Africa Economy - An Insight

As per the estimate in July 2005, there were approximately 888 million people of the world’s total population, or 15 per cent of the world’s population residing in 54 different countries of Africa. Purchasing power parity or GDP of Africa in the year 2007 was US $ 2.576 trillion, according to the data of African Development Bank.

The continent on the whole has economy that is somewhat than the economy of Germany, however, if we abolish Egypt and South Africa , the richest and the most flourishing countries of the continent having a GDP of $ 405 billion (Egypt) and $466 billion (South Africa, we get an economy of $1.8 trillion economy, that is smaller than Italy but has thirteen times more population.

The next largest economies are Algeria at $ 225 billion and Nigeria at $ 294 billion. The smallest economy of Africa is Liberia at $ 1.4 billion.

When we look at GDP per capita income which helps in understanding how rich an average person in a country is , we discover that Africa is one of the most poorest region on the earth. The average GDP per capita is approximately $2, 975. Only Libya is counted in the top 100 nations of the world with a GDP of $12,500 per capita as compared to $ 46,000 in the United States and $ 85,000 in Qatar, the richest and the wealthiest nation per capita.

Zimbabwe is the poorest country not only in the Africa but also in the world, with $ 210 per capita GDP followed by Congo at $ 302 GDP per capita and Liberia at $ 404 GDP per capita. In fact, the sixteen poorest countries on this earth belong to Africa.

Some of the most important sectors of African economy comprises of communication and information technology, construction and mining, investment and banking, agriculture and manufacturing. More than sixty per cent of the employees are engaged in agricultural sector; of them approximately three fifths are subsistence farmers. These framers earn a very small income for their family members by producing minimum products, however in most of the cases they fail to re invest in agriculture. Although, cash crops are cultivated in large fields but most of these crops are exported to the western countries and millions of inhabitants of the country starves of hunger.

As Africa is rich in mines, it mainly exports petroleum and minerals. Moreover, there are various resources of copper, gold and diamond. Manufacturing of products in Africa is carried out on very low scale. Only few nations in the country have considerable manufacturing equipments. The manufacturing sector employs only fifteen per cent of the total labor.

Global Financial Crisis and African Economy:

Global markets can highly influence African economy. One of the biggest6 questions is that whether economy of Africa can survive global financial crisis or not. When it comes to global financing, countries of Africa lasts in the list. Africa has started its growth process, and was one of the most popular destinations for frontier investments and Asian countries.

According to the economists, Africa can easily survive the first phase of financial global crisis. However, the finance access and export demand could be highly affected in the long run. The interest and keenness of foreign investors to invest in countries of Africa has declined after the global financial crisis and this was apparent from the stock operates ranging from Lusaka to Lagos. Though, all these factors do not impact the African economy directly, but the ever increasing prices of fuel and food in the economy of world were affecting even the remotest areas of Africa. If in case, the prices of goods exported by Africa decreases then situation can become adverse in African economy.