E-Business
The Hanke’s Misery Index: How Africa’s Economic Challenges Are Holding Back the Continent Part 2
By Evans Woherem, Ph.D
- Economic Challenges in Angola, Ghana, and Other African Nations
The 2022 HAMI rankings provide insights into the economic challenges faced by Angola, Ghana, and several other African countries. Angola is ranked 13th with a HAMI score of 93.518, struggling with a high unemployment rate of 29.6%, an inflation rate of 13.9%, and a bank lending rate of 20.118%. Similarly, Ghana holds the 15th position on the Misery Index, burdened by an alarming inflation rate of 54.1% and achieving an index score of 86.8.
These challenges are not unique to Angola and Ghana. Many other African nations also grapple with significant economic hurdles. South Africa, positioned 16th on the Misery Index, records an index score of 83.492 primarily due to high unemployment rates. Rwanda, ranked 20th, achieves a score of 69.192 with inflation being a major contributing factor. Botswana, at the 21st spot, has an index score of 64.023 mainly influenced by elevated unemployment rates.
Moreover, countries such as Madagascar, Malawi, Eswatini, Gabon, Sao Tome and Principe, Congo (Brazzaville), Ethiopia, Libya, Namibia, Lesotho, Algeria, Nigeria, Tunisia, and Mauritania also face economic difficulties characterized by high unemployment rates, inflation, or lending rates.
The HAMI rankings shed light on the economic challenges experienced by various African countries, highlighting the need for targeted measures to address unemployment, inflation, and lending rates. It is crucial to alleviate the hardships endured by their populations.
The situations in Zimbabwe, Sudan, Niger, Togo, and other African nations serve as poignant reminders of the urgent need to tackle economic instability and implement effective policies across the continent.
Recognizing the profound impact of high inflation rates, unemployment, and other economic challenges on individuals’ well-being, it becomes imperative to prioritize sustainable development, job creation, and economic reforms. These steps are crucial for uplifting the lives of African citizens and ensuring a brighter and more prosperous future for all.
- Contrasting Happiness and Economic Struggles in Africa
It is indeed disconcerting to observe that four African countries—Zimbabwe, Sudan, Angola, and Ghana—are ranked among the top fifteen “most miserable” countries. However, it is worth noting the significant contrast that exists within the African continent. As evidenced by the 2022 HAMI, Niger and Togo were among the top ten “happiest” countries.
This striking disparity highlights the uneven progress made by different African nations in their pursuit of greater happiness and well-being. While some countries have made strides towards improving their conditions, many others continue to face substantial economic challenges, leading to a state of ongoing misery.
The varying experiences of African countries in terms of happiness and well-being underscore the need for concerted efforts to address the underlying economic factors that contribute to misery. By identifying and tackling these challenges head-on, African nations can work towards creating more equitable and prosperous societies for their citizens.
Root Causes of Economic Challenges in African Countries
The economic challenges faced by several African countries, as highlighted by the 2022 Hanke’s Annual Misery Index, are multifaceted and have far-reaching consequences for the well-being of their populations.
In this section, we will explore the root causes of these challenges and their impact on inflation, unemployment, and overall economic stability. By delving into distinct factors such as inflation rates and external factors, high unemployment rates and youth employment, and the influence of political instability, poor governance, and excessive lending rates, we can gain a comprehensive understanding of the complex economic landscape in African countries.
- Inflation and External Factors
Inflation rates have had a detrimental impact on several African countries, including Zimbabwe, Sudan, Angola, Ghana, Rwanda, Ethiopia, and Nigeria. These nations have witnessed significant inflation rates. For instance, Zimbabwe reached an alarming rate of 243.8% in 2022, while Sudan and Ghana faced rates of 176.1% and 54.1%, respectively. This high inflation has resulted in a decline in purchasing power, making it increasingly difficult for individuals and families to afford basic necessities.
A study conducted by the International Monetary Fund in 2022 highlights a significant increase in inflation across sub-Saharan Africa in recent years. This rise in inflation can primarily be attributed to external factors such as global food prices, oil prices, and disruptions in the supply chain. Despite the gradual recovery of domestic demand following the COVID-19 pandemic, its contribution has been insufficient to offset the effects of these escalating external factors.
- Unemployment and the Plight of African Youth
High unemployment rates pose a significant economic challenge in many African countries. For instance, Angola, with a misery index score of 93.518, and South Africa, scoring 83.492 on the index, have been grappling with substantial unemployment issues. In Botswana, Eswatini, Gabon, Sao Tome and Principe, Congo (Brazzaville), Libya, Nambia, Lesotho, Tunisia, and Mauritania, the index scores range from 45.4 to 64.023, indicating the prevalence of unemployment and its impact on their respective economies.
The situation becomes particularly alarming when considering the plight of young people in Africa. The African Development Bank highlights that youth unemployment in many African nations exceeds twice the rate of adults. This means that millions of young individuals struggle to secure employment, severely impacting their future prospects.
Former Zambian finance minister, Alexander Chikwanda, vividly described youth unemployment as a “ticking time bomb.” This analogy powerfully emphasizes the potential consequences of this issue. With an estimated 10-12 million young people entering Africa’s labor market each year, it is evident that youth unemployment demands urgent attention.
Beyond its economic implications, youth unemployment also carries serious security concerns. Nigerian journalist Ahmad Salkida highlights how militant groups like Boko Haram find it easy to recruit frustrated and unemployed young individuals. This underscores the imperative to address youth unemployment not only as an economic challenge but also as a preventive measure against security threats in the region.
- Political Instability, Poor Governance, and Excessive Lending Rates
Political instability, as witnessed in Sudan, exacerbates economic challenges. The recent war in Sudan resulted in loss of life and forced displacement of a significant portion of the population. Political conflicts disrupt economic activities, deter investment, and hamper the implementation of effective economic policies, further deepening the misery experienced by citizens. In 2023, West Africa faces heightened instability with recent coups in Burkina Faso, Guinea, and Mali, coinciding with ongoing conflicts in the Sahel and extending violence to previously peaceful areas like Benin and Togo.
Poor governance, as evidenced by low scores on governance indicators measured by the World Bank, exacerbates the situation, with political instability and violence, including terrorism, experiencing the most significant decline over the past two decades. These governance indicators, particularly instability, not only undermine peace and security but also have adverse effects on the region’s economic growth and development.
Instability brings political risk, which deters investors from the region, leading to minimal foreign direct investment and limited trade. Moreover, our analysis of World Bank data reveals that while West Africa’s GDP has grown at a compound annual rate of 4 % between 1990 and 2021, per-capita growth has been sluggish at just 1.3 % due to rapid population growth. These factors highlight the urgent need for stability, good governance, and effective measures to attract investment and foster sustainable economic growth in the region.
Excessive lending rates, such as those observed in Zimbabwe (131.8%) and Angola (20.118%), pose significant barriers to economic growth and development. These high rates make it difficult for individuals and businesses to access credit, hindering investment, entrepreneurship, and overall economic expansion. In Africa, interest rates play a crucial role in shaping economic growth and affecting access to basic needs.
While higher interest rates can indicate economic potential and stimulate investment, this is not always the case. Zimbabwe stands out with the world’s highest interest rate of 150%, making it the most expensive country to borrow money in. Ghana also faces challenges with high interest rates of 29.5%, reflecting efforts to curb inflation. Sudan, on the other hand, records a benchmark interest rate of 27.30%, attributed to various factors such as macroeconomic imbalances, structural deficiencies, political instability, and the impact of COVID-19. To ensure economic stability and growth, it is crucial to address lending rates and create an environment that fosters economic development.
Watch out for the concluding part
President Bola Tinubu said that his administration has initiated a project to install fibre optic cables across the country, aimed at enhancing the socio-economic development of Nigeria.
His plans were contained in a speech he delivered at a joint session of the National Assembly in commemoration of Democracy Day on Thursday, June 12.
He said the fibre optic layout is part of other projects being embarked on.
“In addition, we have embarked on an ambitious project to lay fibre optic cables across the nation, a transformative step toward bridging the digital divide and fostering greater connectivity.
“This initiative promises not only to enhance the speed and reliability of internet access but also to revolutionise how businesses operate, how students learn, and how communities stay connected,” Tinubu stated.
He maintained that by extending this critical infrastructure, his government is empowering entrepreneurs, enabling digital education, and providing the tools for our youth to compete in a globalised world.
In a most recent report on Internet connectivity, The ICIR pointed out how Nigeria has faced setbacks in its deployment of fibre optic cables and needs a transformation.
The challenges revolve around vandalism, inadequate coordination between road construction and telecom infrastructure, and varying right-of-way (RoW) charges across states.
Among industry experts, these issues impact network outages, increase repair costs, and hinder broadband expansion efforts.
It has also further threatened the digital economy, leading to slower Internet speeds, dropped calls, and unreliable connectivity among others.
African startups raised more than $345 million across 65 deals in May, more than double the amount raised in the same period of last year, according to a report by Briter, a research and business intelligence firm.
The report disclosed that both the number of deals and participating companies declined, confirming a growing trend of fewer companies raising funds in larger sizes.
It said fintech attracted the highest share of funding in May, accounting for 34 percent of the total, while cleantech followed closely, driven by a debt deal from Sun King. The company raised $80 million (in local currency) to expand clean energy access in Nigeria.
“Equity remains the primary instrument in terms of total value. There’s no doubt about it; in fact, equity deals with disclosed amounts captured more than half of the total funding volume in May.
“However, debt financing is increasingly proving its weight. Although it accounted for only 8 percent of all deals, it represented 32 percent of the total funding, highlighting the typically larger size of debt transactions. With the rise of specialised vehicles targeting early-stage businesses, debt is becoming an increasingly important part of Africa’s innovation funding landscape,” it said.
Briter’s report added that grants continued to play a vital role in early-stage support, especially in the education technology (EdTech) sector. The Mastercard Foundation led the pack in grant activity, funding a new cohort of EdTech innovators in Nigeria and Kenya. Each selected startup is set to receive $100,000 in grant funding, in addition to mentorship and business development support.
Multilaterals also made a strong showing in May, it said. The Multilateral Investment Guarantee Agency (MIGA), a World Bank Group member, issued a $179.6 million guarantee to CleanTech firm KOKO Networks. The support will help scale its clean energy solutions across Kenya.
“This deal not only demonstrates growing international confidence in African climate ventures but also signals a promising pathway for other asset-intensive startups in clean cooking, agriculture, and renewable energy,” the report said.
From a geographic perspective, Egypt emerged as the continent’s fundraising powerhouse for the month, contributing 51 percent of all funding raised. The country recorded 12 deals across equity, debt, and bond instruments. Notably, FinTech platform MNT-Halan raised $50 million through a bond issuance, further illustrating the diversification of capital-raising mechanisms in the region.
Outside Egypt, funding was distributed across Africa’s three other key markets, which are Egypt, Nigeria, and Kenya, with limited activity recorded in countries such as Ghana, Tunisia, Morocco, and Uganda, each registering between one and three deals.
In terms of exits, the African tech landscape continues to mature. Three companies—Baobab+, Qardy, and Shopa—were acquired in May, bringing the total number of exits this year to 22. This already surpasses last year’s count for the same period. Qardy was acquired by Catalyst Partners Middle East (CPME) in a disclosed deal valued at $23 million, the report added.
By Nancy Werteen
When you get anti-hacking advice, you’ve probably heard “Don’t use a simple password,” or “Don’t plug in that USB you found on the ground.”
But there’s one form of hacking that doesn’t always require a computer, and it costs businesses about 4.88 million dollars a year.
Modern hackers aren’t trying to get into your computer; they’re trying to get into you.
“They’ll try to learn about you a little bit, and they’ll try to use that information against you to try to get you to complete some action, maybe to send somebody some money,” said Kevin Moran, PhD, Assistant Professor of Computer Science, Cyber Security and Privacy Cluster, University of Central Florida.
IBM calls this human hacking, because it exploits human error instead of system error.
“With people just being busy and maybe not very carefully checking some of the emails or the phone calls that they get, can be something unfortunately that people can fall victim to,” said Moran.
Also known as social engineering, this often takes the form of phishing, where the hacker tries to “fish” the information out of you by impersonating family, friends, or even your bank.
There’s also baiting, where the hacker baits you with something of value. Remember the Nigerian prince scam?
That’s a famous example of baiting. There’s also pretexting, where the hacker will claim the victim has already been hacked, and that the hacker can fix it if you just send over your passwords. So, what can you do?
“Just as a rule of thumb, instead of clicking on links and emails, just go to the website yourself. And that will prevent, a lot of these types of attacks from happening,” explained Moran.
Phishing can take many forms.
Spear phishing targets people with access to confidential information, often to get access into an entire business, and whale phishing targets CEOs or political figures.
Search engine phishing is when hackers create fake websites promising services or goods you’ll never receive.
Angler phishing is when hackers create fake social media accounts impersonating famous people or companies.
Finally, vishing and smishing is phishing done through phone calls and texts respectively.
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