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Insight & Analysis - December 22, 2021

The Worst Countries for Businesses in Africa in 2021

The yardsticks used to measure the growth of countries and how prosperous the economy is for businesses, including Africa countries, are the gross domestic product (GDP) per capita and gross net income (GNI) per capita. 

While Africa has made some impressive economic strides, the World Population Review ranks it as the poorest continent in the world. Countries on the continent contend with civil conflicts, economic insecurity, corruption, political instability, terrorist insurgencies, and natural disasters such as drought and locust infestation. These factors, therefore, subject them to abject poverty, which invariably affects the economy of the countries and businesses across Africa.

Similarly, 23 of the 27 countries classified by the World Bank as low-income economies are from Africa, indicating that these countries are the poorest and worst globally. Also, 21 of the 55 world’s lower-middle-income countries are from the continent.

The yardsticks used to measure the growth of countries and how prosperous the economy is for businesses, including Africa countries, are the gross domestic product (GDP) per capita and gross net income (GNI) per capita. 

GDP per capita is calculated by dividing the total value of all products and services generated by a country by the number of people living there. GNI per capita is similar to the GDP. It includes any revenue derived from outside the country, such as foreign investments or commercial dealings.

GDP and GNI are commonly stated in US dollars (US$) or purchasing power parity (PPP) “international dollars” (int.$), a hypothetical currency that facilitates cross-national comparisons. These variables are strong indications of how prosperous or poor countries’ economies are.

Focusing on the GDP and GNI per capita, the worst countries for businesses in Africa are here.

Burundi

Burundi, a small landlocked country in East Africa ravaged by Hutu-Tutsi ethnic conflict and civil violence, tops the world and Africa poorest country list. The country shares a border with Tanzania, Rwanda, and the Democratic Republic of Congo.

Food scarcity is a serious concern, with almost 90 % of its approximately 12 million residents reliant on subsistence agriculture (with the majority surviving on $1.25 a day or less). Food insecurity is about twice as high as the norm in Sub-Saharan African countries. Also, access to water and sanitation remains low, and only about 5% of the population has access to electricity. With the outbreak of COVID-19, the situation has worsened in the country.

Evariste Ndayishimiye, the president of Burundi, has made attempts to relaunch the country’s economy and mend diplomatic ties with other African countries and the West. This yielded some positive results as the United States and the European Union withdrew financial restrictions imposed in the aftermath of the 2015 political turmoil.

Could this be a turning point for the poorest country in the world? It is a question to be answered by time. In terms of GDP and GNI per capita, Burundi has $771 and $270, respectively. This puts Burundi on top of the list of the worst countries for businesses in Africa.

Somalia

The Republic of Somalia is the easternmost extension of Africa,  also known as the Horn of Africa. It shares a border with Ethiopia, Djibouti, and Kenya. With the pandemic, the country has experienced some hitch in its economy. 

The country experienced over 3% growth in 2020, which was interrupted by the outbreak of the COVID-19 pandemic, locusts infestation, and floods. This made the economy decline by 1.5% in 2020. The pandemic and the economic situation resulted in the country’s GDP and GNI per capita, $875 and $310, respectively.

The Central African Republic

The Central African Republic (CAR), a landlocked republic in Central Africa, is rich in gold, oil, uranium, and diamonds. It is a prosperous country with an impoverished population. The country is surrounded by six countries: Chad, Sudan, South Sudan, the Democratic Republic of Congo, and Cameroon. With 60% of the population living below the poverty line, lockdown and some measures to contain the COVID-19 pandemic worsened the situation. According to the World Population Review, the country has a $980 GDP per capita and a $510 GNI per capita.

Mozambique

In terms of location, Mozambique is strategically positioned, as four of its six bordering countries are landlocked and rely on it for global trade. Over the past decades, it has consistently posted average GDP growth rates of more than 7%. Despite this, it remains one of the world’s top ten poorest countries, with significant swaths of the population living in abject poverty.

With the setback from the pandemic and the indefinite suspension of the most significant foreign direct investment in Africa-French company, Total S.A., the country was deprived of the much-needed economic boost. The country, hence, has a GDP per capita of $1,297 and a GNI per capita of $460.

Madagascar

The Republic of Madagascar is an African island country located in the Indian Ocean, off the coast of East Africa. The country has stunning terrain and is considered one of the world’s most environmentally varied regions.

However, last year, everything changed. According to the World Bank, Covid-19 has produced a severe recession that has affected people working in tourism and other industries. This and other factors put it on the list of the poorest African countries, the only African island country on the list. Madagascar has a GDP per capita of $1,593 and a GNI per capita of $480.

READ ALSO: Here is Why Over 45% of Nigerians May be Poorer in 2022

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