Per Capita Incomes and Welfare in Africa.
Hello Africa,
It would interest us to know that the most important indices in measuring the level of welfare and economic wellbeing is income per capita. The per capita incomes of developing countries are low compared to the advanced countries, and this is the most important indicator of the level of human welfare, standard of living, and the quality of life. According to World bank (2021), countries with per capita incomes of $1,025 or less were classified as "low income countries" and this category of countries had the least levels of economic growth advances. In comparison to other macroeconomic indicators, per capita income is used to evaluate the general health of any economy.
According to the global threshold, Algeria, Libya, Egypt, Gabon, Namibia, Botswana, South Africa, and Swaziland are the only countries in Africa having a per capita incomes of $4,000 and above. The DCR, Ethiopia, Somalia, Tanzania, Sierra Leone, Eritrea, and Malawi are countries having the least per capita incomes, below $800. World Bank (2021) in its report stated that 9 out of 10 countries with the highest per capita incomes are in the advanced countries. While Luxembourg has the highest, Burundi has the least in the world. Growth rate in population has a significant impact on the levels of income per head. If the ratio of the amount of GDP and population rises, it shows that there is relative prosperity within a country. Conversely, if the ratio falls, this suggest a lower level of wellbeing.
Per capita income measures relative prosperity, and helps to determine the developmental status to evaluate countries that are in dire need of assistance and financial aid. However, per capita incomes does not necessarily reflect the living standards in any country. There is the likelihood that an increase in the levels of income per capita might not raise the levels of consumption of goods and services. African countries are usually challenged with low GDP, high population growth rates, poorly developed institutional and physical infrastructure, low quality of life, and low standard of living. The five poorest nations on earth are in sub-Sahara Africa.
Real GDP growth in Africa averages 3.9 percent as of 2019, and it is expected to rise to 4.1 percent in 2022. Growth in sub-Sahara Africa varies transversely between countries and regions. Africa's fastest growing economies, as of 2019, were in East Africa region, with growth rates of 5 percent, while North Africa, the second fastest growing, had a growth rate of 4 percent.
West Africa sub-region contributed 3.7 percent. The region with the slowest growth were in Southern Africa with a meagre 0.7 percent growth rate. Africa must accelerate its economic growth reforms if it must catch up with the rest of the world.
How can Africa improve growth in GDP?
For Africa to raise its level of welfare, growth reforms must target local and international sources of investment that will be urgently needed to fill the gap in investment-savings ratios. Africa is bedeviled with savings gap. Economic growth is a function of the needed investment to conserve local and foreign currencies to acquire capital goods from other countries. Financial aid is necessary for economic growth and development. Secondly, a growth in the quality of its labor force is necessary to raise the level of productivity, which ultimately raise the levels of GDP.
What can be done to raise the level of welfare?
Unemployment rate in African is highest compared to other regions of the world. To raise living standards, policy reforms targeting the creation of job opportunities and building skills through quality education must be a priority. Governments should also strengthen and improve the health system through the provision of affordable healthcare, elimination of grafts and corruption, and the participation of the private sector in the provision of health supplies.
Africa can be transformed from its underdeveloped state to a region with strong transformative economic growth and development policies, strong institutions, and good governance. Africa deserve good and effective leadership to drive the desired reforms. The welfare of its citizens is paramount in the various reform programs, and national interest should be the main focus of any developmental agenda. Africa must strengthen its social welfare programs targeting families in need, and such programs to improve healthcare, unemployment, and food aid.
Africa has the needed natural and human endowment to transform its economies. Agriculture, manufacturing, and other productive sectors must be transformed to contribute to the growth of GDP and ultimately raise the level of its per capita incomes.
Enoma Ojo
enomaojo.blogspot.com
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