The Issue of Poverty with a Focus on Africa - Case Study Example

Poverty in Africa Introduction Poverty refers to an economic disadvantage leading to the lack of basic human needs by a person or portion of the society. It is characterized by a substantial proportion of people living below the poverty line, low gross domestic product (GDP) and generally poor human development. The issue is of great significance to the global economy because poor communities or societies often become a global burden. There is a great contrast in poverty levels between developing countries like Brazil, India and African countries, and developed countries like the UK. Developed countries have to come in to help poor countries through funding instead of focusing on their own economic development. Cancellation of debts translates to great challenges for the operation of the World Bank as a global financial institution. The main parties when it comes to addressing poverty in are the people, governments, colonialists and other nations. Africa is one continent that has the highest poverty level in the entire world. This paper is dedicated to discussing the issue of poverty with a focus on Africa. Statistics about Poverty in Africa In Africa, there is a high level of absolute poverty as is evidenced by various economic indicators like the per capita income, GDP, and the number of people living on less than a dollar a day. In 2005, Sub Sahara Africa owned only 2% of the global economic share while recording the lowest GDP compared to other developing regions (OECD 2007). About 41.1% of people lived on less than a dollar a day in 2006 in Sub Saharan Africa. According to the UN, as of 2006, 34 countries in Africa appeared on the list of the 50least developed nations in the world (OECD 2007). Furthermore, an average European makes about 20 times what the average African does. Causes of Poverty in Africa In Sub-Saharan Africa, the level of poverty is extremely high. One of the factors that lead to high poverty levels in Africa as a continent is illiteracy and lack of skills that help in increasing productivity. Many African states as a result suffer from low human capital resulting in low production capacity - not the case in developed countries where literacy levels and human capital is high. One limiting factor is the harsh global economic environment that hinders Africa’s economic development (Chen and Ravallion 2004). Africa has a high population growth rate compared to other continents. This has put a lot of pressure on available resources like land, marshlands, forests and water. This has resulted in the overexploitation of resources and degradation of the environment. This is worsened by the existence of poor land policies in many African states that allow for massive land fragmentation. The fragmented land is not economical as it discourages large scale crop production. In some places, land is subject to communal ownership. This makes it hard to develop the limited land due to lack of accountability. The high population growth rates and low rates of economic development in many African countries have led to high levels of unemployment. This has culminated in high dependency rates. This state of affairs has placed a heavy burden of providing basic human needs like healthcare and education on respective governments. The funds used by governments to provide some of these basic services could be channelled to other applications so as to expand existing economic sectors and to achieve an sustained economic growth. The dependence on foreign aid has placed many African countries in a viscous circle of loan repayment. Most of theses aids come with conditions that tie the poor African nations to depending on the donor nations. This limits their freedoms in the corporate and globalized economy hence limiting their opportunities for growth. Despite the increased enrolment in educational institutions, attainment levels among learners in many African countries remain low. As a result a huge proportion of those who graduate from these institutions end up being incapable of solving practical problems that face the society. This necessitates the reliance of external expertise which is expensive and economically draining to the poor countries. Africa has been worse hit by the HIV/ADS pandemic. The rate of HIV-related infection and death is high among African youths and young adults. There are also a wide range of diseases that the continent grapples with to date. One such disease is malaria. This has led to loss of human capital and increased high dependency ratio as noted by Kayizzi (1999). Africa has a poor structure for production as there is high dependence on a few commodities –mainly primary commodities. Most of the products that come from Africa are agricultural and often in form of raw materials. Most African nations employ labour intensive methods of production instead of capital intensive methods of production. As a result of poor marketing strategies and fluctuating market prices, farmers are persistently subjected to exploitation. There are regular crop failures due to reliance on rain. This is normally not the case in developed countries which peg their success in agriculture on modern farming methods. According to UNEP (2002), there is a high level of environmental degradation in Africa leading to reduced production viability. Food insecurity has reduced the productivity of many people in poor countries as their focus has shifted from development to seeking desperate ways surviving. Many countries lack the capital to initiate economic projects that have the capacity to gain global competitive advantage. This has kept many African countries at the receiving end of innovations and economic undertakings. Lack of capital has also hindered the exploitation of some vital economic resources like minerals. According to Rodney (1982), colonialism and post colonialism also contribute to poverty in Africa. Colonial white settlers grabbed fertile lands leaving many people landless. In South Africa for example, about 82 percent of arable land belongs to descendants of European settlers. Moshomba (2000) reveals that many have been unable to settle up to date. This is because the ownership of these lands switched to a few rich individuals who are never willing to share, sell or lose them. The original land owners and their families as a result have remained to be labourers. Corruption levels in most African countries are high. National resources have are being drained by a few individuals who end up owning a great share of the national economy. This has led to little economic resources to be shared among the larger population. There is a high rate of embezzlement of government and donor funds meant to run economic projects. This has led to the stalling of many economic projects. The poor political situation has discouraged development as leaders are less focused on economic development. Poor politics has also led to political instability in some African countries thus hindering economic prosperity. Policy responses and recommend future policy changes Policies that have been so far adopted to mitigate poverty in Africa include improved healthcare through preventive strategies. This has led to reduced ill health hence the establishment of a strong and stable production workforce. Many governments offer basic education for free which has led to improved literacy levels. Accessibility to basic needs has changed the focus of people to economic development. African countries should further adopt a broad-based economic strategy instead of depending on a few traded commodities, mainly primary commodities as suggested by OECD (2007). Structural reforms in agriculture should be adopted. These reforms should include adopting policies that protect the potential productivity of land. For example policies should be implemented that boost large scale agricultural production which is cost effective and efficient instead of subsistence farming that is often associated with fragmentation. This will greatly increase rural income and will better stimulate self employment. Policies that respond to environmental degradation should also be implemented urgently. This will help sustain the production capacity of resources like land, forests, marshlands and water bodies. Responsible fishing practices should be adopted by those living around water bodies to ensure sustainable exploitation of water resources (FAO 2002, Westlund 2008). Conclusion The African continent is among the worst hit by poverty. The causes of poverty There is an urgent need to address the issue of poverty in Africa. This will involve the adoption of better structures of production, increasing the levels and quality of literacy and availing the required capital. A good political atmosphere has to be created to attract both local and international investors. References Chen, S and Ravallion, M. (2004). How have the world’s poorest fared since the early 1980s? World Bank Policy Research Working Paper 3341 Washington: World Bank. Food and Agriculture Organization (2002). Reducing Poverty and Hunger, the Critical Role of Financing for Food, Agriculture, and Rural Development. Rome, F A O. Kayizzi-Mugerwa, S. (1999). The African Economy: Policy, Institutions and the Future. Routledge. London. Moshomba, R. (2000). Africa in the Global Economy. Lynne Rienner. London. OECD. (2007). African Economic Outlook 2006/2007. OECD. New York. Rodney, W. (1982). How Europe Underdeveloped Africa. Howard UP. Washington DC. Sahn, D. Paul, D. and Stephen, Y. (1997). Structural Adjustment Reconsidered: Economic Policy and Poverty in Africa. Cambridge University Press. Cambridge. UNEP (2002). Africa Environmental Outlook: the past, present and future perspectives. UNEP. London. Westlund. L, Holvoet, K. and Kebe, M. (2008). Achieving poverty reduction through responsible fisheries. Rome, FAO. Read More