Economics: Sub-Saharan Africa

Sub-Saharan Africa saw rapid economic growth and investment in the early 2000s, a period some experts dub Africa Rising.  

But much of that wealth generation has not translated to significantly higher average incomes or more jobs. And inequality in the region remains high.  

What happened?  

The global financial crisis in 2008—and a 2014 crash in the price of commodities such as crude oil, iron ore, copper, and palm oil—stalled growth. Other problems in the region, such as poor infrastructure and lack of access to capital, continue to impede economic development. Meanwhile, the population of sub-Saharan Africa continues to grow.  

Other forces also hold the region back economically: historical, political, and social challenges (including the legacy of colonialism); conflict; instability; and poor political leadership.  

Despite those hurdles, China and countries in the Arabian Peninsula continue to invest in sub-Saharan Africa, seeking access to natural resources and growing markets as well as geopolitical influence.  

What else defines the modern economies of sub-Saharan African nations?

Here are ten economic developments and challenges across the region.  

1. Most Economies Are Small, but Growing

Sub-Saharan Africa is the world’s poorest region and has the world’s lowest total gross domestic product (GDP) of any region. (It was roughly $1.9 trillion in 2024—representing just under 2 percent of the world's total.) The region’s average GDP per capita, or the GDP divided by population, is also the lowest in the world at under $2,000. (The world average is over $14,000.) But its overall GDP is rising. In fact, sub-Saharan countries are experiencing some of the highest annual GDP growth in the world: the region is expected to see an annual growth rate of roughly 4.5 percent through 2030—compared to a world average of 3.1. Such growth, however, doesn’t mean gains for every country, nor every person. Despite large GDP increase in countries such as Ethiopia and Tanzania, for instance, sub-Saharan wealth is heavily concentrated: Nigeria and South Africa, the region’s wealthiest countries, generate almost one-third of sub-Saharan Africa’s GDP. Meanwhile, per capita income is expected to grow below the global average rate. If that trend continues, sub-Saharan Africa—despite seeing economic advancement in many countries—will remain home to some of the world’s poorest and most unequal populations. 
 

2. Nigeria and South Africa: The Largest Economies Are Built on Different Foundations

Nigeria and South Africa are by far the region’s richest countries. In 2024, their GDPs were roughly $188 billion and $400 billion, respectively; the region’s next richest country was Ethiopia with a GDP of roughly $143 billion. Both Nigeria and South Africa, however, have vastly different types of economies. For many years, Nigeria’s economy has depended on oil. By the mid-2010s, oil accounted for 90 percent of Nigeria’s exports and 70 percent of the government’s revenue. Oil reliance can be dangerous, since it’s susceptible to unpredictable prices and a target for theft. Both such events have rocked Nigeria. In 2014, oil prices crashed, contributing to a recession. Corruption and instability also complicate the region’s resource wealth. Between 2009 and 2020, Nigeria had lost roughly $46 billion to oil theft. South Africa’s economy, on the other hand, is much more diversified and includes automotive manufacturing, mining, financial services, and agriculture, making it more stable. Yet despite being the region’s largest economy, South Africa faces several challenges, including declining incomes, steady unemployment, and widespread inequality. An estimated 10 percent of South Africa’s population owns over 80 percent of the country’s wealth. 

3. Natural Resource Wealth Is a Double-Edged Sword

Experts sometimes point to Nigeria as an example of the so-called resource curse, the counterintuitive idea that countries with lots of natural resources (such as oil) tend to be less economically and politically stable than countries with fewer resources. That is because an overreliance on resource exports leaves a country vulnerable to price changes. Control over lucrative resources can also create opportunities for corruption and exploitation. The resource curse is widespread across sub-Saharan Africa. Why? The entire region is rich in resources: roughly 30 percent of the earth’s known mineral resource reserves are in sub-Saharan Africa. Countries bordering the Sahara Desert have vast deposits of oil and uranium ore. And in central and southern Africa, gold and diamonds abound. Many of the region’s economies are based on commodity exports, making them beholden to the ups and downs of global commodity prices. In Democratic Republic of Congo (DRC), for instance, mineral extraction drives the economy. Mining accounts for over 90 percent of DRC’s export revenue. And two minerals dominate: copper, which accounted for nearly three-quarters of export earnings in 2023, and cobalt, which made up over 10 percent. But DRC’s reliance on commodities like cobalt means it’s vulnerable to price changes. Extracting natural resources has a high human cost too. In DRC, cobalt miners are often children, facing deadly working conditions and human rights abuses. 

4. Corruption Hurts Economies  

In sub-Saharan Africa, corruption, or the abuse of power for personal gain, comes in many forms and degrees—from paying small bribes to access government services to awarding lucrative government contracts to friends or family members. In many countries, corruption is rampant and comes at a high cost to the national economy and the public. South Sudan, for instance, is considered the most corrupt country in the world—as measured by perceived public-sector corruption. After independence from Sudan in 2011, South Sudan saw an economic boom thanks to international assistance and oil revenues. (Oil accounts for over 90 percent of South Sudan's national revenue.) But weak political oversight has led to embezzlement practices. And because the country lacks public finance transparency, it’s unclear how exactly oil revenues are managed; some observers believe that elites close to the president control the revenues. Meanwhile, everyday citizens continue to suffer from poverty and high inflation. Corruption is so widespread that many describe it as “state capture,” which refers to the high degree of control that a few powerful individuals exert over the government for their personal gain. Experts have also used the term to describe corruption in Kenya and South Africa. 

5. Infrastructure Investment Is Needed to Boost Development

Virtually all sub-Saharan Africa’s infrastructure—including roads, bridges, ports, and electricity supply—has worsened in recent decades. And its decline has far-reaching effects for everyone. Poor roads make it hard for doctors to source medicines and for patients to access health care. Isolation means businesses are cut off from vital markets. And limited energy infrastructure means millions lack access to electricity—for example, in Burundi, Chad, Liberia, Malawi, and South Sudan, less than 10 percent of the population has electricity access. Some of sub-Saharan Africa's infrastructure challenges are historical. Colonial regimes prioritized connecting mineral sites instead of towns. After independence, rail lines fell into disuse. Today, thirteen sub-Saharan countries don’t have any operational railway networks. Infrastructure challenges are also investment challenges. The World Bank estimates that sub-Saharan countries need to invest 7.1 percent of GDP into infrastructure to meet the UN Sustainable Development Goals. But the region has only been investing 3.5 percent. In general, sub-Saharan governments pay for almost all infrastructure projects themselves; in other regions of Africa, the private sector often helps shoulder costs. But experts warn that such spending isn’t sustainable, especially with rising public debt. In the future, sub-Saharan governments are expected to spend even less. 
 

6. Big Population Growth Means Big Economic Potential  

Birth rates across the world are sharply declining. Most populations are getting older—and the number of working-age people (ages fifteen to sixty-four) is getting smaller. But that’s not true in sub-Saharan Africa. Countries in the region now have some of the highest birth rates in the world. By 2050, the region’s population is expected to double, reaching two billion people. Many of those people will be working age. According to the International Monetary Fund, that unique population shift represents the region’s biggest economic opportunity. More young people means a larger labor force, higher productivity, and the potential for more foreign investment. But it also means the need for more jobs—fifteen million each year, according to some experts. Niger, for instance, whose youth population won’t peak until 2058, will have to create 650,000 new jobs every year for the next thirty years to avoid rising unemployment. And unemployment remains a big challenge. Each year, between eight and eleven million young people are expected to enter the region’s job market. But currently, only about three million new wage jobs are created annually.  
 

7. Informal Sector Provides Opportunities for Many

Where do most sub-Saharan Africans work? A large portion of young people who are employed work in agriculture, a mostly informal job space. Sub-Saharan Africa is home to a thriving “informal sector”—a term that refers to economic activities not monitored or regulated by the government. Those jobs include farming, as well as small-scale mining operations, craft making, and other services like housekeeping, giving rides, or fixing cars. Reasons for high informal-sector employment include weak governance, low education levels, limited resources, lack of jobs in the formal sector, and economic disruptions due to conflict. Although the informal sector offers ample work, the jobs can be unstable. Workers lack the social and economic advantages of formal wage jobs—like greater income security, employment benefits, and labor protection. They frequently face unsafe working conditions and human rights violations, with little protection from the government. Informal work is also associated with lower life expectancy. Women, who are more likely to have informal employment across the region, also face harsh conditions, especially as family workers in agriculture. Sub-Saharan countries have taken some steps to reduce barriers to formal work, like lowering the cost of creating businesses and providing support for start-ups and small business workers. Still, informal employment remains widespread in the region. In 2022, over 80 percent of employment in sub-Saharan Africa was informal. 

8. Foreign Aid Reliance Varies by Country

In 2024, sub-Saharan Africa received an estimated $36 billion in development assistance and foreign aid—the money, services, or physical goods that one country sends another to help it in some way. Some countries, including Liberia, Niger, and Sierra Leone, depend heavily on foreign aid, but others, such as Botswana, Nigeria, and South Africa, do not. The effectiveness of foreign aid in the region is mixed, though one success story has been the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR). The program has provided lifesaving treatment to roughly twenty million people across sub-Saharan Africa. PEPFAR has also boosted economic growth. Studies show that providing more people with HIV treatment can also increase the rate of per capita GDP growth. Another notable foreign program is the African Growth and Opportunity Act. The U.S. program began in 2000 with the goal of bettering the region’s economy by improving its access to U.S. trade. Under the program, countries have been able to export certain goods to the United States without paying tariffs. Sub-Saharan countries are eligible if they show progress in developments related to their economies, rule of law, and political systems.  
 

9. Improving Health Can Improve Growth

Sub-Saharan Africa faces many public health challenges. Those include limited health-care infrastructure, such as too few medical facilities; lack of essential medicine access and reliance on imported pharmaceuticals; high maternal and child mortality rates; and widespread disease: each year, roughly three million people in the region die of HIV/AIDS, tuberculosis, and malaria. Those are not just health issues but also economic challenges. Studies on sub-Saharan countries have linked health outcomes with economic growth. Improving life expectancy at birth and reducing infant mortality rates, for instance, has been shown to increase the growth rate of per capita income. So what’s standing in the way? One major obstacle is the workforce. For a country to provide full health coverage, the World Health Organization (WHO) recommends at least 4.45 health workers (doctors, nurses, and midwives) for every 1,000 people. In some sub-Saharan countries, that number is less than 1—in Niger, it’s 0.25. Rapid population growth, along with limited health-care training and governance, helps explain some of that regional shortage. Another major obstacle is cost. The WHO estimates that over 30 percent of health-care expenditure in the region is out of pocket—as opposed to government- or insurance-supported; the world average out-of-pocket expenditure is under 18 percent. That means health costs can push households into poverty, feeding a vicious cycle of poor health and economic outcomes.  

10. Digital Currencies Offer Faster, More Inclusive Exchange  

In October 2021, the Central Bank of Nigeria launched the eNaira, a digital currency. Nigeria is the second country (after the Bahamas) to introduce a Central Bank Digital Currency (CBDC)—a digital version of cash that is regulated by a country’s central bank, making it more secure than other forms of digital currency, like crypto. Why would a country adopt a CBDC? Nigeria had several motivations. One was financial inclusion. That means giving more people—especially those without bank accounts, or those living in remote areas—access to financial services, like savings, credit, and insurance. Since the CBDC was launched, Nigerians now just need a cell phone and a verified national identity to make transactions. A CBDC has other advantages, too. It can make cross-border transactions (like remittances) faster, helping boost regional trade. For Nigeria and other sub-Saharan countries, CBDCs can also provide accountability for the informal sector. That’s because transactions can be traced, giving the sector more transparency—and helping the government better enforce things like tax evasion. As of 2024, over twenty central banks in sub-Saharan Africa are somewhere in the process of researching or planning for CBDC use.