African Exports
Introduction
Africa is identified as the most highly endowed with natural resources amongst all continents. The aspect has placed at an advantage of dominating some of the global markets essentially mining, agriculture, and tourism (Myers, 2016). Other than the global market the intra-trading activities are evident within the continent. It is particularly noted that some countries have comparative advantages in the supply of commodities. The western African countries for instance dominate the oil markets. Despite the huge incomes derived by both individuals and companies operating in the continent the rates of poverty remain relatively lower. Some of the factors attributed to the underlying case include perpetuated corruption, lack of transparency as well as a deep-rooted oligarchy. This paper thus addressed the huge levels of African exports against the higher rates of poverty. It eventually further analyzes the reasons for the higher rates of poverty.
Mapping in the Global Market
The intra-trade activities within the African countries rates at an average of 12%. The rate is lower compared to the activities with other trading regions like the European Union whose rate is 70%. The intra-trade activities are nonetheless expected to hike with the introduction of The African Continental Free Trade Area (AfCFA) on May 30th, 2019 (UNCTAD, 2019). An analysis of the global market statistics indicates that the sub-Saharan African exports to the US market have been on the rise with an accelerating rate of 303% recorded for the 2013 fiscal years. It is further noted that since 2013 an approximately 30,000 businesses and households in the United States developed loyalty for the African exports. As a result, the average annual rate of returns from the exports has been a staggering annual 24 billion dollars. A recent report by Afreximbank trade report further noted a 3.4% hike in the income of the African export revenue for the 2017/2018 fiscal year. The product revenue was in this case valued at 997.9 billion dollars. The verge was at the same time enhanced by a rise in trade warfares between the US and China. Much of the merchandise draws from gas, oil, and agricultural products. The report also noted that the emergence of e-commerce due to development in technology is also playing a great role in easing transactions (ZHIHUA, 2020). Despite the huge and accelerating incomes from the exports, more than half of the African populace is living below the United Nations’ $1.25 poverty line.
Reasons for Poverty despite Higher Exports
Africa Continent ranks first as the most endowed continent in the world. It in this case holds 30% of the global minerals including gold, diamonds, uranium, and cobalt. It is also richly endowed with gas and oil reserves. Due to the rise of the global oil and mineral prices therefore, mining has risen in Africa particularly since 2008 to facilitate exportation. The continent has also been ripping big from the exportation of agricultural products as well as heritage products due to the rich cultural envisages. The foreign direct investment since the global recession of 2008 has been rising from the 62 billion dollar mark. Despite the booming trade activities particularly from mining activities, the continent remains the poorest in the world. The aspect is based on almost half of the population spending less than 1.25 dollars a day. The following are the reasons why the continent remains poor despite increased exports bearing in mind the rich endowment of resources.
Corruption and Exploitation
The financial activities in the African continent are noted to be prone to financial flaws. The boom in the exploitation of the mineral resources in the continent has provoked corruption. A greater proportion of the obtained revenues are thus driven towards benefitting a number of both foreign and local elites rather than the general populations. The most common loopholes of embracing fraudulence are implemented through both trades misinvoicing and mispricing. The companies engaging in the trade irregularities thus aims at increasing profits through increased revenues in the low tax avenues while increasing expenses in the high tax avenues (Wilhelm, 2020). The organizations thus reduce the payable taxes while diverting illegal incomes abroad. The funds are in this case siphoned through cooperation between the political elites and the mining companies. The development would otherwise be realized if the funds were channeled towards social development like the development of infrastructures.
Lack of Transparency
A country’s economic policies need to reflect fairer tax regimes, promotion of diversity as well as strict anti-corruption rules. The mining companies for instance ought to be held accountable for their indiscretions to payment of their workers, tax obligations, and financial indiscretions. African trade policies are characterized by non-inclusive decision making. Instead of engaging all stakeholders, the financially enabled individuals play about the rules to dominate the market (Fwatshak, 2017). The agricultural sector for instance entails companies that deliberate on the efforts of consumers. Due to reduced levels of literacy amongst the local farmers, they are less informed on both the financial rules and the market policies. The aspect creates a loophole for the companies to exploit the farmers. The mining sector on the other hand doesn’t take into account the destruction of livelihood and the environment of the communities in the mining sites. A comprehensive compensation policy ought to be put in place to ensure reciprocity thus financial empowerment in the long-run.
Historical and Bureaucratic Oligarchy
Some of the poorest parts of Africa like Congo experience unceasing series of fights amongst the local inhabitants. Such wars are identified to be backed up by rich foreign and local regimes. A similar case is identified in what is termed as neo-colonialism by countries like China (Saibu & Akinyele, 2020). The neo-colonialism in this case takes two diverse forms. As much as local companies exist in the African countries, they have bureaucratic rooting in Chinese families. An example is Shell cooperations which despite having an African identity is controlled by international personalities. A different case is identified in the heavy financing of African countries by international governments and agencies. China is certainly a great financier making its financial exploitation a preferable alternative to maintain loyalty.
Despite the long periods after attaining independence from the colonial masters, the African leaders are also seen to be clueless about how to get their citizens out of poverty. The aspect makes the foreign players take the resources endowment as a platform for exploitation. Africa is also considered to be a less contributor to global economic contributions rather than an avenue for funding. Nevertheless, they ineffectively utilize the funding thus engaging in cyclic all for funding. It is for instance ridiculous that in 2010 the total oil exports amounted to $333 billion (Fwatshak, 2017). The funding was seven times the amount of exports in the same year. Much of the finance nonetheless went to both taxing and corruption. Due to the mismanagement, the colonial powers through shadow administrations will continue to siphon African resources and incomes leaving the local population lavish in poverty.
Conclusion
Africa is among the highest-ranking regions in terms of an endowment of natural resources. As a result, their input in global exports has been increasing. Besides, development in technology sets a pace for continued rise in the statistics due to the emergence of e-commerce platforms. The most prevalent markets are in this case based in both the United States and the European Union. It is expected that due to the higher revenues derived from the trading activities, the rates of poverty would be reducing. The case is however contrary with reports indicating that more than half of the continent’s population is below the poverty line. One of the factors that can be attributed to the tragedy is the long history of political oligarchs. Such sets a pace for collaboration with the cold war colonial masters to drain the resources. The economic policies set in place are besides non-inclusive of the input of the local stakeholders who at times are disadvantage by financial illiteracy.