The current five most rapidly expanding economies in the world are all based in what is consistently the poorest continent, Africa. In 2019, Ghana, South Sudan, Rwanda, Ethiopia, and Côte d’Ivoire had global economic expansion ranging from 8.79% to 7.28% (Mitchell, 2019). These are enormous leaps in comparison to the worldwide growth, which was forecasted at 3.2%. However, a majority of this change occurs as a result of African nations having low starting bases but substantial potential. Though such rapid growth can indicate an increase in the quality of life and general welfare of citizens, African countries continue to rate poorly in poverty, with most Sub-Saharan regions presenting poverty rates above 30% (Mitchell, 2019). This information displays the complexity of the interaction between larger economic growth and individual welfare among citizens. The missing key ingredient, utilized primarily in Ghana, is greater economic and political reform and sustainable governance.
Currently, there are certain prerequisites for sub-Saharan Africa to actively use modern technologies in the economy. First of all, this is a significant resource potential, especially the qualitative and quantitative composition of the population. More than 1.2 billion people live in Africa, and by 2050 the population of the continent may reach 2.5 billion people (Mitchell, 2019). According to experts, the rapid demographic growth taking place on the continent as a whole, and in sub-Saharan Africa in particular, causes, in turn, the rapid growth of the able-bodied population; its number has more than doubled over the past 30 years and, according to forecasts, will grow by another 2.5 times by 2025 (Mitchell, 2019). In this case, population growth should be considered not as a problem but as a prerequisite for the modernization of African national economies. This is due to the fact that the numerically increasing workforce will need knowledge, certain professional skills, and qualifications to guarantee a decent standard of living.
In countries that demonstrate a high level of urbanization (Cameroon, Ivory Coast, Sudan, etc.), the industry continues to remain at the stage of formation. At the same time, the service sector is showing rapid growth, often in illegal and informal subsectors. Industrial employment is also not at a high level (with the exception of the Republic of the Congo, Morocco, and South Africa). For industrial development in these States, it is necessary to take into account the relationship between industrial development and urbanization (Mitchell, 2019). This is due to the fact that the rapid growth of African cities should contribute to the development of domestic and regional markets for industrial products, the growth of the consumer class, and a change in consumption patterns. In addition, the growth of the urban population has an impact on the development of agriculture as the demand for agricultural products increases.
Ghana leads not only in economic growth worldwide but is also working toward steady but noticeable social and infrastructural progress. In 1957, Ghana became independent, and the newly founded government prioritized an economic focus (Johnson-Dollie, 2022). The profitability and growth of the cocoa crop industry in the country were dominant and had established a reliable market. Despite this, the sector was vulnerable to lowered pricing like many other trades and products on the continent. Gold, another vital export, did not outweigh cocoa in terms of importance and skewed Ghana’s stability and diversification of goods. This is a pattern that has been seen in many African countries historically. Certain goods can dominate an entire economy, and any global price changes can have a tremendous influence on the economy and the lives of regular citizens. Ghana may be the most optimal example of recovery from such an event, but it is a phenomenon that is predominantly present in all of Africa.
For many States of Sub-Saharan Africa, one of the permanent macroeconomic problems throughout the entire time of their independent development is high inflation. It has a serious, mostly negative impact on the pace and nature of the development of their economies, often nullifying long-term efforts to reform farms and improve the standard of living of the population. The analysis of the historical dynamics and the nature of the impact of inflationary processes over long periods of time indicates the cyclical nature of megatrends of inflation in African countries, for example, Ghana (Johnson-Dollie, 2022). However, over time, the level of independence of the development of national economies has changed, and the complexity and modernization of economic relationships and deeper involvement of African countries in the process of globalization have changed. In connection with this, the comparative significance of various drivers of inflation and the specific manifestations of the latter’s impact on the economies of Ghana have changed.
Most of the continent’s countries became sovereign states in the 1960s (Johnson-Dollie, 2022). The conquest of political independence, and measures to nationalize and limit the positions of foreign capital in a number of sectors of the economy, carried out in the 1960s and 1970s, created prerequisites for a noticeable growth of national private entrepreneurship (Johnson-Dollie, 2022). At the initial stage of the formation of national economies in the 1960s and 1970s, African Governments viewed industrialization as a way to achieve self-sufficiency and self-sustaining growth (Johnson-Dollie, 2022). On the basis of the development of industrial production, it was planned to create new jobs for an increasing population and establish links between various sectors of the economy. At this stage, many African countries have taken the path of creating import-substituting industries, nationalization, state planning, import control, and the establishment of tariff barriers.
In Ghana, change began when government officials took a harder stance on reform. As such, further growth was a result of not only external demand fluctuations but a governmental and economic system that was improved in terms of equitability and structure. Countries that did this in the latter part of the 1990s had essentially made sure that commodities and their prices were no longer the dominant elements in influencing the overall financial welfare and quality of life of citizens. In other countries, such as Ethiopia, productivity rates are indicative of economic growth and stability. Ethiopia has a turbulent history, with the third poorest economy in the world and a poverty rate of 50% in 2000 (Kopf, 2020). However, it is also an incredible success story, with a decreased poverty rate of 24% in 2019 and a rising employability rate (The World Bank, 2020). The cases share two features, the involvement of government influence in accommodating disparities and unemployment and the diversification of products and services.
Ghana’s sustainable development government goal is to ensure universal access to affordable, reliable, sustainable, and modern energy sources for all. It aims to provide environmentally sustainable, efficient energy solutions. Access to electricity in the country is increasing, although at a slower rate than population growth. There is a slow but steady expansion of access to electricity on the continent. In addition, the disparity between urban and rural areas in access is huge; it is the smallest in Ghana, where the level of electrification in rural areas averaged 17% compared to 70% in urban areas (Kopf, 2020). 53% of the world’s population without access to electricity lives in Africa (The World Bank, 2020). The inefficiency of energy use can mainly be explained by inadequate infrastructure and poorly designed buildings. It is also caused by the absence of a mandatory policy on energy-efficient appliances and technologies (for example, the constant use of incandescent lamps or inefficient kitchen stoves) and inefficient processes of electricity production and transmission.
Africa is the fastest-growing region in the world, but the potential benefits have not yet been fully exploited. At the moment, the level of urbanization is 43% (Kopf, 2020). Africa is urbanizing faster than any other region in the world. Many cities in Ghana are characterized by a serious shortage of services and infrastructure and social and spatial segregation. They are also characterized by limited employment opportunities in the manufacturing sectors of production and modern services.
The spread of slums in African cities is the most crucial manifestation of the externalities associated with rapid and unplanned urbanization. Regardless, Africa has a much higher proportion of slum dwellers compared to other regions of the world. Between 2010 and 2014, the number of people living in slums increased from 14.8 million to 212 million (Africa Union, 2021). They account for almost a quarter (24%) of the world’s slum population (Africa Union, 2021). For these reasons, the potential of fast-growing cities and urban settlements in Africa to stimulate broad-based economic growth, while social integration, has not been fully exploited. It is imperative that national governments and city authorities focus and invest in removing major urban barriers. These include a shortage of infrastructure and services, as well as weak and poorly functioning State institutions.
According to the World Bank monitoring of 2012 data, 43% of the African population had an income of less than $ 1.90 per day, which gives reason to consider this indicator as a level of extreme poverty (The World Bank, 2020). It should be noted that thanks to the efforts of the world community to combat poverty in recent decades, the level of extreme poverty in Africa has decreased somewhat. However, along with this, the opposite trend draws attention – an increase in the number of poor segments of the population. Compared with 1990, when there were about 280 million people on average, in 2012, this figure increased to 330 million (The World Bank, 2020). Moreover, the population of 15 African countries lives in extreme poverty. For the vast majority of Ghanaians, the daily subsistence level is less than $1 per day.
The main question is still focused on whether economic growth can improve the current disparities and poverty trends common throughout all African nations. While countries like Ghana and Ethiopia do provide correlating rates of decreases in poverty and economic expansions, it is vital to remember that they are both products of sustainable reform and policy. An influx of investments or purchases of African commodities may boost the overall economy but does little to provide continuous growth to worker productivity and citizen welfare directly (Africa Union, 2021). African goods are diversifying, and certain business ventures on the continent are becoming more attractive to foreign investors, but the national policy is the factor that motivates greater equitability. Continued economic growth is predicted to remain despite the fact that productivity may notice stagnation. Without increased governmental involvement, this may cause the current economic growth to be unsustainable.
References
Africa Union. (2021). Africa’s Commodities Strategy; Value Addition for Global Competitiveness. Africa Union. Web.
Johnson-Dollie, T. (2022). Africa’s fastest-growing economies: How Ghana got it right. GVI Planet. Web.
Kopf, D. (2020). Ethiopia’s economic miracle ride is set to turn into a bumpy road. Quartz Africa. Web.
Mitchell, J. (2019). IMF: African economies are the world’s fastest-growing. FDI Intelligence. Web.
The World Bank. (2020). Ethiopia Poverty Assessment: Poverty Rate Declines, Despite Challenges. The World Bank. Web.