africa is the richest continent in terms of natural resources, so why is it the poorest in economic terms?

Question

The continent has enough natural resources to take care of the whole world, for example The D.R.C is capable of generating enough hydro electricity to power the whole continent, but at this very moment the whole of southern Africa is facing a regional power deficit Zimbabwe, South Africa, Mozambique,Zambia and DRC are all having to do load shedding.
The continent has reserves of gold,platinum,diamond,natural gas,oil,water,coal,asbestos,uranium even skilled labour, but non of this is being used for the benefit of the continent. does anyone have answer to this.

Answer 1

corruption amonst the leaders

Answer 2

Africa is also a continent in turmoil-wars,genocide,deforestation, rape and pillage of the people and the continent by white Europeans mostly, apartheid,suppression of the Africans--Africa until the white man invaded etc was a continent of nations at war with each other there was no established unity when the Europeans-Dutch,German,French and so on settled and began forming governments controlling schools and the severely repressed education of the Africans and in order to be a part of industry,commerce the people have to be schooled,taught the ins and outs and be organized, It hasn't been that long since Africans got their independence from European suppression and there is no unity and until that occurs where a country can set up a government that is for the good of the people that commerce and industry can flourish. Just some thoughts for to get all the issues into the right perspective -there are so many in Africa at the present is a bit of a strain mentally.

Answer 3

Wow, lot of scary answers.

European colonies and their extraction of resources were real bad, but they're not the problem today.

A few old African empires were rich and in their time more powerful than their European counterparts. The Carthegians, Malanese, Songhai, and Zulu, for examples. If you look at the maps, those empires were in regions that had resources and the capacity to trade. The Songhai, for example, had lots of gold and ivory and no geographical boundaries to trade. Where are the poorest countries? For the most part, where trade was impossible for geographic or other reasons.

More modernly, there are other problems. The biggest problem is stability. Governments won't last long when the people are already poor and diseases and racial tensions kill. There also isn't enough capital for infrastructure. Foreign investment would help, but locals are cautious because of the sordid past of imperialism. Investors themselves are wary because of the political turmoil.

Sometimes foreign aid helps, as it has for a couple East African countries. Sometimes MNCs come in to take advantage of the resources. Sometimes people do invest. And sometimes, nothing good happens at all. Meantime, the ecology is getting screwed (how many people know how fast the Sahara creeps into the fertile plains below per year?), and people are dying.

Many of the countries who have managed to get on their feet aren't happy with the West. This is bad. They privatize and form nifty groups with each other and other resource rich third world countries who also have tense relations with first world countries.

Because of the oil and other stuff, both the US and China have global interests in parts of Africa, and support governments sympathetic to them.

It's also interesting to note that not all African countries are rich, and in general, the ones that are are the ones with bad governments and intense political competition.

There you go, that's all I have to say.

Answer 4

In order to get to the resources, you high capital investments and knowhow. Africa does not have that much money to invest itself; and it doesn't have the know-how yet.

The easiest solution is therefore to turn to one of the few companies who are experienced in the field. The thing then is to realise that this is no longer a competitive market. On one hand the people negotiating the contract on behalf of the government could have classic principal-agent issues (do I do what's best for me as agent, or for my principal, the country, or do I choose a compromise?). On the other, given the lack of competition, the profits to be made are huge, and the companies have the incentive to increase rewards to the agents to get the contract.

Add to this the political pressures at work -very visible when heads of state or high level officials visit countries with private investors - you have a market that's very far from being competitive.

Often, once the contracts are signed, the exploitation starts; not that much of the value of the minerals extracted flows back to the country; upper echelon labour comes from outside as a rule.

Furthermore, transfer pricing can take place. The whole process to get the mineral from it's raw form from the ground to a form that can be used commercially is a long one; refining is big business. So a company can sell the raw form cheap to itself or a subsidiary, and charge a lot for the refining, exploiting tax differentials for example.

The bottom line is that the world, especially in exploitation of natural resources is far from competitive, the process from the ground to commercial application is a long one and depending where each process takes place, or where taxes are more favourable, the distribution of the 'revenue' is shared. Most of the time this distribution is not to the favour of the counry being mined. Hence some drastic steps like recent nationalisations in South America.

Answer 5

Africa's resources are of little value to its inhabitants. You can't eat gold or platinum. If you're starving to death, you would trade a pound of gold for a good meal. Besides, most of Africa's wealth is held in the hands of only a few. Take the Mid East for example. They control the majority of the world's oil, yet the common man there is also living below the poverty line. Most of Africa is barren desert also. Its not the ideal place to build a residence; especially, considering the rampant sickness and disease throughout its population. It is a common trend for countries with holds over specific natural resources to be weak overall. Gold is something you want imported into your country, not exported. Its the manufacturing countries that make the money (gold). They trade a couple bags of junk that they created for the gold.

Why doesn't Africa have hydroelectric power? How would people afford it. Many are unemployed and still build their houses out of cattle manure. Electricity is a large step.

Before modern times, Africa was stripped of a good portion of its overall wealth and resources by the European countries that ruled over it.

Answer 6

Why do you think the economy of the british, the portugal, the french and the german rich.. Not from their own money but from the stolen wealth from the African continent and the Indian sub continent.

They took away all the diamonds, gold and platinum to their motherland and treated the locals like slaves. Made them keep in the disdian manner,

Then when the europeans left the country the left the country with all the ammunition and cartridges for the the locals to fight amongst themselves. They were divided amongst themselves, They did not have the right skills to rule the nation. Then corruption set in to fill the pockets of the politicians who had not seen money for long.

They went in a whirlpool..
and going down till good governance comes in..

Smile always

Answer 7

Some of the repliers have given sound reasons but the one influential factor is that the African people are not united by one government. If you research, African is divided among themselves, many civil warfares due to past rivalry among villages. There are some part of Africa control and govern by Warlords. The part of Africa that do have a form of government is largely corrupt. The rich people in Africa wants the rest of the people to be poor so they can control the resources and the existing government. When African people can be united into one country with a stable government they can trust, you will see a radical change in economic terms.

Answer 8

Why didn't they realise it, and do something about many years ago. Of course, the "They" I speak of, were divided by tribalism, and I think that that still exists today. Africa seems incapable of working as a coherent unit. There seems to be constant internal strife, a lack of good Government. A lack of national pride, within each country.

Perhaps, the real problem with Africa is that change has been imposed from the outside, it has not grown organically from within, so that they do not feel that they can own what has been imposed on them. I am not saying that they would have made a success of it, if they had been allowed to develop it for themselves.

Answer 9

There's a great deal of potential wealth, but until it is realized it cannot benefit anyone.

The DRC's capability of generating electricity is meaningless until it actually builds plants that generate that level of energy.

The most important answer is probably political - unrest and almost constant warfare, combined with bunker dictatorships that show no care for their people, have reduced the productive capital (that which is used to harness the wealth of other resources) to levels too low to be of any good.

Give the continent about 20 years of peace and you'll see substantial development.

Answer 10

Economic wealth in the modern world is generated more from maufactuing industry and service industries than from the possesion of raw materials. These were not developed in Africa, except in South Africa (the political state of South Africa), under colonialism. And sadly, economic development has actually gone backwards because of subsequent politcal corruption.

Until very recently, Africa has had no regional economic organisations. With the exception of South Africa, countries had one or two major resources. This left individual countries easy prey for international expoitation, by major companies as much as nation states.

Social organization is crucial for economic success in the modern world. Africa has been held back by lack of education, both in terms of basic education to enable literacy and higher educations such as universities. Lack of health services is a problem, particularly - but not only - in relation to AIDS.

You list various forms of mineral wealth, but you do not consider agriculture. Much of Africa, not just the Sahara, is poor land agriculturally. The massive dams on rivers like the Zambezi and the Nile were intended to address this issue as well as electricity generation, but cannot support irrigation over other areas of the continent. The industrial revolution in Europe was made possible by a previous agricultural revolution that released many workers from the land (indeed drove them off it with much suffering): this has not happened over much of Africa.

You will see from this answer that there are multiple causes for Africa's poverty. This is a problem in itself because one economic problem leads to another.

Answer 11

The government. People bust their bottoms extracting these resources, but the employers pay them scraps. In this case employers and the government are the "middle man" selling for high profits and low labor cost.
Education is low due to the lack of interest of the government to implement a better educational system in the rural communities. These communities are abandoned and without educated people how can one expect a change in anything when survival is the concern.
In conclusion if the people were educated then the possibilities of mediocre governments would shrink; therefore better thinkers would take place allowing for better decision makers to create more efficient governmental, educational, health, and economic systems that ultimately lead to a better life.