the poorest continent in the world sub saharan africa

HO CHi MINH H H!I MINH CITY OPEN UNIVER: THE POOREST CONTINENT IN THE WORLD SUB-SAHARAN AFRICA Subject: International Business QT336-IB201C Trang 2 TABLE OF CONTENTS Trang 3 EX

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THE POOREST CONTINENT IN THE WORLD

SUB-SAHARAN AFRICA

Subject: International Business (QT336-IB201C)

Ho Chỉ Minh, 2022

TABLE OF CONTENTS

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EXECUTIVE SUMMARY

Sub Sahara Africa is a large area, with a long civilization, besides a diverse language and cultural system With a large human capital and a high rate of population growth, SSA is currently facing economic difficulties and facing the world's greatest

poverty

The report outlines the SSA's economic, political, social, and technological aspects Economically, SSA has encountered economic disruption due to the Covid-19 epidemic Along with the conflicts taking place in the region, the conflict between Russia and Ukraine also contributed to the worsening of the SSA's economic development Information about the unstable political situation, low index of democratic freedoms is also a contributor to the poverty of the SSA Issues of population, education, health, and access to technology will be made clearer in this

report

In addition, the report presents the countries with notable economies of the SSA, giving us a more realistic and detailed view of the poverty situation in this region This

is also an example to help us have a basis to assert that the SSA is the poorest region in the world

1 INTRODUCTION

The world economy is growing, but in which Africa is still a continent with less developed economy than other continents, especially Sub -Sahara Africa - which is considered to be the poorest area in the world

Globally, extreme poverty has rapidly declined New poverty estimates by the World Bank suggest that the number of extremely poor people—those who live on

$1.90 a day or less—has fallen from 1.9 billion in 1990 to about 736 million in 2015 However, the number of people living in extreme poverty is on the rise in Sub-Saharan Africa, comprising more than half of the extreme poor in 2015 Forecasts also indicate that by 2030, nearly 9 in 10 extremely poor people will live in Sub-Saharan Africa

(DIVYANSHI WADHWA, 2018)

People in extreme poverty (millions)

M@ East Asia and Pacific Ml Europe and Central Asia Ml Latin America and the Caribbean Ml Middle East and North Africa Ml Rest of the world IfSouth Asia Sub-Saharan Africa

1,800

1,400

1,200

1,000

800

400

1990 1992 1994 1996 998 2000 2002 2004 2006 2008 20 ~ `

Source: World Bank PovcalNet and Poverty & Fquity Data Portal

Figure 1 People in extreme poverty

Poverty is a problem in almost all nations in the world, and Africa is not an exception Much has been argued about the causes of poverty in Africa The consensus

of the economists and development practitioners is that income inequality, conflicts, location, natural disasters, ill health and disability, inheritance of poverty, education and skills, and gender discrimination may cause poverty in Africa

This report is intended to give an overview of the SSA's economic situation, providing information to help people understand why SSA is the least economically developed region in the world From there, we can say that this is the poorest region in the world

1.1 Geographic & climate

Sub-Saharan Africa is an African in the south of the Sahara desert It includes regions of West Africa, Central Africa, East Africa and Southern Africa It consists of about 48 countries, accounting for about one third of the total number of countries around the world Sub-Sahara Africa is an area with extremely diverse landscape In addition, it is also the second largest continent has 9 million square miles of huge plateaus, moutains, and valleys south of the Sahara The majority of sub-Saharan Africa is made up of grasslands with scattered trees to the north and south of that zone, while humid rainforests may be found close to the equator

Climate is significantly influenced by both altitude and equator distance It may

be mild in the highlands, even near to the equator Although there are alternate dry and wet seasons, the humidity of the woods makes precipitation more dependable

1.2 History

For centuries, sub-Saharan Africa was home to prosperous empires that made groundbreaking advances in architecture, mathematics, and metalworking By the end

of the fifteenth century, Europeans had begun arriving in the region, wanting to acquire resources such as gold, copper, and rubber And slaves Europeans enslaved and killed

at least twenty million Africans between the sixteenth and mid-nineteenth century When the slave trade abated by 1870, a new era in sub-Saharan Africa began: the age

of colonialism By 1914, European powers controlled almost 90 percent of the continent, often using unmitigated violence Twentieth-century sub-Saharan Africa also saw a wave of independence movements, sometimes bloody, sometimes peaceful, but almost always the result of a long and hard-fought battle with colonial powers (Modern History - Sub-Saharan Africa | World101, n.d.)

1.3 People & society

Sub-Saharan Africa is one of the most ethnically and culturally varied continents, home to nearly one billion people across 49 nations Over 200 languages are spoken

by people from over 250 different ethnic groups in Cameroon alone, where there is a mixture of Muslims, Christians, and followers of indigenous religions The youngest and fastest-growing populations are found in Sub-Saharan Africa; while these figures indicate immense economic promise, they also hint to great challenges as governments

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and expanding cities struggle to keep up with growth Rapid demographic change in sub-Saharan Africa is also a result of forced migration brought on by environmental change and armed conflict Even though there has been a substantial improvement in health and education, particularly for women and girls, this area still lags other areas (People and Society - Sub-Saharan Africa | World101, n.d.)

1.4 Economics

In the early 2000s, Sub-Saharan Africa had sustained high economic development and investment, a period some experts refer to as Africa Rising However, much of this wealth creation has not translated into considerably higher average salaries or additional jobs, and regional inequality remains severe This growth was hindered by the global financial crisis of 2008 as well as a decline in the price of commodities such as crude oil, iron ore, copper, and palm oil Other hard issues in the area, such as poor infrastructure and limited access to capital, continue to impede economic growth, which is consistently surpassed by brisk population growth The region's economy is additionally hampered by historical, political, and social issues such as colonialism's legacy, violence, instability, and weak governmental leadership Despite these challenges, foreign investment is still coming into the region, specifically from China and the nations of the Arabian Peninsula.(Economics - Sub- Saharan Africa | World101, n.d.)

2, ANALYSIS OF THE SSA’ ECONOMIC

For a more detailed look, we will begin to delve into the factors and factors that have impacted the economic development of SSA

In this section, we will analyze the Political, Economic, Social and Technological factors (PEST)

2.1 Political of SSA

Currently, it can be said that SSA is one of the regions with unstable political situation in the world Although countries in sub-Saharan Africa started opening up to democracy three decades ago, the region is still characterised by a high heterogeneity

of political regimes Fragile democracies often endure numerous challenges and shortcomings and share their borders with some of the world's least democratic regimes Virtually non-existent in 1990, multi-party elections are the norm today, yet

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they still only rarely lead to power changes The recent trends of democratic recession have not left sub-Saharan Africa untouched, but they have affected individual countries differently Some unexpected democratic transitions have taken place at the same time as overall democratic decline has set in Two sets of reasons account for the fragility of democracies in sub-Saharan Africa — those that are extrinsic and those that are intrinsic to political and institutional settings The first include low socio-economic development, conflict, and insecurity; the second include weak institutions, lack of judicial independence, manipulation of electoral laws and constitutional norms, as well

as serious limitations of civil and political rights In practice, authoritarian regimes have become skilled at using a fagade of legality to legitimise their grip on power The coronavirus pandemic has affected the region less severely than compared to other parts of the world, but its impact on democratic and human rights norms has been significant While the international perception of Africa often ignores regional and country differences, the variation in democratisation levels among individual countries

is stunning According to Cheeseman (2018), 'there are few other parts of the world in which states are so polarized between countries firmly rooted in authoritarianism, such

as Cameroon and Rwanda, and those that are defective democracies but nonetheless have the potential to consolidate over time’ Over the years, some countries have emerged as best performers across various indices, despite differences in their methodology while others are among the worst performers not only in the region, but also in the whole world (Zamfir, 2021)

Best and worst performers in democracy

rankings

Highest scores: the four island states - Cabo Verde,

Mauritius, Seychelles, S40 Tomé and Principe, the three

Southern African states: Botswana, Namibia, South

Africa, as well as Ghana and sometimes Senegal in

West Africa

Lowest scores: Burundi, Cameroon, Chad, the

Republic of the Congo, Equatorial Guinea, Eritrea,

Eswatini, Rwanda, Somalia and South Sudan

Source: BTI transformation index 2020; V-DEM 2020

report; Freedom House, '2020 Freedom in the World’

According to the United Nations, in 2021, sub-Saharan Africa recorded 48% of the deaths attributed to terrorist groups around the world Terrorist groups such as Al- Qaeda, the Islamic State (IS) and their affiliates are constantly expanding and infiltrating different parts of Africa Terrorist groups take advantage of ethnic conflicts and other factors to escalate violence and promote instability.(Chuyén déng

24h/TTXVN, 2021)

2.2 Economic of SSA

Sub-Saharan Africa, home to more than | billion people, half of whom will be under 25 years old by 2050, is a diverse continent offering human and _ natural resources that have the potential to yield inclusive growth and eradicate poverty in the region With the world’s largest free trade area and a 1.2-billion-person market, the continent is creating an entirely new development path, harnessing the potential of its resources and people The region is composed of low, lower-middle, upper-middle, and high-income countries, 22 of which are fragile or conflict-affected Africa also has 13 small states, characterized by a small population, limited human capital, and a confined land area.(Africa Overview: Development News, Research, Data | World Bank, n.d.)

Sub-Saharan Africa’s recovery has been sharply interrupted Last year, activity in sub-Saharan Africa finally bounced back, bringing GDP growth in 2021 up to 4.7 percent Unfortunately, growth is expected to slow this year by more than | percentage point to 3.6 percent, as a worldwide slowdown and a dramatic pickup in global inflation spill into a region already wearied by an ongoing series of shocks Rising food and energy prices are striking at the region’s most vulnerable, and macroeconomic imbalances are approaching levels not seen in decades

Three major global developments are reshaping sub-Saharan Africa’s outlook: the slowdown in advanced economies and emerging markets, tightening global financial conditions, and volatile commodity prices In the months since April, growth projections have been scaled back worldwide Global growth in 2022 has been revised down by almost % percentage point, driven in large part by a drop for both advanced economies and China of about | percentage point

With the rapid pickup in global inflation, monetary policy normalization in advanced economies has sped up In this context, capital flows have remained precarious (Figure 2) For the first half of the year, outflows from sub-Saharan Africa rivaled those associated with the onset of the COVID-19 crisis or the 2015 commodity price shock, adding to pressure on exchange rates, with the largest depreciations observed in Ghana, Malawi, and Sierra Leone

Equity E] R

Sources: EPFR; and IMF staff calculations

Note: EPFR data covers flows to portfolio investment funds

2022 : H1

Figure 2 Sub-Saharan Africa: Portfolio Flows Global commodity prices have been particularly turbulent Wheat, for example, almost doubled at the onset of the Russian invasion of Ukraine but has since returned

to prewar levels (Figure 3) More broadly, sub-Saharan Africa’s terms of trade are still expected to improve in 2022, compared with last year, but some gains have been scaled back since April, and significant heterogeneity persists—oil exporters can

terms of 440

while non- 4120

intensive

100

drop of

of Ukraine

60

Source: Bloomberg Finance L.P

Nguyễn Trần Quỳnh Như

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Improvement of percent in their trade this year, resource- countries face a

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percent For commodity exporters and importers alike, however, external prices are now increasingly uncertain

Policy space to confront the latest challenges remains thin as the region endures its third year of crisis Over the past few years, as authorities have struggled to protect ltves and livelihoods throughout the COVID-19 pandemic, fiscal positions have deteriorated, increasing regional public debt to about 60 percent of GDP And with

Figure 3 World: Global Commodity Prices global supply chain disruptions adding to the fallout from the war in Ukraine, double- digit inflation is now present in about 40 percent of the region’s economies

On public debt, regional indebtedness is now approaching levels last seen in the early 2000s before the impact of the Heavily Indebted Poor Countries Initiative, though with a different composition (Figure 4) The substitution of low-cost, long-term multilateral debt with higher-cost private funds has resulted in rising debt-service costs and higher rollover risks Nineteen of the region’s 35 low-income countries are in debt distress or at high risk of distress.2 Out of the other ten countries of the region, three have faced spreads of more than 1,000 basis points at some point over the past six months (Angola, Gabon, Nigeria) On inflation, rising prices have mirrored worldwide trends, where inflation has increased more rapidly and more persistently than expected, and where incomes have been squeezed by hikes in the cost of living Recent inflation increases may appear less striking relative to historical averages for sub- Saharan Africa (Figure 5), especially for countries with fixed exchange rates, but much

of the recent movement has been driven by essential food and energy items, which are imported in many countries and average 50 percent of the region’s consumption basket As a result, poverty, food insecurity, and malnutrition have been exacerbated,

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