How does Agriculture, Industry and Service contribute to GDP
How much revenue do SADC countries generate form three main industries and how does their reliance on these industries effect the country’s GDP
Where do SADC Countries Make their GDP
What is SADC
SADC (Southern African Development Community) is an intergovernmental organisation founded in 1992.The main goals of SADC is to Increase Development in Member States, Maintain Peace and Security within its Member States, Help Member States Achieve Economic Growth, Increase the Standard of living in Member States and Support Disadvantaged People through Development.
Member States
- Angola
- Botswana
- Comoros
- Congo D.R
- Eswatini (Swaziland)
- Lesotho
- Madagascar
- Malawi
- Mauritius
- Mozambique
- Namibia
- Seychelles
- South Africa (RSA)
- Tanzania
- Zambia
- Zimbabwe
GDP ($) in Numerical Order
- Mauritius- $11 400
- South Africa- $10 700
- Botswana- $9000
- Seychelles- $7800
- Namibia- $7200
- Eswatini (Swaziland)- $4900
- Lesotho- $3000
- Angola- $1900
- Zimbabwe- $1900
- Mozambique- $1200
- Madagascar- $800
- Zambia- $800
- Comoros- $700
- Malawi- $600
- Tanzania- $600
- Congo D.R- $94,69
Agriculture
15 of the 16 SADC countries have less than 5% Agriculture. Congo D.R has the highest agriculture percentage which 13.27%. The reasons behind Congo D.R having a large agricultural industry is based on the fact that the country has 80 million hectors of arable land. The agricultural industry in Congo D.R has also employed 60% of their population. Despite the fact that they have the largest Agricultural industry of the 16 SADC countries, Congo D.R does still have many issues with food security. The main drivers of food insecurity in Congo D.R are economic mismanagement by corrupt government officials, the increase in violence and the outbreak of the Covid-19 pandemic which has put strain on an already struggling economy.
The second highest agricultural SADC nation is Tanzania which has the second lowest GDP of the 16 SADC nations. Tanzania’s economy is heavily dependent on agriculture which can make their economy vulnerable to factors such as extreme weather (drought or flood), and varying prices of commodity. The lack of agricultural infrastructure and technology has left Tanzania vulnerable to the drought and flood, which can have a devastating effect on unemployment in the agricultural sector and food security in the country.
Comoros has the third highest agricultural industry and fourth lowest GDP of SADC countries. Like Tanzania, the economy of Comoros is heavily reliant on Agriculture which accounts for 40% of its GDP. Comoros is made up of two agricultural zones, the coast (which grows import crops) and the highlands (which grows crops for domestic use). The value of the crops that are exported influences the revenue generated by Comoros, the value is known to fluctuate based on external factors such as demand and natural disasters such as cyclones. The revenue generated from their exports can either be a massive profit or a massive loss for the economy. The agricultural industry in Comoros is starting to suffer to the decline of in soil quality and deforestation brought about by farmers.
Malawi has the fourth largest agricultural industry and the second lowest GDP tied with Tanzania. With 80% of it’s population living in rural areas, the economy of Malawi is heavily reliant on agriculture. The biggest crop produced in Malawi is tobacco, however with the recent decline in tobacco prices and limited production of tobacco products has put a strain on the economy of Malawi. Traditionally Malawi has been a self-sufficient nation and the majority of its population produces and provides food for themselves. Despite the declining tobacco industry Malawi has generated revenue from exporting tea, coffee, and sugar. However much of the nation’s financial wealth lies in the hands of a small elite.
Madagascar has the fifth largest agricultural industry and the fifth lowest GDP tied with Zambia. Unlike the previous four nations mentioned above, the economy of Madagascar is not as heavily reliant on agriculture, however it does account for majority of the nation’s exports. Madagascar also has potential to increase its revenue from agriculture due to the nations soil and climate diversity. Despite its promising agricultural industry, the nation of Madagascar is still suffering from a high amount of poverty. Due to the lack of agricultural infrastructure and old farming methods the agriculture industry of Madagascar is open to disasters such as decline in soil quality as well as cyclones, droughts, and locust plagues.
Mozambique has the sixth largest agricultural industry and the seventh lowest GDP. Much of the economy relies on foreign donations to stabilise the economy. The agriculture industry employs 80% of the labour force and contributes 31.5% to the GDP. The potential for agricultural growth is high due to the fertility of northern Mozambique and the abundance of marine life which has not been fully utilized. Due to the fertility of the country as well as the abundance of water, the agricultural potential in Mozambique has been high even in times of drought, flood, and cyclones. Despite the promising agriculture industry in Mozambique the country still suffers from high poverty rates due to the high government debt and increased inflation that happened in the early 2000s.
Zambia has the seventh largest agricultural industry and fifth lowest GDP tied with Madagascar. Despite its low GDP Zambia is a developing country, and a good portion of its population have achieved middle class status. The nations capital, Lusaka, is the fastest growing city in SADC. In terms of doing business Zambia ranks eighth in Africa and fifth in SADC. According to Forbes Zambia is the seventh best country to do business within Africa. The economy of Zambia is not heavily reliant on agriculture and much of its employment is based in urban areas. Despite its growth, Zambia still has problems with high unemployment, poverty, and high public debt. Agriculture only makes up 2.7% of the GDP in Zambia, much it is cash crops and staple foods. In recent years the agriculture industry in Zambia has experienced growth in Floriculture. The recent growth in floriculture has even started to rival the mining industry in Zambia. Zambia does have the potential to increase its agriculture industry as only 20% of it’s arable land is used for its agricultural industry. The agricultural industry in Zambia has suffered due to low prices, shortage of foreign currency, shortages in availability and distribution problems.
Zimbabwe has the eighth largest agricultural industry and eighth lowest GDP. Majority of the nations exports are contributed by the agricultural and mining industry and Zimbabwe has the second largest informal economy in the world. The agricultural industry in Zimbabwe is made up of both commercial and self-sufficient farms. Agriculture in Zimbabwe has taken a knock in 2000 during the Land Redistribution Program. During the Land Redistribution Program many farmers were forced off their land and the new owners did not have deeds, which meant that they did not have collateral for bank loans. Many of the self-sufficient farmers did not have any experience on commercial farms. The University of Zimbabwe has estimated that between 2000-2007 the agriculture industry decreased by 51%. In 2008 tobacco farming did increase in Zimbabwe due to demand in China, and today many tobacco farms have received outside help with loans and farming equipment. Today tobacco accounts for 11% of the country’s GDP. Poverty and high unemployment rates brought about by a shrinking economy, corruption and hyper-inflation remain major problems in Zimbabwe. Many entrepreneurs have gone bankrupt between 2000-2014 due to the negative economy of the country.
Lesotho has the eighth smallest agriculture industry and the seventh largest GDP. Lesotho is largely dependent on agriculture despite the fact that only 10% of the country’s land can be cultivated. Recent droughts and heavy rains have decreased food production in Lesotho which contributed to widespread poverty in rural areas. Majority of the population in Lesotho live in rural areas and much of its food is imported to South Africa leaving the country with only 30% of its needs met.
Swaziland (Eswatini) has the seventh smallest agriculture industry and sixth highest GDP. Despite its small agricultural industry, the country is still highly dependent on it. The majority of the population is made of self-sufficient farmers which suffer from low levels of investment and low productivity. The declining productivity has led to high inequality and high unemployment rates.
Namibia has the sixth smallest agriculture industry and fifth highest GDP. The economy of Namibia is not heavily reliant on agriculture with much of it’s agriculture being self-sufficient. Namibia has a large higher-middle class population. Much of Namibia’s agriculture is self-sufficient and only 1% of the land is arable. The urban economy has made income inequality an issue in Namibia. With frequent droughts and bush encroachments Namibian farmers are under constant pressure to leave their conventional farming methods and find new ways to increase their production. Many farmers are now looking at alternative methods to generate an income. Not all hope is lost for agriculture in Namibia as there is said to be a large underground water supply and with wildlife conservation many farmers are now turning farms to guesthouses and employing much of its rural population.
Angola has the fifth smallest agriculture industry and the eighth lowest GDP tied with Zimbabwe. The economy of Angola has been affected by 40 years of conflict, despite that the agricultural sector does have potential for growth due the nations abundance in rich soil. Much of the agriculture done today in Angola is self sufficient agriculture. At one time Angola was a major food exporter but now it imports most of its food. Most of the economic problems stem from corruption within the government. A lot of land was destroyed during the wartime period, in which landmines were planted and destroyed arable land. During the war period almost, all agriculture was brought to a halt. There have been efforts to revive the once thriving agricultural industry, but nation seems to be more dependent on oil and other precious resources for economic growth.
Mauritius has the fourth smallest agriculture industry and the highest GDP. The economy of Mauritius is a diverse economy with much of its agriculture coming from the sugar industry. At one time the economy of Mauritius was heavily reliant on agriculture however new policies and investments have diversified the economy and created a new upper-middle class. 90% of arable land in Mauritius is made up of sugarcane and contributes 25% earnings towards the nation’s exports.
Seychelles has the third smallest agriculture industry and the fourth highest GDP. The economy of Seychelles is heavily reliant on tourism, but in an attempt to decrease its reliance in tourism the government has started increasing the agricultural and fishing industry. Despite the government attempts to expand the agriculture industry, Seychelles still imports 90% of its food. The government has been taking steps to make the agricultural industry more productive in Seychelles. Such attempts involve privatizing the agricultural industry, which limits the government’s role to only supplying infrastructure and carrying out studies on the land. Despite government efforts to increase agriculture, the economy of Seychelles is still heavily reliant on tourism and fishing.
South Africa has the second smallest agriculture industry and the second highest GDP. South Africa does have a large upper-middle class and diversified economy. The agricultural industry in South Africa only makes up 5% of the total formal employment and contributes 2.8% to the nations GDP. Two of the major issues that the agricultural sector is facing is increased competition from foreign businesses and high crime rates, especially with a high number of farm attacks. Only 13.5% of the land is arable with 3% of the land potentially being arable. The South African agricultural industry has suffered some losses due to climate change, droughts, and water shortages. The agro-processing sector has also been facing issues such as increased international competition which produces cheaper products and has led to a decline in South Africa exporting its processed agricultural goods.
Botswana has the smallest agriculture industry and the highest GDP. More than half of Botswana’s population lives in rural areas. Much of its agriculture is self sufficient and only meets a small amount of nation’s food needs. Botswana’s agricultural industry is dominated by cattle, with the Botswana Meat Commission having the monopoly on all beef production within Botswana. Despite its small agricultural industry Botswana has experienced growth in recent years. It’s reliance on diamonds as well as very few corrupt officials in government have created the same level of growth as some Asian countries.
Industry
Angola has the largest industrial sector in SADC. Much of its industry is generated through petroleum, diamonds, and iron. The country is heavily reliant on the oil industry; however, the oil boom came to an end in 2015 which has resulted in an economic contraction. Angola is the third largest producer of diamonds in Africa; however, the diamond industry has been failing to attract investment. The failure to attract investment in the diamond industry is largely due to corruption, violation of human rights and diamond smuggling. Diamond smuggling does cost the Angolan government $375 million in losses. Diamond production has been on the rise in recent years, this was all done in effort to attract foreign investors. Angola did have a large iron industry and has exported much of its iron to Europe prior to the Civil War. During the Civil War almost all of the mining infrastructure has been destroyed, in recent years however the government has been investing the iron mining industry.
Congo D.R has the second largest industrial sector. 60% of the country is covered by forest which provides timber. Congo D.R also has some of the largest oil and mineral reserves in the world, its untapped resources are estimated to worth $24 trillion. Due its large deposits of natural resources Congo D.R is often referred to as the wealthiest poor country. It could potentially be the richest country in the world with its resources. However, corruption, human rights violations, violence and conflict and the outbreak of the Covid-19 pandemic have negatively impacted what could potentially be the richest country in the world.
Swaziland has the third largest industry sector. Its industry sector is reliant on forestry, mining, textiles, and sugar production. Sugar is the country’s main export, before 2010 wood pulp was another major export, however when the company closed in 2010 that left sugar as the main export. Swaziland’s mineral sector is governed by a policy that was drawn up prior to the country’s independence. The mining industry did rely on asbestos, however a decline in demand has led to a decline in supply. Recently gold, diamond and iron ore deposits were discovered however there is not enough investment in the mining sector for any revenue to be generated from those mines.
Botswana has the fourth largest industry sector. The industry sector of Botswana is heavily reliant on diamond mining, which contributes 50% of the country’s revenue. Last year Botswana’s diamond industry has seen a decline, only producing 17 million carats, this is a 29% decline form 2019. Despite this decline, Botswana is the second largest producer of diamonds in the world. In an effort to decrease its reliance on diamonds and the electricity it imports from South Africa, Botswana has started to work on power stations. With outside help the government aim is to become a major player and exporter of electricity. This will decrease its reliance on South Africa for importing electricity. Being such a diamond rich country, Botswana’s manufacturing industry is dominated by diamond processing and a growing jewellery industry. Despite its large diamond manufacturing industry, the country does have a notable food processing industry, largely beef processing.
Lesotho has the fifth largest industry sector. Lesotho is moving from a self-sufficient farming economy to a diversified economy that exports natural resources and manufactured goods. Lesotho only has two major resources, water, and diamonds. They have been working on a hydroelectric plant that will help the country produce its own electricity when completed. The hydroelectric plant will also help generate income when Lesotho exports electricity to South Africa. The diamond industry in Lesotho has suffered a set back due the 2008 recession, but it has made a comeback and is one the country’s biggest exports.
Mozambique has the sixth largest industry sector. Mozambique has an estimated $200 million of resources; however, the impact of the civil war and lack of infrastructure means that these resources were never explored. The main minerals being mined are gold, coal, granite, titanium, and gemstones. The government loses $50 million from illegal exports. Manufacturing in Mozambique was once thriving; however, it has declined in recent years. There has been significant investment in the aluminium industry, the largest foreign investment in Mozambique, however it hasn’t made a large impact on the employment rate.
Namibia has the seventh largest industry sector. Mining is the largest contributor to the country’s GDP, with majority of that contribution coming from diamonds. The country also extracts gold, silver, tin, and salt. The mining sector is small, but promising and can help diversify Namibia’s economy. The fishing industry contributes a significant amount to Namibia’s GDP due to the rich fishing grounds. The fishing industry is the fastest growing industry in Namibia. The amount of available fish has declined; however, government policy has helped reverse the trend and stabilise the amount available. Currently the government is looking to develop fish farms as a way of preserving the amount available. Namibia’s manufacturing industry is limited, and the country is reliant on imported manufactured goods. Many of these good are imported into Walvis Bay which is expected to become an important commercial port in southern Africa.
Seychelles has the eighth largest industry sector. Much of its industry is reliant on tuna fishing. In recent years to decrease the country’s dependence on tourism the Seychelles government has tried to expand its fishing and small-scale manufacturing sectors. Construction, manufacturing, and industrial fishing contribute 28.8% to the GDP. Earnings in the fishing industry have been increasing due to the number of licences being issued to trawlers. The recent privatization in the tuna canning factory has seen a decrease in shipment costs and an increase in efficiency. The manufacturing industry in Seychelles is small scale and limited to agro-processing. Seychelles is heavily reliant on imported manufactured goods which accounts for 90% of the nation’s imports. The heavy reliance on imports and tourism leaves Seychelles open to many external shocks that could negatively impact the economy.
South Africa has the seventh smallest industry sector. Its industry sector is reliant on resource extraction; however, the economy is a diversified economy and so is the industry sector. South Africa is the world’s largest producer of platinum, second in titanium, eleventh in gold, and sixth in iron ore. Historically mining has been the backbone of South Africa’s economy. Despite the decline of mining in South Africa, the sector still accounts for 60% of the country’s exports. The manufacturing industry in South Africa is relatively small and only accounts for 13.3% of employment and 15% of GDP. Despite its small size many sub-sectors of the manufacturing industry in South Africa are growing. The automobile industry in South Africa contributes 7.5% to the GDP and accounts for 10% of manufactured exports. The reason behind the small manufacturing industry is because of the low international demand for South African manufactured goods.
Mauritius has the sixth smallest industry sector. Mauritius does not have very many natural resources or minerals, because of this commercial mining has not been carried out on a large scale in Mauritius. Mauritius does produce basalt for construction, fertiliser, sea salt, and lime from coral. The manufacturing industry has contributed 17.7% to the GDP of Mauritius. Over the years the manufacturing industry has grown in Mauritius largely thanks to new innovations within the country and an export orientated strategy. The manufacturing industry in Mauritius is focused largely on textiles, seafood, and sugar production.
Zambia has the sixth smallest industry sector. The economy of Zambia has historically been based on copper mining. The copper industry has suffered some setbacks due to decrease in prices and investors threatening to withdraw their investments. However, in 2004 the increase in the value of copper had increased and as a result had attracted international interest. Today copper accounts for 85% of Zambia’s export and the copper industry remains central to country’s economy. There have been concerns about the economy not being diversified, the over reliance on copper could have a negative impact on the economy of Zambia if prices were to fall.
Zimbabwe has the fifth smallest industry sector. There are two power stations responsible for supplying electricity to Zimbabwe, however due to crumbling infrastructure and neglect these stations cannot supply the full demand to the people, resulting in rolling blackouts. As a result of not being able to produce enough electricity for the country Zimbabwe is forced to import electricity from South Africa, Zambia, and Congo D.R. Zimbabwe’s soil is rich with resources. There are large deposits of platinum, gold, diamonds, and iron. The diamond industry in Zimbabwe has suffered a major fall in share prices due to the laws which only allowed local ownership. The diamond industry also suffers with corruption and a lack of transparency of revenue, this has left the wealth generated from diamonds in the hands of a small elite. It is estimated that this elite has stolen $2 billion worth of diamonds.
Tanzania has the fourth smallest industry sector. Industry is a growing sector in Tanzania, and it has contributed 22.2% of GDP in 2013. The industry sector is made up mostly of mining, manufacturing, electricity, and construction. The majority of revenue generated from the mining industry is generated from gold. There are still notable amounts of diamonds, and coal (which is used domestically.) The electricity industry in Tanzania is big, however only a small part of the population has access to it. The electricity industry has suffered losses due to theft and problems with distribution. Hydro-electric power is not 100% reliable as supply is often disrupted during times of drought, which causes rolling blackouts. A very large deposit of natural gas has been discovered in Tanzania, which has increased production and employment within the manufacturing industry. With these recent discoveries growth is likely to happen for the foreseeable future. Despite its large natural gas deposits exploration will be slowed down due to a fall in gas prices.
Madagascar has the third smallest industry sector. The industry sector of Madagascar is dominated by mining and textiles. Mining is an emerging industry in Madagascar and has been attracting investment. Many projects are underway to increase the production of oil and gas, if these projects are successful, they could boost the economy of Madagascar. The mining industry in Madagascar has however had a negative effect on the environment as well as local communities effected by them.
Malawi has the second smallest industry sector. The industry sector in Malawi is dominated by Food, and beverages, pharmaceuticals, forestry, and electricity. Most food produced in Malawi is raw and much of the food available to them has been imported from South Africa. Malawi is large producer of tobacco which it exports, however the tobacco industry has suffered a setback due to the drop in demand. The forestry industry is largely made up of man-made forests, however illegal logging has caused the country to suffer deforestation. Electricity in Malawi is hydro-electric and controlled by only one company. A very large part of the population does not have access to electricity. Electricity is hydro powered, however due to drought and less availability of water the country has been suffering from rolling blackouts.
Comoros has the smallest industry sector. Much of its industry is internal and only contributes 5% of the GDP. Majority of the industry in Comoros is made up of cash crops, printing, carpentry, shoe making, handicrafts and fishing boats. The country has many obstacles when it comes to industry growth, the biggest challenges being its isolated location, shortage of skilled labours, and resources and the high cost of electricity.
Service
South Africa has the largest service sector. The service industry in South Africa is largely made up of tourism, telecommunications, business outsourcing, and financial services. In 1997 Telkom, a partly privatized parastatal, had the monopoly in the telecommunication industry, that monopoly ended in 2002 when Neotel entered the market. Telkom has been increasing its service into previously unreachable areas and supplies a large number of South African households with internet and phone service, in both rural and urban areas. The mobile industry is powered by five mobile providers, MTN, Vodacom, CellC, Telkom Mobile and Rain. With more than 50 million mobile users South Africa is considered to have the fourth most advanced mobile network in the world. The South African tourism industry holds a significant portion of the country’s GDP and employs 10.3% of the nation’s workforce. With its diverse culture and picturesque landscape South Africa has manged to attract a sizeable amount of tourists. Over the years marketing and the availability of affordable flights have kept bringing tourists to South Africa. The tourism industry has recently suffered a setback due to the outbreak of the Covid 19 pandemic, however the future of tourism is looking bright when travel returns back to normal. In recent years the city of Cape Town has been attracting numerous foreign businesses looking at establishing call centres in South Africa. These call centres helped in job creation, providing low skill labour to many people in the city. The financial sector in South Africa is the most sophisticated on the continent, with the JSE (Johannesburg Stock Exchange) being the largest stock exchange in Africa and the seventeenth largest stock exchange in the world. The South African banking industry has established itself as one of the most internationally competitive banking industries in the world. The banking industry is overseen by the South African Reserve Bank and is dominated by four large banks, ABSA, Nedbank, Standard Bank, and First Rand, all four of these banks offer both retail and investment services.
Seychelles has the second largest service sector. The country’s service sector is made up largely of tourism, and the public sector. In recent years the Seychelles government has been trying to decrease its reliance on tourism and increase its reliance on fishing and agriculture. This move was made after the decline of tourism in 1991-92, even after tourism made its comeback Seychelles tourism industry faced international competition. Tourism accounts for 16.6% of the nation’s GDP. Other industries such as construction and commerce rely on the revenue generated by the tourism industry. The public sector employs two thirds of the country’s population and accounts for one third of the GDP. The lack of diversity in Seychelles’ service sector has left the sector open to external shocks, such as global pandemics and economic downturn which could result in less tourists having disposable income needed for travel.
Mauritius has the third largest service sector. The service sector in Mauritius is dominated by tourism and financial services, however the ICT (Information and Communication Technology) industry has seen growth in recent years. Many tourists flock to Mauritius for the beautiful beaches and tropical climate. The increasing number of international airlines operating in Mauritius has helped give the tourism industry a boost. The tourism industry in Mauritius has been depending on arrivals from Africa and Asia, however increased service in Europe has helped increase the number of European arrivals as well. Despite the setback in the tourism industry, due to the outbreak of the Covid 19 pandemic, the economy of Mauritius is diversified and has had other industries and sectors to fall back on in these uncertain times. When international travel does resume the tourism industry in Mauritius will no doubt be up running once again. As a result of economic success in the 1980s, Mauritius has provided a great business environment for banks and other financial services. The financial industry has enjoyed growth, due to the number of local and international banks as well as many other financial institutions opening up shop in Mauritius. The increase in financial services have been happening due to friendly policy that makes doing business easier as well as transparency laws which help decrease corruption and increase investor safety. The ICT industry has been a growing industry since the beginning of the century and its workforce is steadily increasing. As businesses begins to modernise and as more businesses invest in Mauritius, the need for talented IT professionals has increased. The ICT industry accounts for 5.8% of the country’s GDP. The telecommunications industry in Mauritius has helped decrease the reliance on tourism and diversify the economy.
Namibia has the fourth largest service sector. Much of the service sector is made of tourism and businesses that rely on tourism for revenue, the financial industry has seen a sharp decline due to the low demand for banking services as well as the increasing number of people leaving their banks. Tourism accounts for 14.5% of the GDP and is the largest direct and indirect employer in the country. The reasons for Namibia having a limited-service sector are due to the reliance on self-sufficient agriculture as well as the large amount of people entering the informal economy. Despite this, recent strategies to increase tertiary education and to increase employment in the formal sector are underway. Namibia annually has 25 000 school graduates however only 8000 of those find employment in the formal economy. The tourism industry has suffered a setback due the outbreak of the Covid 19 pandemic, however relaxed restrictions have helped reduce the loss that the industry is facing. Despite Namibia’s large service sector, the lack of diversity has left the sector open to external disasters which could have a detrimental effect on the economy.
Zimbabwe has the fifth largest service sector. Zimbabwe has the second largest informal economy in the world. Much of its service sector relies on transportation, tourism, and mobile industry. The transportation industry in Zimbabwe has suffered major setbacks due the lack of investment and has since fallen into a state of disrepair. Tourism is the third largest industry in Zimbabwe, however tourism have fallen due to the government crackdown on peaceful protests which has harmed the image of the country as a tourist destination. On top of its declining tourism industry, Zimbabwe doesn’t attract many tourists from outside of Africa, with most of its arrivals coming from Africa. The decline in tourists from outside of Africa is largely due to the recent events in the country, the lack of direct international flights outside of Africa, the competition with neighbouring countries and the outbreak of the Covid 19 pandemic. Due to the hyper-inflation and lack of disposable income within Zimbabwe domestic tourism is suffering as well. The government has been trying to come up with strategies to increase tourism in Zimbabwe however due to political manoeuvring these policies are not achieving what they were created to achieve. Due to the lack of phone lines, telecommunication industry in Zimbabwe is dominated by the mobile industry. Zimbabwe has three mobile providers, Telecel, Net*One, and Econet. Zimbabwe suffers from a lack of physical currency, however, to solve this problem EcoCash was founded. EcoCash is a mobile based money transfer service. Many businesses in Zimbabwe have started to accept EcoCash as a form of payment. Due to the convenient nature and easy access of EcoCash, many conventional banks have been suffering. This is due to the high fees that many cannot afford to pay. EcoCash allows people to transfer, pay for goods, services, and utilities, and purchase airtime. Electricity in Zimbabwe is supplied by two power stations however due lack of funding these power stations cannot keep up with demand and rolling blackouts are the norm. Zimbabwe imports much of its electricity from Congo D.R, Zambia, Mozambique, and South Africa.
Comoros has the sixth largest service sector. Much of the service sector in Comoros is reliant on the tourism industry. In the 1980s many tourist facilities were developed thanks to the help of South African investment in the tourism industry. However, with the end of the apartheid regime and other nearby destinations welcoming South Africans, South Africa’s interest Comoros and its tourism industry declined. Comoros has all the natural resources needed for tourism, however political instability and competition from other nearby destinations have resulted in the weak tourism industry. The banking system is made of the Central Bank of the Comoros, The Bank for Industry and Commerce, Development Bank of Comoros (which funds many small and medium projects on the island), Federal Bank of Commerce, and Exim Bank Comores Ltd. There have been recent government strategies to decrease the country’s reliance on tourism, and increase manufacturing and agriculture, however there are less plans to increase the country’s service sector.
Madagascar has the seventh largest service sector. The service sector of Madagascar relies mostly on tourism and foreign investment. Due to its unique biodiversity and culture, Madagascar has become a place of interest for tourists. The government has developed strategies to increase the number of tourists who visit Madagascar, these strategies are aimed at reducing poverty through revenue generated from tourism as well as creating jobs that relate directly and indirectly to the tourism industry. Despite the country’s growth in tourism, the growth is still relatively small compared to Mauritius or Seychelles. The improvement of infrastructure and increased service of international airlines would help the tourism industry of Madagascar grow. The biggest challenges that the tourism industry in Madagascar face is, expensive flights due to the lack of competition in airlines, lack of infrastructure or sub-standard infrastructure, and the lack of diversified tourism options. The recent outbreak of the Covid 19 pandemic has set back the development plans, however with increased investment in the post pandemic world as well as increased number of tourists, Madagascar has the potential to grow its tourism industry. Much foreign aid in Madagascar goes to the tourism industry as well as the textile industry. Due to the widespread poverty in Madagascar, only a small part of the population has access to telecommunication, with most telecommunication being received via radio. The lack of economic diversification in the service sector in Madagascar can have negative effects for the economy of Madagascar. The nation’s over reliance on tourism and foreign aid leaves it open to external disasters such as economic crisis and global pandemics which effect tourism.
Botswana has the eighth largest service sector. Botswana’s service sector is reliant on tourism and the financial industry. Tourism accounts for 12% of Botswana’s GDP and remains an important part of the country’s economy. With its excellent game parks, and unspoiled scenery the increasing tourism industry in Botswana has helped in diversifying the economy. There is a strategy in place to help increase tourism as well as the employment opportunities in the tourism industry. Despite employing 4.5% of the formal workforce, the higher paid management positions in the tourism industry are held by foreign workers. The increase in Botswana’s tourism industry has helped with infrastructure development and social upliftment in rural areas. Despite this growth and development, foreign based tourism companies are not putting any money or resources towards development and social upliftment. The BSE (Botswana Stock Exchange) is one of the best performing stock exchanges in Africa. In terms of capitalization the BSE is the third largest stock exchange in Southern Africa, having returned an aggregate of 24% in the last decade. The BSE currently has 40 listed companies and has offered some of the best investor returns. Despite its great financial records, many people in Botswana have not purchased a formal bank product, due to the lack of access to formal banks in rural areas. Despite this challenge, the plans to modernise the banking industry and introduce internet banking have been put into place to increase the access to formal banking service in rural areas. Recently the country’s tourism industry has suffered a setback to the outbreak of the Covid 19 pandemic, however Botswana’s diverse economy and reliance on multiple sources of income have shown that the economy can be strong and resilient in uncertain times.
Malawi has the eighth smallest service sector. The service sector of Malawi is largely reliant on tourism, telecommunication, and banking. The Malawian tourism industry employs 3.8% of the country’s workforce. It has significantly grown and there are strategies in place to further expand the tourism industry. Malawians spend 56% of their salary on mobile phones. Malawi is the fifth most expensive country to purchase mobile data in and owning a mobile phone has become a luxury, with many Malawians struggling to make ends meet. The reason why data charges are so high in Malawi is due the fact that licenses and violation fines that mobile providers have to pay are so high, as a result they pass that cost on to the consumer. Mobile providers have tried introducing pay as you go bundles however these have not succeeded in bringing the price of data down, they are also not very popular as the data purchased through a pay as you go plan has an expiration date. The banking industry in Malawi is made up of nine banks. Despite there being nine banks, due the high levels of poverty only 10% of the country has access to a formal banking institution. Most of those who do have access to a formal banking service live in urban areas. Despite the low number of banks in Malawi, The Opportunity International Bank of Malawi has tried increasing service to both semi-urban and rural areas. They have also launched a mobile service called Banki Manji in an effort to increase the accessibility to formal banking services in rural and semi-urban areas.
Zambia has the seventh smallest service sector. The service sector in Zambia relies largely on tourism and finance. Tourism is growing in Zambia, with many tourists visiting the national parks, the historic monuments, and Victoria Falls. Companies in the tourism industry as well as investors have been given tax incentives to help increase the tourism industry in Zambia. This has helped in promoting Zambia’s private sector and increasing revenue for these businesses. Being a highly urbanised nation, the ICT (Information and Communication Technology) industry has been experiencing growth. There are three mobile providers in Zambia ZAIN, MTN, and CELTEL. The lack of competition has meant expensive mobile and internet costs, however there are new regulations that provide incentives for mobile investment in a bid to increase competition and bring down mobile costs. There are currently 19 internet service providers in Zambia, however only 14 of them are operational. Despite having so many internet providers only 15.4% of the population have internet access. This is due to the lack of terrestrial cables that link the country to submarine cables. The only point of entry for internet providers is through Namibia. Despite its limited internet access there are plans in place to connect terrestrial lines to submarine lines in South Africa. One of the biggest challenges that internet providers are struggling with is the lack of incentive to increase internet service in Zambia. There are currently 19 commercial banks in Zambia. Despite the large number of banks in Zambia the four largest banks hold two thirds of assets. Despite holding majority of the banking industry’s assets, the smaller banks as well as new entrants in the banking industry are getting more new customers and increasing competition within the banking industry.
Tanzania has the sixth smallest service sector. The vast majority of people who work in Tanzania’s service sector are employed in the informal economy. Much of the formal service sector relies on tourism, however, there has been growth in both finance, and ICT (Information and Communication Technology). The tourism industry employs 11% of the formal workforce. Tourism has been increasing due to the increased number of airlines offering direct flights to Tanzania, however with the 2014 Ebola scare and the recent outbreak of the Covid 19 pandemic tourism numbers have declined, along with declining tourism numbers many plans to expand the tourism industry have been halted. On the island of Zanzibar tourism plays a major role in the economy, however lack of direct international flights make it less competitive than other tropical islands nearby. Despite the growing tourism industry in Tanzania, majority of the tourists are from Africa, this can be attributed to the low cost of holidays and visa free travel for travellers from SADC and much of east Africa. In an effort to sustain economic growth, the Tanzanian banking industry has put plans to liberalize the economy. There liberalization and promotion of the free market in Tanzania’s banking industry has helped increase employment in the formal sector. The banking sector has attracted many foreign investors and contributed 4% to the country’s GDP. Currently there are more than 30 commercial banks in Tanzania and the mobilization in the banking industry has helped increase the nation’s access to formal banking services. The liberalization policies in Tanzania have helped with the rapid growth of the ICT industry in Tanzania. Tanzania’s ICT industry is the second largest in East Africa, just behind Kenya. The growth in the ICT industry has led to increased internet and mobile service access. There are seven mobile providers in Tanzania, Airtel, Halotel, Smile, Tigo, TTC, Vodacom, and Zantel. After the launch of mobile broadband these seven mobile providers have also become leading internet providers. Internet access has increased thanks to fibre optic cables being installed in many parts of the country as well as the new submarine cable. Despite having a small service sector, it has been increasing and may help in diversifying the economy, increasing the formal workforce, and help give the Tanzanian economy a boost.
Lesotho has the fifth smallest service sector. The service sector in Lesotho relies heavily on retail, telecommunication, and real estate. The increase retail industry has been brought along by the increase in the garment manufacturing industry. Many big clothing brands have established themselves in Lesotho through sourcing and manufacturing. Due to the recent outbreak of the Covid 19 pandemic the retail industry hasn’t been performing well due to decrease in disposable income and many people losing their jobs. Despite the growing ICT industry in Lesotho majority of the population does not have access to the internet, nor do they have access to mobile service. The mobile industry in Lesotho is dominated by two services, Vodacom, and EcoNet Liquid. This duopoly has resulted in high prices for mobile services due to the lack of competition. Despite efforts to increase internet access in Lesotho, many still don’t have access to the internet, nor do they have access to a mobile service due to the high cost of these products. Due its unaffordability internet and mobile service access lie in the hands of a small elite.
Mozambique has the fourth smallest service sector. Mozambique’s service sector relies largely on tourism, telecommunication, and finance. Tourism in Mozambique has declined with the civil war which took place between 1977 and 1992. Since the end of the civil war there has been an opportunity for the country to rebrand itself as a tourist destination. Despite this opportunity, lack of budget for tourism marketing, and lack of land to develop tourist facilities leaves Mozambique’s tourism industry far behind its neighbours’ tourism industry. Other factors for the small tourism industry is the lack of international airlines that offer direct flights to Mozambique and strict visa policies for nationals outside of Africa. Despite being small, the tourism industry in Mozambique still attracts more international investment than any of its other industries. Mozambique’s mobile industry is dominated by three providers, Movitel, mCel, and Vodacom. Mobile penetration rates are still behind other countries in the region. Internet use in Mozambique has been limited due to the high cost of internet, however submarine cables have helped reduce the cost of internet in the country. With the recent outbreak of the Covid 19 pandemic, many mobile and telecom projects have been halted in Mozambique which led to the mobile industry experiencing a downturn recently. This downturn will cause negative effects such decrease in mobile sales and the struggle to maintain and develop infrastructure. Another negative effect that the Covid 19 pandemic has had on the telecom industry is the decrease in sales of mobile products and services, this sales decrease is the result of job losses and less available disposable income for people to purchase mobile products and services. Mozambique’s financial industry is made of nineteen commercial banks, most of which are foreign owned. Despite the large number of banks in Mozambique, 70% of the financial industry’s assets are owned by three banks. The Mozambique Stock Exchange is still in a very early development stage, having only eleven listed companies. Due to the lack of economic diversification, and the lack of domestic businesses that are big enough to be listed on the stock exchange, it is unlikely that Mozambique’s stock exchange will grow. Despite its growing finance industry, many people in Mozambique, especially in rural areas, have little to no access to formal banking products and services.
Swaziland has the third smallest service sector. The service sector in Swaziland is largely reliant on government services, and tourism. During the apartheid era in South Africa, and the civil war in Mozambique, Swaziland’s tourism industry developed making it a more competitive destination than its neighbours. The tourism industry did experience a decline in the 1990s when the apartheid era ended in South Africa and the civil war ended in Mozambique. Despite this decline, many tourists do still visit Swaziland, especially when traveling between South Africa and Mozambique. Due to the lack of growth opportunities in other service sector industries, the tourism industry in Swaziland is the only industry in the service sector that has potential for growth. In an effort to increase competition in its telecom industry a regulatory body was established in 2013. This regulatory body has been trying to end MTN’s monopoly, increase competition in its telecom industry, and provide competitive prices for mobile products and services. Despite fierce competition among four internet providers in Swaziland, the price for internet services still remain high, these high internet prices mean that majority of the country does not have internet access and penetration rates still remain low. Swaziland still depends on other countries to help with internet connectivity, as result internet prices are high, despite this new submarine cables in South Africa and Mozambique have helped increase bandwidth and have helped in bringing the price of internet services down. Despite the recent developments in Swaziland’s telecommunication industry, many people still do not have access to internet service, and recently there have been reports of the government monitoring emails and social media sites.
Angola has the second smallest service sector. The service sector in Angola is heavily reliant on transport. In an effort to diversify the economy and reduce the country’s reliance on oil and diamonds the government of Angola has created policies to try and increase its service sector. Despite its reliance on transport, much of Angola’s transport and roads are in a state of disrepair. Only 24% of the roads in the country have been paved. The transport industry as well as the state of the road still show the effects that the civil war had on the country. Air transport in Angola is monopolistic, this has resulted in high airfares and low numbers in tourism due to the cost of flights in Angola. There have been efforts to increase competition in Angola’s domestic aviation industry, however safety is one of the biggest challenges facing the aviation industry. Because business is tied to political stability in Angola, the success of growth in the private sector relies largely on political stability. Political stability has been achieved, however government interference in business has slowed and halted some of the nation’s development projects.
Congo D.R has the smallest service sector. The service sector in Congo D.R relies heavily on transport. Much of the country’s service sector is underdeveloped, due to the lack of developed infrastructure, political instability, and lack of business policies that are needed to create a productive business environment. There are twenty banks in Congo D.R, however only 4% of the population have access to a formal banking service. In 2013 44% of the population did have access to mobile products and services, that number has been increasing however growth, ownership and access is centred around the major cities in Congo D.R, especially in the nation’s capital Kinshasa. Internet access is severely limited, with only two out of hundred people having access to internet services. The service sector is highly dependent on transport, however lack of infrastructure, paved roads, armed conflict, and underdevelopment of transport means that transport is severely limited. Many areas are inaccessible due to the lack of roads and available transport to these areas. Despite having the potential for a thriving tourism industry, the DRC’s tourism industry still has to face challenges such as lack of tourist facilities, lack of infrastructure, and violent conflict in parts of the country which has caused fear among many potential tourists. The economic value of tourism has started to increase due to an increased number of arrivals, however it still remains low when compared with the value of tourism in other countries in the region. Corruption has also played a role in the lack of infrastructure, with much of the nations money and resources remaining in the hands of a small elite, much of that money has not been invested in the country and its infrastructure.
Conclusion
The countries with lower GDPs have larger agricultural sectors. Upon closer inspection however, these countries rely on self sufficient agriculture for food production. As a result, not much revenue is generated from the agricultural sector. The countries that rely on cash crops to generate revenue are open to price fluctuation, natural disasters, and economic recession in trade partner countries, which will result in less disposable income for foreign cash crops. The decline in the tobacco industry has led to less revenue being generated in countries that rely on tobacco for economic growth. The decline in the tobacco industry has shown that over reliance on a single cash crop leaves the economy open to a decline in demand for that particular crop.
Countries that overly rely on industry, manufacturing, and natural resources to generate revenue tend to perform better than countries that rely on agriculture, however they also leave themselves open to external disasters such as price fluctuation in natural resources and economic struggles in trade partner countries. If the price of particular natural resources drop less revenue is generated from that particular resource, leading to a lower GDP. Economic disasters in foreign trade partner countries results in less demand for a particular resource, due to less disposable income being available. This will result in these countries buying less of that particular resource and less revenue is generated from that resource.
Countries with large service sectors, also have higher GDPs than countries with smaller service sectors. The reason behind this is that these countries have diversified their economy in both sectors as well as industries within those sectors. The recent outbreak of the Covid 19 pandemic has had a devastating effect on countries that overly rely on tourism, however countries with large finance and ICT industries have helped increase the resilience of the economy. Countries with a large service sector aren’t immune to external disasters, the recent outbreak of the Covid 19 pandemic has resulted in job losses, decrease in tourism, and ICT projects which have been halted or slowed down due to there being less disposable income to continue with these projects. Countries with large internet and mobile industries tend have better income than countries with smaller internet and mobile industries. This is due to there being more competition amongst businesses, which has resulted in more competitive prices among mobile and internet service providers. The lower prices for mobile and internet services has resulted in more people having access to mobile and internet services. Countries with large financial industries have attracted more foreign investment, as a result more foreign businesses have been setting up base in these countries. As more foreign businesses set up base in these particular countries, more jobs are created, and more revenue is generated by a country’s economy.
In my research I have found that corruption, transparency laws, and violence all play a part in a country’s GDP. Countries that have experienced violence in the past, or are still experiencing violence now experience more poverty, this is due to displacement of individuals and destruction of infrastructure that could be used to generate revenue and increase GDP. Countries in which corruption is a major issue also have less transparency laws. The lack of transparency laws turns away potential investment due to the lack of investor safety. Many of these countries have also made laws that make doing business harder for potential investors. These laws do not create a productive business environment needed for a profitable business to run, as a result potential investors look to neighbouring countries that do provide investment safety and the necessary environment needed for a profitable business to run. The lack of transparency laws are a result of corruption, because of this, much of the revenue generated in these countries lies in the hands of a small elite. A lot of money in the hands of very few people not being fed into the economy has resulted in lower GDP. Due to this low GDP many foreign investors stay away knowing that their money too will lie I the hands of a small elite.
