Oct 9, 2009, 4:58 AM
1. Lack of Economic Diversification
While the cause of Poverty in SSA can be attributed to many factors, a major problem lies in the non-diversification of the economies by most of the developing countries in SSA. An example of a lack of diversification is the case of Nigeria where the oil sector which only constituted 1 percent of the country’s export revenue in 1958 rose to 97 percent by 1984 and has since then not gone below 90 percent. In 2008, the oil and gas sector constituted about 97.5 percent of their export revenues, 81 percent of government revenues and about 17 percent of GDP.
The lack of diversification prompts SSA governments to ignore other areas of the economy that could have generated income and create more jobs for the local population. Therefore, there is need for SSA countries to expand and diversify their economic activities in order to boost Foreign Direct Investment (FDI) and Gross Domestic Product (GDP). This is important as evidence suggests that most of the countries that have expanded their trade have enjoyed growth. However, export diversification should be accompanied with introduction of new products. Ultimately, the country could chose to maintain the same product but in this instance, they would need to considerably improve the quality of the product they offer as they would face competition in the global market.
2. Poor Governance
Poor governance involves various malpractices by the state and its workers. This can be in the form of corruption, dysfunctional public services, and unfair tax assessments amongst other issues. Poor governance affects the poor people and leaves them vulnerable as they are denied basic necessities such as healthcare, food and shelter.
In developing countries, the poor are involved in small enterprises in order to generate income. Unfortunately their efforts are often undermined by corrupt practices. They struggle to make profit as they are faced with challenges such as unauthorised importation duties are often powerless, helpless and isolated.
Corruption has been and is a major issue in the development and fight against poverty in SSA. SSA is considered among the most corrupt places in the world as pointed out by Transparency International, a leading global watchdog on corruption who stated that, 6 out of the 10 most corrupt nations in the world are in Sub-Saharan Africa. Also, a study by Africa Union in 2002 concluded that, corruption cost the continent roughly $150 billion a year in lost revenue.Some countries in Africa such as Ghana, Tanzania and Rwanda have made some progress on the fight against corruption. However, there are still many lacking behind and the lack of drastic efforts to improve governance and stamp out corruption does not aid the fight to end poverty.
3. Inequality in distribution
Lastly, inequality is a challenge in society that needs to be overcome if poverty eradication is to be achieved. Inequality is a concentration of distribution of welfare, consumption and income. Most of the times, the people that suffer as a result of the income inequality are often the rural poor because a lot of the times they don’t invest in acquiring skills like the urban dwellers. The outcome of inequality can be an increase in economic and social problems such as violence.