A nation’s economic growth can be measured by making use of its GDP (gross domestic product), which takes into account the country’s consumer spending, investment, government spending, and net export all in terms of dollar values. The country’s net export is what is most influenced by other countries and their economic well being, as it takes into account both import and export statuses. Take, for example, the two nations of Nigeria and South Africa. South Africa had relied heavily on China to purchase their iron ore, as South Africa is China’s biggest exporter of iron ore. However, this over-reliance on China’s purchase of their commodity has indeed, backfired, as China’s demand for iron ore has plummeted over the years. As stated by China’s capital city, Beijing, “imports from the continent [of Africa] had fallen almost 40% in 2015”. On the other hand, Nigeria’s economy has also plummeted overtime, as the country’s staple export, oil, has not been selling well. Both issues share a core element, in which neither of them are due to the nation of Africa itself. Nevertheless, Africa and its economy has still been affected – negatively, in fact – and there seems to be no end to this downfall at the moment.
The most hard hitting issue in regards to South Africa, per say, is the decline of South Africa’s currency: rand. South Africa’s currency has descended to record lows, and this decline has indeed, correlated with China’s decline in demand of commodities. The decline in demand of commodities has only lead to a “worldwide fall in prices of raw materials,” because they could not sell the resources had they not made the prices cheaper, hence the decline in currency. Additionally, according to New York Times author Norimitsu Onishi, South Africa is currently experiencing “the worst drought in a generation”. Due to this environmental hindrance, the country can neither produce nor export agricultural products they usually do, thus must import those products, such as corn. However, going back to the issue with the currency, the weak rand only makes it harder for them to import corn – or anything, for that matter.
Africa’s severe financial conditions does not stop here. The nation of Nigeria, Africa’s both biggest economy and oil producer, is also facing similar problems like those of South Africa. Profit that comes from selling oil accounts for 80% of Nigeria’s profit. However, due to a recent crash in crude prices, Nigeria’s economy has also tremendously weakened. Like South Africa, Nigeria is also experiencing collapse in their national currency, naira, because the nation’s central bank has restricted the sale of American dollars in order to protect its “shrinking foreign reserves”. Nigeria’s economy has grown by 3% in the year of 2015, after the nation’s expansion of 6.3%. But with the rather threatening status quo that Nigeria is facing, it seems as though they can no longer be satisfied with such a minor growth.
The two countries, as they are both developing ones, must prosper enough so that they no longer have to rely heavily on other nations for their economic success. As the two countries are both soon to hit recession, unemployment rates will likely soar, as well as other major issues to consider such as lack of resources. The continent of Africa as a whole is also currently under threat, as it must face “a slump in mining, as well as manufacturing and agriculture”. The key for them to once again, place their hands upon welfare and boom, is to advance enough so that they no longer require the help of other countries. However, this is easier said than to be done. No accurate predictions can be made as to how long Africa will be in a slump, with many economic downturns. For now, one can only hope for the recession they are to face this year to be not as severe as, say, the Great Depression that hit the United States of America less than a hundred years ago.
– Leona Maruyama (‘17)
Featured Image: New York Times