having multiple tribes makes it more difficult to implement policies. Development programs that are carried out in other countries are more homogeneous. This, again, supports that racial diversity requires the design of demanding programs to be more centralized. These are the reasons why Africa, especially sub-Saharan countries, is still as poor as it is in the past.

 For more information, please read: The looting machine (Tom Burgis), Taxing Africa (Mick Moore), and Asia-Africa Development Divergence: A question of intent (David Henley).

Writer: Ngoc Thao

Editor and Translator: Gia Linh & Bao Nguyen