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Africa

History of Africa

• Africa was highly agriculture based, but also engaged in trade with the Muslim world

• Many eastern towns developed cultural ties, trust, and trade networks following their adoption of Islam

• African Trade Slave began in modern-day Nigeria with Portuguese traders

• 1680-1800→slave trade skyrocketed as the Atlantic plantation system developed → Slave raiding became a business that prevented growth and escalated internal conflicts

European “Scramble for Africa” 1880-1960

• 1884 and 1885, the Berlin Conference formalized European colonization of Africa.

• Prior to this time, world superpowers such as Portugal, France, and Britain had already set up colonies in Africa & to a smaller extent, Germany and Italy

• By 1900 majority of the land in Africa was divided up amongst seven different European colonizing nations: Britain, France, Spain, Germany, Belgium, Italy, and Portugal.

•

Africa was divided into settler colonies and native colonies

Settler economies: • most local land was reserved for European use

• Labor scarcity> governments of settler economies embarked on policies aimed at driving Africans out of the produce market and on to the labor marketEmphasis on cash crop agriculture like peanuts, cocoa beans, some sugar • growth of exports of agriculture allowed the formal abolition of slavery to become an economic and

social reality, by providing opportunities for former slaves as hired laborers

“Native” colonies (peasant colonies) were reserved for Africans but exploited by European companies Africans retained almost all the land > expansion of export agriculture by African producers > demand for labor created by this expansion attracted seasonal migrants into the cash crop zones from areas that lacked the soil (ex. Labor from Rwanda to Uganda for cotton production)

African economies from 60s –present

• intensification of the trend of state intervention in African economies • 1973 & 1978 oil crises

1960s and 1970s

• structural adjustment in 1980s → transition to market economy • incomes per capita in sub-Saharan Africa grew • advances in education & health • environmental obstacles to agricultural intensification remained costly

1980s

Market Liberalization after 1980

• Spending on health and education were low, leading to incredibly low growth on the continent

• 1994, the African franc was devalued about 50% to assist the non-French countries with exports

• Led to increased investment in raw materials, such as oil in Congo and gold in Mali

• Benefitted exporting nations

• After South African apartheid ended, growth skyrocketed until stagnation following 2008

• African Union founded in 2000

CFA Franc Zone • African Financial Community founded

in 1994, hosts East African and Economic Union Countries.

• encouraged exports , but export policies were not coupled with structural policies

• CFA Countries have grown about 5% each year since 1994 until 2021

explanation for Africa’s history of poverty

The two stands of external explanation for Africa’s history of poverty: 1. Dependency Theory

2. Rational Choice focusing on the way resources are controlled, organized & exploited→Approach pioneered in African studies by Robert Bates, examines how far the private interests of rulers align with those of the population as a whole→ rulers stand to gain by rewarding themselves and their supports at the expense of general prosperity.

Both interpretations are Euro centric, attributing Africa’s fate to Europeans decisions.

Internal Explanation: factor endowments framework

1. most of sub-Saharan Africa was land abandoned and labor scarce 2. extension of food was constrained by the supply labor 3. relatively plentiful land was resistant to intensive methods of agriculture: soils were thin and

therefore easy eroded, animal diseases such as sleeping sickness prevented or inhibited the use of large animals over much of the continent

4. Seasonality: distribution of rainfall over the year in much tropical Africa limited the productive uses of land during some months of the year.

5. resource characteristics account for choices of technology, such as the preference for extensive rather than intensive use of land.

6. diverging rather than converging inheritance systems, 7. reliance on coercion as means of recruiting labor from outside the household

Reasons for Africa’s stagnant growth: conflict, corruption & others

• Africa has experienced 200 wars & ethnic conflicts since 1800 • Weak institutions • Governments taxed agriculture exports, even when this discouraged farmers from

reinvesting • corruption, misallocation of resources • foreign exploitation • Low private investment • Underdeveloped regional markets

Bad governance in many African countries has also contributed to the economic damage

• Lack of institutions • corruption • Inefficient utilization of resources • Poor or no access to capital • Dormant regional capital markets • Lack of employment for educated human capital • Low levels of private investments • Inappropriate economic policies

China’s Belt and Road Initiative in Africa

• China has made over 3,600 investments in Africa since 2000

• investments focus on infrastructure (roads, railways, ports), finance, medical investments, and natural resources

• Raises concerns about loss of African sovereignty and debt trap

Russian Mercenaries in Africa

• Russia has made about 200 investments in Africa since 2000,→ focusing on natural resource extractions

• Russian mercenaries have been hired by officials in Central African Republic in exchange for mining concessions

• Mercenaries have also appeared in Sudan, Libya, Madagascar, and Mozambique→ violence, and exploitation in vulnerable African countries

North Africa Magrep

Magrep

• much of the northern part of Africa, including a large portion of Sahara, excluding Egypt and Sudan, located in the Mashriq — the eastern part of the Arab world

• 6.05 million km² • about 104.75 million people

Maghreb Countries in 17th & 18th c

• The coastal strip of North Africa enjoyed peaceful existence up to the 15th and 16th centuries when the Berber dynasties declined

• The Ottoman Empire for a period controlled parts of the region.

• Complicated institutional Structure • No rule of law • taxation capability was low • ruler’s ethnic background differed from those of the ruled

• In Algeria and Tunisia an important additional element was the economy created by a tradition of holy war again the Christians→ “pirating” developed into an industry for the Algerian and Tunisian port cities. Ships whose owners were not willing or able to pay a substantial fee were captured, and the surviving personnel sold on slave markets if ransom was not paid.

Magrep Countries in 19th c & 20th c

• European powers began taking over parts of the Maghreb. • France eventually became the dominant colonial power in the region. • Spain had seized territory in present-day Western Sahara &e northern coast of

Morocco • Libya was the first country in the region to gain independence, followed by

Tunisia and Morocco. • Algeria gained independence in 1962, following a bloody revolt against French

rule. • Spain withdrew from Western Sahara in 1976, after which Morocco immediately

claimed sovereignty over it, a claim that was rejected by people leading to armed resistance→ conflict remains unresolved

Magrep in 21st c • social turmoil that accompanied the Arab spring transitions & Libyan conflict & failure to implement structural reforms →growth performance of the Maghreb countries suffered since 2011 • Morocco and Tunisia are the two countries in the Southern Mediterranean with

which the EU is developing stronger links, both in terms of trade agreements and EU financial assistance

GDP of Magrep Countries (Statista 2022) In 2020, estimated GDP of all Maghreb countries amounted to $ 328.74 billion.

Ø Population Algeria most populous with about 43.8 million people Morocco with 36.9 mil Tunisia 11.8 mil Libya 6.8 mill disputed enclave of Western Sahara is less than 600,000 people living in it.

Arab Maghreb Union • Algeria, Libya, Mauritania, Morocco, and Tunisia established the Arab Maghreb

Union in 1989 to promote cooperation and economic integration in a common market.

• envisioned initially by Muammar Gaddafi as a superstate. • union included Western Sahara implicitly under Morocco's membership, ended

Morocco's long cold war with Algeria over this territory. • progress was short-lived, & union is now dormant

Algeria

Algerian Economy

abundant natural resources including oil, gas, solar energy, iron, zinc, lead, silicon, and helium.

country is classified as an upper middle-income country

heavily dependent on oil and gas as its main source of income→ 60% of budget revenues & 34% of GDP

heavy reliance on the hydrocarbon

• main problem with the Algerian economy is the heavy reliance on the hydrocarbon industries

• Although there are many other sectors of the economy that could be developed, political instability has kept foreign investors away.

• Algeria adopted a new constitution in 2016, which establishes the promotion of a diversified and more market-based economy.

• the government started working on a strategy to reshape the country’s growth model, with World Bank support. The aim is to reduce the dependence on hydrocarbons.

Egypt

• used to be a highly centralized economy, focused on import substitution under President Gamal Abdel Nasser (1954–1970)

• rule of President Abdel Fattah el-Sisi (2014–present), the economy follows Egypt's 2030 Vision

• structural reforms (including fiscal and monetary policies, taxation, privatization and new business legislation)

• move towards a more market-oriented economy and prompted FDI • economy became 36th in worldwide ranking as of 2021

Sub-Saharan Africa

Key Indicators Nominal GDP: $2.6 trillion (2019)

GDP Per Capita: 1,970 (2020)

Birth Rate: 3.24 per 100 people → expected to double in 2036

3.000 Distinct Ethnic Groups

Mixed populations of Christians, Muslims, and traditional religions

Agriculture and the Rural Economy

• dependence of rain-fed agriculture • Low irrigation usage • Limited institutional support &

public investments • inadequate human capital due to

skills and knowledge shortage

Manufacturing

• South Africa manufacturing reached 10% of GDP> development of manufacturing in South Africa, Southern Rhodesia and the Belgian Congo owe to their mining sectors.

• European firms sought to preserve their markets by establishing factories before Independence arrived

• South Africa and southern Rhodesia > settler dominated parliaments gave governments the mandates to pursue import substitution industrialization, from 1924 and 1933.

• FDI→ only mines attracted large flows of capital & 42.8% of FDI in South of the Sahara went to South Africa

•

Sub-Saharan Africa following COVID-19

• Africa has been steadily declining in GDP growth rate since 2008 & COVID-19 accelerated it → World Bank expects GDP growth rates to return to pre-COVID levels by 2025

• Lack of access to vaccines decreased foreign investment • Human rights situation continues to deteriorate • Ethnic conflicts • War in Central African Republic • Threat of ethnic cleansing in South Sudan

References

• https://www.worldbank.org/en/region/afr/overview • https://world101.cfr.org/rotw/africa/economics • Fox, S. (2014). The political economy of slums: Theory and evidence from Sub-Saharan

Africa. World Development, 54, 191-203. • Anlesinya, A., Adepoju, O. A., & Richter, U. H. (2019). Cultural orientation, perceived

support and participation of female students in formal entrepreneurship in the sub- Saharan economy of Ghana. International Journal of Gender and Entrepreneurship.

• Benson, C., & Clay, E. J. (1998). The impact of drought on sub-Saharan African economies: a preliminary examination (Vol. 401). World Bank Publications.

References (cont.)

• https://asiasociety.org/education/iran-20th-century

• https://www.nytimes.com/2021/04/02/world/europe/us-iran-nuclear-deal.html

• https://www.bbc.com/news/world-middle-east-14542438

• https://www.thoughtco.com/is-it-iranian-or-persian-3555178

• https://historycooperative.org/history-of-iran/

• https://www.cnn.com/2013/06/03/world/meast/iran-fast-facts

• https://www.ganintegrity.com/portal/country-profiles/iran/

• https://gulfif.org/unemployment-crisis-in-iraq-and-iran-a-chronic-dilemma-for-state-and-society/

• https://www.statista.com/statistics/1033856/iran-gdp-growth/

• links https://www.sahistory.org.za/article/nelson-mandela-presidency-1994-1999 https://www.borgenmagazine.com/south-africas-natural-resources/ https://www.southafricanmi.com/thabo-mbeki-sa-economy-6sep2018.html https://blogs.worldbank.org/africacan/amid-lot-uncertainty-lies-opportunity-bui ld- south-african-economy-back-better https://en.wikipedia.org/wiki/Economy_of_South_Africa https://www.worldbank.org/en/country/southafric