Africa

B

Development of the Modern Sector

The modern sector of the African economy was developed largely by Europeans during the colonial period and geared toward the export of raw materials. Industrialization was minimal. After independence, many African governments pursued industrialization programs with varying success. Today, African nations face the challenge of expanding their economies to fulfill the needs of their people while maintaining their profitable export-oriented activities.

B

1

Colonial Economy

The colonial economy was centered around isolated agricultural and mining centers in which foreign-financed and foreign-managed firms employed local labor to produce raw materials for export to Europe, North America, and Japan. Colonial administrations started most of the important large-scale farming and mining activities: for example, cotton growing in the irrigated Al Jazīrah (Gezira) region of Sudan, rubber growing on plantations in Liberia, coffee growing in Côte d’Ivoire, Ethiopia, and Kenya, and copper mining in Zambia.

For a variety of reasons, colonial economies did not focus on developing industry to produce finished goods for local consumption. First, markets for finished goods in Africa were small. Second, mineral and agricultural raw materials, for the most part, were not processed in Africa, or were only minimally processed to ease shipment to ports. Third, since African industrialization was largely initiated by European firms, it was not in the firms’ interest to create competition for their own products in Europe. Fourth, in the case of some countries, both the colonial and later African governments kept the exchange rates of their currencies too high, making imported consumer goods more affordable.

South Africa and Zimbabwe were two distinct exceptions to this general lack of industrialization. South Africa had been administered by settlers of European descent since the early 20th century. The size and technical skill level of the settler population—combined with relative autonomy from colonial powers—supported greater economic development, making it possible for industrialization to succeed. In the case of the colony of Rhodesia (what is now Zimbabwe), the white minority regime faced world sanctions for its illegal takeover of the government in 1965, and was forced to embark on homegrown industrial development to meet its own domestic needs. At independence in 1980, Zimbabwe had one of the most developed economies on the continent, second only to South Africa.

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Colonial export-oriented industries did make some positive marks on the African economic landscape. They introduced important innovations in transportation, banking, marketing, trade, and many commercial services. They also led to improvements in government administration, agricultural practices, health care, and education. However, these innovations were not intended to modernize Africa as a whole. Instead, they were primarily concentrated in and around a small number of principal ports and trade centers, which usually also served as colonial capitals. This unbalanced system gave rise to tremendous disparities between developed urban centers and the rural sector.

B

2

Postcolonial Development

From 1960 to 1980 most newly independent African countries launched ambitious development plans to lift the standard of living of their peoples, who had suffered years of colonial misrule and exploitation. Development projects were launched to spur economic development by promoting manufacturing and other industries. One major goal of industrialization was for a nation to spend less on imports by producing the consumer goods that formerly had to be imported (such as textiles, tires, chemicals, fertilizers, paper, glass, ceramics, and electrical equipment). This strategy, known as import substitution, faltered in the 1960s because of the inability of new African manufacturers to produce consumer goods efficiently. New factories required imported machinery and other costly goods to sustain production. The high costs made local manufacturers inefficient and incapable of competing with foreign manufactured products. The efforts were also hampered by the relatively low demand for consumer goods by Africa’s small markets.

The other major goal of industrialization was to increase earnings by promoting exports. Toward this end, foreign development agencies encouraged the colonial practice of developing export-oriented centers of raw material production. African governments therefore not only continued to protect the isolated mining and agricultural developments from the colonial era, but also helped create new ones. The guiding theory, borrowed from basic Western economic ideas, was that the high incomes generated in the developed areas would spill over into the local economy in the form of higher demand for locally produced goods and services. In response, the local people would not only spend more themselves, but would also invest both in new industrial developments and in building the roads, schools, health facilities, and so forth needed to support the expanding economic activity. All of this, in theory, would lead to still further increases in income. Meanwhile, national export earnings would be used to fund further development projects in agriculture and industry. Thus, the developed area would initiate a cycle of rising incomes, consumption, and investment, culminating in a takeoff in industrialization and modernization.

The reality was quite different. First, the export-promotion strategy was crippled by declining world prices for African raw materials. Second, what wealth was generated in the developed areas was often expatriated to foreign investors, siphoned off by national governments, or spent on ostentatious public works and imported consumer goods for urban residents. The promised economic spillover effects were minimal, except in oil-producing countries such as Libya, Gabon, and Nigeria, and in a few other countries such as South Africa, Zimbabwe, and Kenya, which received significant amounts of foreign investment in industry.

Furthermore, the geographic distribution of development remained as limited as in the years when Africa was under colonial rule. Export production and other manufacturing activities were concentrated in isolated rural areas and in a few port cities or other transportation hubs. Colonial-era transportation networks and marketing systems remained in place, and continued to favor these locations. The result was a widening economic disparity between centers of development and outlying areas. Innovations in modern technology and know-how developed in cities like Dakar, Senegal; Abidjan, Côte d’Ivoire; Lagos, Nigeria; Addis Ababa, Ethiopia; Nairobi, Kenya; Lusaka, Zambia; and Harare, Zimbabwe, and city dwellers saw their living standards improve. At the same time, outlying areas increasingly faced poverty.

African governments sought to improve traditional subsistence agriculture either by promoting the use of modern farming equipment, fertilizers, and pesticides; or by forming collective farms for subsistence farmers to share. These measures were somewhat successful in improving the quality of life of some rural populations, but failed to transform Africa’s traditional subsistence mode of production.

Despite these challenges, African industry has made important strides since the 1970s. In this period, many African governments developed more effective import substitution strategies by more closely analyzing their internal and external markets and producing goods that were easiest to produce, given their countries’ resources. There was measurable success in many sectors, especially in consumer products, though not all import substitution schemes worked out.

C

Labor

Only 52 percent of the African population is between the ages of 15 and 64, the age range that is conventionally considered to be working age. About 45 percent are children under 15 years of age, while 3 percent are 65 years or older. Africa has the highest dependency ratio—the proportion of the total population that needs to be supported by the working-age group—of any continent. This does not mean that children under 15 years of age do not work. In rural areas, children, especially girls, start work at 5 or 6 years of age. The child labor pool is shrinking, however, as opportunities for universal elementary education expand.

Only a small portion of Africa's labor force—mainly males—has formal wage-paying jobs in the cities or in the mining and plantation sectors. Most of the labor force is employed in subsistence production in rural areas or in the informal sector of the urban economy. The latter often involves women and children, and includes petty trade and other urban services such as cleaning, repairs, manual labor, and handicrafts.

The lowest earnings come from the rural subsistence occupations, which generally require basic traditional skills. Rural cottage industry is usually more profitable, but these occupations require higher skill levels and typically necessitate long apprenticeships. During the colonial period, the creation of a small number of more lucrative jobs in mining or plantation agriculture caused subsistence occupations to lose their respectability as routes to well-being. Eventually they were stigmatized as 'primitive' by a growing number of young men, who went off to big cities in search of better-paying jobs.

Africa’s major cities remain magnets for the rural labor force, which perceives these areas as centers of opportunity. The rise in the number of rural-urban migrants has contributed to wild growth, high unemployment, and overextended social services in African cities. In most countries in Africa, the major cities drain most of the national resources for modernization, leaving little to be shared with the rural population. At the same time, the unrestrained rural-urban migration has grave consequences for the food-producing areas that are losing significant numbers of able-bodied workers to the cities.

D

Economic Activities

Despite the expansion of industry and services and the growing economic importance of these activities, in almost all African countries agriculture continues to be the most important economic activity. Agriculture makes up about one-sixth of Africa’s total gross domestic product (GDP), while industry makes up about one-third, and services about half.

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