This is the democratic republic of the congo
This central African nation is the poorest country
in the world with a Nominal
GDP per person of just 500 USD
71% of the countries population lives in absolute poverty
with no access to clean drinking
water, education, medical attention, and very
scarce access to food
This is the highest rate of absolute
poverty in the world.
These devastation conditions were unfortunately not
always the case for this country, prior to 1960
the Congo was a colony of Belgium
and was
actually making progress to becoming a developing economy
The Belgian Congo in the 1950’s was the second
most industrialised nation in Africa
Africa falling just behind South Africa. Now
it must be recognised
that this country had many of the same social issues that South Africa
during this time as well, But
the country was becoming richer and
investment into industries and infrastructure
meant that quality of life was improving for everybody.
What is more is that the Democratic
Republic of the Congo sits on top of a
treasure chest of natural resources like precious metals
diamonds, oil and natural gas
So
where did this all go so wrong?
, this country had a lot going for it
and while it is hard to say there
was no reason to believe that the Democratic
republic of the Congo could not
not have developed like so many other economies
did during the 1960’s onwards.
The truth is though that there is a very
simple economic reason why this country has fallen so far
behind
but to really look at this properly
we must first look at poverty itself
In social studies there is a widely
used model called the Maslow hierarchy
of needs
at the bottom of the hierarchy of needs is the need
for things like food, water and shelter
needs that people in absolute poverty
don’t get met
Above that is the need for safety, and above that
are more social needs and so on
until and the very top of the hierarchy we get
to self-actualisation needs which are
very nice to have but
probably should not really be called needs at all
When someone lives in absolute poverty
it officially means that they live on less than
$2.12 US a day
this is the type of poverty where even the most
basic human needs in even the lowest
lowest cost of living area’s are not met
this Is the type of poverty we are talking about in the Democratic
Republic of the Congo
A quick side note is that abject poverty
the type of poverty you are more
likely to hear about in the news is the type of poverty
caused by having financial means well
under the cost of living in a certain area
this is the type of poverty that
affects low income earners in the united states where the
poverty line for an individual is a yearly income of
$11,770 USD or less
now this is a real issue
and the issue of poverty in the united states should not be ignored
but for reference this same
$11,000 income in the democratic republic
of the congo would make you an esteemed member
of the 1%.
okay
so
understanding poverty in relation to human needs
is interesting all be it very depressing
but
what does that have to do with the economy
of the DRC
Well just like people
economies have fundamental needs
that are pretty easy to rank in terms of importance
the most fundamental needs of an economy are
stability and confidence
in the same way that a briefcase filled with
millions of dollars is pretty useless
stranded on a desert island without water
the piles of natural resources in the DRC
are not very meaningful given that there is very
stability or confidence in the country itself
at the most fundamental level this is what
that looks like
this is a diamond mine in Canada
it is
a huge industrial facility that utilises
modern machinery and technology
to extract these resources very efficiently
mines like these employ thousands of workers
in very high paying jobs and generate huge profit
for the companies running these operations
and they should given the hundreds
of millions of dollars in investments
that goes into building facilities like these
conversely this
this is a diamond mine in the democratic republic of the Congo
no rational investor would ever
put the same amount of money into a mine here because
there is very little confidence that their investments would not be claimed
by corruption and so much instability
that having a mine stolen by any number of the civil conflicts
is a very real possibility
because of this lack of investment workers are reduced to using
hand tools and very very basic machinery
this means that despite the abundance of resources
they are not extracted with the same efficiency
and do not generate nearly as much money
as a properly developed industrial mine
this issue is made even worse by the fact that
the only groups that are willing and able to run
and confidently hold these mines
operating military powers who
have often stooped to using child labour
to extract these resources
vice did a fantastic documentary on this
and I will leave a link to that in the description below but
needless to say the revenue from
the sale of these crudely extracted resources
is not going to build schools and infrastructure
but rather guns and tanks
furthering the horrendous violence plaguing this nation
so is there any solution to this situation?
foreign aid is a big deal in countries like
the democratic republic of the Congo
many foreign aid organisations ranging from
UN's unicef to doctors without borders
and even the Bill and Melinda Gates foundation
have major operations in the country so
could this foreign aid be the kick start the Congolese
economy needs to get back on track?
well no... unfortunately
foreign aid is a lot like life support
it will keep everything ticking along
but it really isn't meant to cure anything
among the most donated goods are clothing and food
normally donated from wealthy countries
this is a fantastic initiative
that means that the Congolese
people with get the clothing and nutrition that they need to live in the
harsh conditions of their country but
it also means
any business that wants to sell clothes or food
has to compete with a competitor charging zero dollars
now I hope that anybody watching this channel has
a basic understanding of economics, enough to know that
competing with a zero cost business in a country as poor
as the DRC is just not possible
as any politician will tell you
small business is the backbone of any economy
and on one hand this foreign aid has
devastating impacts on local business owners
looking to ply their trade, on the other hand though
it is a very tough call to make to pull back this aid
knowing that it could mean ten's of thousand's of men
women and children are starving
so
what is the solution then?
well fortunately we know
we know exactly what the solution is
stability and confidence needs to be restored to the country
unfortunately.. we have no idea
how to really do that
war and corruption has more or less
become a way of life for many groups in the DRC
and as we have seen this can be a really hard cycle to
break
there is good news though
just earlier this week in
July of 2019
the 54 countries of Africa signed on
to launch the African Free Trade Zone
which means that all countries in Africa
will be able to trade freely amongst one another
without any restrictions
this is a very similar model to
the European Union
the importance of this deal cannot be understated
and it could optimistically be the catalyst
for massive development all over Africa
it can't be forgotten that Europe a century ago
did so love themselves some wars aswell
the creation of the European Union
has brought the longest period of
peace in the regions history
if that success can be replicated here in Africa
there is every possibility that it will become
the economic superpower it was destined to be
and in so doing lift hundreds of millions
of people out of poverty