Africa has had a long history of colonialism that began around 400 years ago. The continent was colonized mostly due to its resources and cheap labor. Due to these reasons, Europe and America had their hands full dealing with other issues. As a result, African countries are now facing a global economic crisis. What can they do to fix the situation?
Make sure education is available for everyone
The world’s fastest growing economy is in South Africa. This country has one of the highest literacy rates in the world. They also have one of the best educational systems because it is free. In fact, all children go to school until at least age 16. Although there is no way to measure how well schools work since they only exist on paper, people seem satisfied with the results. Unfortunately, this success story isn’t true for every part of Africa. According to World Bank statistics, some areas of Africa still struggle with poverty and illiteracy. If Africa wants to solve its global financial crisis, it needs to make sure that education is accessible for everyone.
Stop being so dependent on oil.
Oil production has declined in recent decades and the price per barrel changes frequently. When the price falls, many small producers simply cannot afford the cost. With lower prices, fewer companies invest in new projects. Eventually, Africa runs out of money before it runs out of oil. Oil provides about 25 percent of Africa’s export revenue.
Improve the infrastructure.
In most parts of Africa, electricity is not reliable and roads are poor. Because technology is limited, when something goes wrong in Africa, it takes much longer to be fixed than in developed countries. The slow pace of change means that businesses usually close down for days or weeks while technicians travel from place to place looking for spare parts. Improving the quality and reliability of infrastructure will take time but can significantly impact the lives of everyday citizens and boost growth in the near future.
Improve banking regulations.
Banks play an extremely important role in the modern day economy. Banks offer services like loans and savings accounts which help people buy homes, cars, and start businesses. Many people in developing countries believe that the rich get richer and the poor become poorer under the current system. In reality, the reason why some people get wealthy is because the government allows them to lend to others who need money for things like starting businesses and building houses. For example, in 2014, China became the largest lender to Africa after the US, but the Chinese banks were careful and controlled. They wanted good returns on their investments because they saw that Africa could use the money more productively as electric grids improved.
Create employment opportunities.
If Africans want to gain economic independence, they should focus on creating jobs. Many people in developing nations spend their entire life working to help support their families. However, when times are tough, those people often face increased amounts of debt. It becomes very difficult to feed and pay off large debts over a period of time if someone never gets ahead enough to generate extra income. Entrepreneurs create better opportunities for themselves by starting up small businesses – farms, shops, etc. On the opposite end, employers create jobs by having large-scale operations. The problem with big corporations is that they don’t always treat their employees fairly. Highly profitable companies lay off thousands of workers to cut costs even though these same workers would love to stay with the company forever. Instead of saving money, the company loses money and ends up putting itself into further debt.
Increase trade across borders.
Africa’s biggest obstacle to development is the lack of cross border trade between African states. Trade creates stability and leads to the flow of capital and resources. The United States and Europe provide the majority of investment in Africa today, but the U.S. stopped giving aid to other countries long ago. As a result, less foreign funding is available for African development. Cross border trade would reduce the amount of foreign aid needed and improve financial management.
The Bottom Line .
Africa has made a lot of progress since the colonial era; however, there still exists a gap between the rich and the poor. The gap remains because Africa needs to improve its infrastructure, increase trade across borders, and create employment opportunities for its citizens.