The Causes of Poverty in Africa

Poverty is a disease. It is certainly terrible. It is undesirable, yet it is very common in some parts of the world while it is nearly unknown in some other parts of the world. Africa is one of the continents of the world. In fact, the continent is the second largest continent in the world and is only surpassed by Asia which is the largest. The size of Africa is estimated at about 30.2 million km² (11.7 million sq mi) to include adjacent islands and it covers 6% of the Earth's total surface area and 20.4% of the total land area.

The continent is mostly occupied by people referred to as Africans and the people are mostly black in complexion. This is however not to suggest that there are no people with other complexions. Some Africans are even white while there are other complexions in-between. The complexions in Africa are best described as beautiful and elegant mix as well as pot-pourri. Between 1982-2009, the population of the continent has doubled and the population is currently estimated at 1 billion. The continent is tropical and poverty is common.

Poverty, whether by relative definition or absolute one is prevalent on the continent as about 70 percent of Africans still live on less than $2 a day and par capita income is extremely low. Hence, unemployment in most African countries is in excess of 20% while diseases and wars have ravaged many. The capacity for self improvement of many has been compromised predisposing many to crime and premature deaths. Hence, illiteracy is high and governance is weak. Against weak development indicators and wide spread poverty, Africa as a continent is usually referred to as a developing/least developed continent.

On the continent, poverty is in fact deadlier than HIV/AIDS. Although the problem is curable, its prevalence and endemic nature on the continent suggests that it is nearly incurable. Most people on the continent are poor and trapped in the problem. Although they wanted to be out of the problem, it is impossible for them to. Systemic problems appear to have kept them perpetually there. Many battle the problem all their lives and their generations are also banished into it explaining the term Inter generational poverty trap.

The following are the causes of poverty in Africa:

1. Corruption and Poor leadership: Many government officials on the continent are corrupt and abuse their public offices. The governance environment is largely irresponsible. Resources meant for all the citizenry are cornered and embezzled by few just because they are privileged to be in government or corridors of power.
3. Lifestyles: The lifestyles of many Africans induce poverty. Many engage in ways of life that keep them forever in the problem. For instance, many celebrate normal events like naming ceremony in outlandish manners. Africans throw parties on nearly anything. They even borrow money to celebrate dead people in events called burial ceremonies. People without stable income borrow money with huge interests just to meet cultural expectations through needless celebrations. This is one of the major causes of the problem on the continent
5. Illiteracy: There is high level of illiteracy on the continent. Very many Africans do not have access to formal education. This affects their reasoning faculties and drastically reduces their capacity to generate income in the modern environment being driven competitively by knowledge in the knowledge industry
7. Resignation: So many people on the continent have resigned to faith and accepted their situation as normal and sometimes divine. Their thinking now reflect poverty and they have come to see themselves as poor and that there is nothing they could do. They thus live a life that accepts the problem and perceive it as normal.
9. Systemic dis-empowerment: Life on the continent favors the rich and poor people find it difficult to actualize themselves in the system. In many instances, employment and opportunities are hijacked by the rich and those from poor background find it difficult to move up the ladder of success and affluence. The environment thus perpetrates and perpetuates the problem on the continent.

Unemployment Problem

The problem of unemployment is a world-wide reality. The developed countries like the U.S., England, France, Germany, Italy, etc. also suffer from this problem, but it is more pronounced in India. With the passage of time it has become worse.

It has become a threat to India's economic well-being and social development. It is one of the major causes of our poverty, backwardness, crimes and frustration among the people. India is the second largest country after China in terms of populations and man-power. But because of large scale unemployment there is no suitable employment for them. They are forced to remain idle.

There are millions of young men and women waiting and waiting for job opportunities. This chronic problem of unemployment is not confirmed to any particular class, segment or society. It is all pervading. There is massive unemployment among educated, well-trained and skilled people, and it is also there among semi-skilled and unskilled laborers, small and marginal farmers and workers. Then there is underemployment. The jobs being created have miserably failed to keep pace with the ever increasing number of job-seekers. It is a problem which presents a great challenge to leaders, thinkers, planners, economists, industrialists and educationists.

Our education system should be reviewed and changed according to our present needs. Like factories our universities, colleges and schools are still producing on a large scale, a rich crop of graduates fit only for white collar jobs in these offices. These graduates are fit only for such jobs as those of clerks, assistants, officers and bureaucrats sitting at tables in the offices. These educated but unemployed youths numbering millions and millions are a source of great anxiety and concern.

Our education should be work-oriented. It should be such as enables a person to stand on his own feet instead of depending on others. It is really an irony that our highly educated and trained personnel like engineers, doctors, scientists etc. run after the government jobs. It is perhaps because of the education system started by the Britishers long ago, which has totally lost its relevance and still prevails. They depend too much on the government and lack the courage and inspiration to stand on their own feet. There should be more and more emphasis on vocational education. There should be more and more technical institutions and training centers. Indiscriminate and unplanned admissions in colleges and universities should also be checked. Higher education should be reserved only for those who really deserved it.

To alleviate this problem of unemployment and under-employment in villages a progressive employment scheme called Jawahar Rozgar Yojana was introduced in 1989. Over 440 lakh families living under the poverty-line are likely to benefit from it. More such schemes are need to create gainful employment opportunities for scheduled tribes, scheduled castes and other backward classes and communities in the rural areas of the country. The rural unemployment has been a major contributory factor of this highest incidence of poverty in spite of our efforts towards development and industrialization.

Whether a National Minimum Wage Reduces Relative Poverty

Relative poverty reflects the fact that some sections of society have an income far lower (e.g. 50% less) than the average salary. In the UK the National Minimum wage is a legal requirement. Firms must pay workers an hourly wage of at least £5.05 for those over 21. The development rate for those 18-21 is £4.35Since the introduction of the NMW many low paid workers have seen an increase in the hourly wage as firms are obliged to pay workers the statutory minimum wage. To some extent this has helped reduce relative poverty as the lowest paid workers have seen a significant increase in their weekly income. This is more prevalent in the North where wages tended to be lower, fewer jobs in the south have been affected by the NMW.

However it is worth noting that the poorest sections of society tend to be those on benefits such as JSA (60% of the poorest tend to be unemployed) and incapacity benefits, therefore these groups will not benefit from a NMW. Also many on the NMW may be second income earners e.g. the wife of a main breadwinner. Therefore these households may be quite well off and would not classify as being relatively poor anyway. Therefore this is a limitation of the NMW in reducing poverty.

Another concern about the NMW is that if it was increase it may cause unemployment. According to classical theory an increase in the NMW will lead to real wage unemployment.

The extent of unemployment would depend upon the elasticity of demand for labour, if it was inelastic unemployment would only increase a little. However If there was an increase in unemployment this would have the effect of increasing relative poverty rather than reducing it.. This problem may be most likely to occur in industries with low profit margins and regions where equilibrium wages tend to be low.

However evidence suggests that UK labour markets are not perfectly competitive but employers may have significant Monopsony power. This is especially true part time temporary service sector jobs where workers have little union representation and few rights. If workers face Monopsonist a higher Minimum wage may not cause unemployment, in some circumstances it may decrease

Empirical evidence suggest that increasing the NMW does not cause unemployment to increase suggesting this model is more accurate than the classical view. However it will clearly depend upon how much the NMW is increased. It is also likely that some labour markets will be more competitive than others therefore the effect may differ for different industries.

Other positive benefits of the NMW include the fact it may increase the incentive for the unemployed to get a job rather than stay on benefits, however the JSA is quite low and the gap between benefits and work is quite high already.

In conclusion an increase in the NMW can help the low paid increase their income, thereby reducing relative poverty to some extent. A serious concern about an increase is that in some labour markets it may cause real wage unemployment therefore increasing poverty. However evidence suggests that the increase would have to be very significant for this to occur because many labour markets tend to be uncompetitive. There could also be a case for increasing the NMW more in the south where wages tend to be higher, thereby reducing relative poverty in the south.

In conclusion raising the minimum wage can cause a decrease in relative poverty for those in work but its extent is limited as much poverty stems from those living on welfare benefits. In the US the benefits of raising the minimum wage are likely to be higher because of the large numbers of workers working close to the statutory minimum wage.