By on March 1, 2011 in Africa

Living on Little

In Sub-Saharan Africa, one in two people survive on less than $1 per day. In many African countries, the average income per capita decreases on a yearly basis. Thirty-three percent of the entire African population suffers from malnutrition. Over 300 million Africans do not have access to clean water. Less than 50% of the population has access to hospitals or any medical care.

A large percentage of Africans live their lives on very little. Everyday is a struggle – not to get ahead, but just to survive. On the contrary, there are many African countries that are doing well financially and there are also a number of African individuals with extreme wealth. There are even a few who have made Forbes’s World’s Billionaires list.

Where in Africa is the wealth concentrated and why is the gap between the rich and the poor so big? The answer lies within the world of resource exploitation, wealth distribution and the use of technology.

High GDP’s

To determine the wealth of citizens in an economy, GDP per capita is most often used. However this method has its limitations; in order for it to be accurate, the distribution of wealth within a country would have to be at least somewhat even. In places like Nigeria where there is money flowing in from oil, that doesn’t necessarily mean that the money will ever end up in the hands of the average citizen. The wealth there is highly concentrated among a few individuals.

That said, GDP can sometimes be an overall good measure of labor productivity in a country. In Africa, the country with the highest GDP per capita is Equatorial Guinea. Due almost entirely to the exploitation of massive oil reserves, the country’s GDP per capita is also one of the highest in the world. Unfortunately, wealth distribution is significantly lacking in this country and it is primarily members of the government who own businesses. Libya has one of the highest per capita GDP’s in Africa. Like Nigeria, it has benefited greatly from oil production. However this country is another case in which the gains from natural resources rarely flow down to the average citizens. Tunisia, with a high GDP per capita, benefits from booming agricultural, mining and manufacturing sectors, among others. However, with a growing population of university graduates, unemployment continues to be a major issue.

While it may not be a surprise that some African countries have been able to use their wealth of natural and other resources to make money, with all of the talk of extreme poverty on the continent, it does come as a bit of a surprise that Africa has so many wealthy individuals – including billionaires.

Rolling in Dough

We’ve all heard of Americans Bill Gates and Warren Buffett, who at different times have held the top spot on Forbes’s coveted World’s Billionaires list. But many have not heard of people like Ethiopian-born Mohammed Al Amoudi, a billionaire and the “richest black person in the world.”

Al Amoudi, ranked 97th richest in the world, amassed his $9 billion fortune in construction and real estate as well as taking considerably risky bets on Swedish and Moroccan oil refineries. He owns a petroleum company that conducts oil exploration from the Nordic shelf to the Ivory Coast. In Ethiopia, his diverse assets include everything from hotels to gold mines. Some have said that he is gaining a monopoly on many businesses there. Others say that he is strongly committed to job creation. With $3.3 billion, Nigeria’s Ali Dangote is another one to have made Forbes’s prestigious list.   From a loan off his uncle, he became a successful stock trader.   Today, his company, The Dangote Group, has interests in flour, milling, cement and sugar among other industries. His company is the major supplier of sugar in Nigeria to soft drink companies, breweries and confectionaries. He has given controversial financial gifts to Nigeria’s ruling People’s Democratic Party, contributing to concerns of corruption. He is ranked the 334th richest person in the world.

In many cases, concentration of wealth in Africa is very much resource driven. But as we have seen throughout the world, natural resources are not the only way to elevate economies and people out of poverty.

Narrowing the Gap

As the gap between the rich and poor continues to expand in Africa, and exploitation of natural resources is seen as a contributing factor, it helps to look at other economies of the world to get a different perspective.

It may come as a surprise, but there are nations with relatively few natural resources that have done far better than those that have an abundance. Japan, South Korea and Taiwan outpace most of the oil countries in Africa due to the fact that they have embraced and advanced technology. Even the United States, a country that has an abundance of oil, has experienced the bulk of its growth from technology and other intellectual pursuits. Bill Gates made his fortune by having ultimate control over his technological inventions.

To date, it is apparent that Africa has been unable or unwilling to embrace technology. One of the ways in which Africans could help to shrink the gap between the rich and the poor would be to use their immense intellectual prowess to harness the power of technology. After all, it is advancements in technology that have allowed so many developed nations to come to Africa and exploit their natural resources.

Standard of Living

Every African should be able to enjoy a decent standard of living. The fact that there are billionaires on a continent where hundreds-of-millions have to survive on less than $1 per day only drives home the point that the gap between the rich and poor is far too wide.


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