Why is Africa doing so badly economically?

Economists respond: it is mostly due to poor economic policies on the part of governments. With their wealth of raw materials and a young, increasingly well-educated population, many African countries actually have good basic conditions for economic success. However, natural resources usually prove to be a curse rather than a blessing.

This is mainly because governments are unable or unwilling to use the revenue from the sale of raw materials productively, for example to expand infrastructure or the education system. Instead, the money is spent on consumption at the expense of the export oriented economy subsidies, pensions, social programmes.

Much of this only benefits a small elite. The prime example of this is Nigeria, Africa's largest oil producer. There, in the 1970s, the oil industry displaced the previously competitive agricultural sector and prevented broad-based economic growth. Even in a country like Ghana, which achieved several decades of steady economic growth under stable conditions from 1984 onwards, the discovery of oil in 2007 led to a drastic deterioration in governance, with increasing public debt and corruption. The hoped-for growth spurt failed to materialise. Botswana is the only African country that has managed to translate its wealth of raw materials, in this case diamonds into long-term economic growth with the help of a government committed to the welfare of the country.

The dependence of African countries on individual unprocessed raw materials has been exacerbated by the policies of their most important economic partners. For example, EU agricultural policy has traditionally imposed higher tariffs and stricter standards on processed goods.

African in their commodity-rich economies is a strong dependence on exports of one or a few agricultural commodities or minerals. This leads to boom phases, such as at the beginning of the 2000s, when China and India became major players on the world market, which quickly end in recessions.

Countries with fewer resources have been more successful in achieving greater economic diversification. Ethiopia, for example, has used foreign direct investment to build up a clothing industry and modernise its agriculture. From the early 2000s until the start of the civil war in 2020, this was accompanied by growth rates that were sometimes in double digits.