All the countries on this list have at
least one trait in common: Their
governments discourage private
investment–and economic growth–through policies of crony capitalism,
expropriation or arbitrary enforcement
of the laws. That makes it difficult to
generate hard currency to pay off
government debt and discourages
citizens from investing in education
to improve their own economic lot.
9. Ghana
GDP per capita: $671
Inflation rate: 16%
Bauxite, the world’s largest manmade
lake, a 1-gigawatt hydroelectric plant
and now offshore oil. Ghana’s got it
all, except a functioning economy.
Persistent electricity shortages have
sidelined the massive Valco
aluminum smelter and the
government of Ghana must privatize
several money-losing state-owned
enterprises to reduce its budget
deficits, which run close to 10% of
GDP. Oil revenues are expected to
flow next year from offshore fields,
being developed by Anadarko
Petroleum and others. Perhaps the
government will use the money to
stabilize its finances instead of
launching another spending binge.
8. Liberia
GDP per capita: $234
Inflation rate: 10%
Once the site of some of the world’s
most vicious civil warfare, Liberia has
been relatively peaceful since 2005.
But the West African nation
established by freed slaves in 1847 is
swamped by $3.4 billion in war debt
and 85% unemployment. Some
economic growth is expected after
Arcelor Mittal begins shipping iron
ore from the Yekapi complex in 2011.
7. Eritrea
GDP per capita: $363
Inflation: 30%
Since gaining independence from
Ethiopia, this East African nation has
struggled to build an economy.
Extensive meddling by the ruling
Peoples Front for Democracy and
Justice doesn’t help. The U.S. State
Department. cites an “arbitrary and
complex set of regulatory
requirements” that discourage
domestic and foreign investment.
6. Burundi
GDP per capita: $163
Inflation rate: 8.5%
This war-ravaged Central African
nation needs $5.8 billion in
telecommunications, energy and
transportation investments over the
next 20 years to raise its economy to
sub-Saharan standards, according to
the African Development Bank. With
the government spending 12% of GDP
on its own employees, it’s hard to
see where the money’s going to come
from. Last year Burundi exported $44
million in coffee, leaving a $207
million trade deficit.
5. Nicaragua
GDP per capita: $971
Inflation rate: 1%
The government of socialist President
Daniel Ortega might be popular with
leftists elsewhere in South America,
but it isn’t delivering the goods at
home. The second-poorest country in
the Western Hemisphere after Haiti,
Nicaragua actively discourages
foreign investment and its citizens
suffer from blackouts, water
shortages and high energy costs that
disproportionately hurt the poor.
4. Sierra Leone
GDP per capita: $310
Inflation rate: 11%
Rich in diamonds, titanium and other
commodities, Sierra Leone might
finally be getting its act together. The
IMF projects 4.7% GDP growth in 2010
and a 2008 anticorruption act has led
to the removal of at least 13
government officials, including the
vice president’s chief of staff. But
with exports of just $205 million last
year, Sierra Leone struggles with a
current account deficit of almost 9%.
3. Guinea
GDP per capita: $414
Inflation rate: 8%
This West African nation sits on 30%
of the world’s known bauxite reserves
but has trouble attracting productive
investment. Poorly maintained roads,
military coups and constant
government meddling in private
business have slowed investments
like a $5 billion Guinea Alumina
project with Abu Dhabi and BHP
Billiton. Says the U.S. State
Department: “Many companies
already operating in Guinea have
slowed exploration efforts
considerably in fear that falling prices
and government intervention could
precipitate massive investment
losses.”
2. Democratic Republic of Congo
GDP per capita: $172
Inflation rate: 51%
Inflation spiked past 50% last year as
this commodity-rich nation’s central
bank extended too much credit to
troubled banks and it struggled to
pay $13 billion in external debt. Debt
service now accounts for 25% of
government revenue and 150% of
exports. A $3 billion mining deal with
China might help trim the DRC’s
massive current account deficit but
the government needs to fix a
dilapidated infrastructure and high
levels of malnutrition.
1. Zimbabwe
GDP per capita: $375
Inflation rate: 5%
At the height of its inflationary fever
in 2008, the price of a loaf of bread
soared from 200,000 Zimbabwean
dollars to 1.6 trillion. Dictator Robert
Mugabe’s policies of seizing
productive grain farms and handing
them to his political cronies has
turned the nation from one of Africa’s
biggest food exporters into an
economic basket case, reliant on
foreign aid to feed its people. A
power-sharing arrangement between
Mugabe and rival Prime Minister
Morgan Tsvangirai has led to some
reforms and inflation has cooled
since the government began settling
transactions in U.S. dollars.
[Credit: Forbes]
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