The economy of Africa consists of the trade, industry, and resources of the peoples of Africa. As of July 2005, approximately 887 million people were living in 54 different states. Africa is by far the world's poorest inhabited continent, and it is, on average, poorer than it was 25 years ago. Of the 175 countries reviewed in the United Nations' Human Development Report 2003, 25 African nations ranked lowest.

Africa's current poverty is rooted, in part, in its history. The transition from colonialism has been shaky and uncertain. Since mid-20th century the Cold War and increased corruption and despotism have contributed to Africa's poor economy. While China and India have grown rapidly and Latin America has experienced moderate growth, lifting millions above subsistence living, Africa has stagnated and even regressed in terms of foreign trade, investment, and per capita income. This poverty has widespread effects, including low life expectancy, violence, and instability, which in turn perpetuate the continent's poverty. Over the decades, attempts to improve the economy of Africa have met with little success.

Regional variation
While no African nation is wealthy enough to join the ranks of the developed nations in the Organisation for Economic Co-operation and Development (OECD), the entire continent is not utterly impoverished and there is considerable variation in its wealth.
Arab North Africa has long been closely linked to the economies of Europe and the Middle East.
South Africa is by far the continent's wealthiest state, both in GDP per capita and in total GDP, and its neighbours have shared in this wealth. The small but oil-rich states of Gabon and Equatorial Guinea round out the list of the ten wealthiest states in Africa.
West Africa, with its long pre-colonial history of trade and development, has tended to be wealthier and more stable than the continental average. Island nations such as the Seychelles, Cape Verde, and Mauritius, have remained wealthier than the continental nations, although the unstable Comoros remain poor.

The poorest states are those engaged in or just emerging from civil wars. These include the Democratic Republic of the Congo, Sierra Leone, Burundi, and Somalia. In recent times the poorest region has been the Horn of Africa, although it had historically been one of the wealthiest regions of sub-Saharan Africa. Ethiopia in particular had a long and successful history. The current poverty of the region, and the associated famines and wars, have been a problem for decades.

There is considerable internal variation within countries. Urban areas, especially capital cities, are generally wealthier than rural zones. Inequality is pronounced in most African countries; an upper class has a much higher income than the majority of the population.

Investment and banking
Banking in Africa has long been problematic. Because local banks are often unstable and corrupt, governments and industry rely on international banks.
South Africa alone has a thriving banking sector, aided by the international sanctions of the apartheid era, which forced out the once-dominant British banks. In the years after independence, African governments heavily regulated the banking sector and placed strict limits on international competition. In recent decades, banking reform has been a priority of the IMF and World Bank. One important reform was obtaining permission for increased penetration by foreign banks. South Africa has been the most successful in attracting local operation of foreign banks.

Encouraging foreign investment in Africa has been difficult. Even Africans are reluctant to invest locally; about forty percent of sub-Saharan African savings are invested in other markets. Foreign governments who invest may have ulterior motives not in the best interest of the African economies. The IMF and World Bank only lend money after imposing stringent conditions such as austerity policies.

There are two African currency unions; the West African Banque Centrale des États de l'Afrique de l'Ouest (BCEAO) and the Central African Banque des États de l'Afrique Centrale (BEAC). Both use the CFA Franc as their legal tender.

Foreign aid
Since independence there has been a constant flow of foreign aid into Africa. The benefits of this aid have been mixed. In many cases much of this aid was misappropriated by unscrupulous leaders. During the Cold War the main goal of much of the aid money was to win the allegiance of these rulers, and so their misappropriation of the aid was at the very least overlooked. Since the end of the Cold War almost all developed countries have slashed foreign aid spending. Many also allege that the aid that was not stolen was long misdirected.
For many decades the leading notion of development was government supervised mega-projects; today many believe that small grants to local businesses would be more effective.
One example of foreign aid which has come under considerable criticism is food aid. In some circles, it is believed that food aid does not solve any fundamental problems and can also lead to a dependency on outside assistance, as well as hindering the development of indigenous industries.
Food shipments in case of dire local shortage are generally uncontroversial; but as Amartya Sen has shown, most famines involve a local lack of income rather than of food. In such situations, food aid - as opposed to financial aid - has the effect of destroying local agriculture and serves mainly to benefit Western agribusiness which are vastly overproducing food as a result of agricultural subsidies. Historically, food aid is more highly correlated with excess supply in Western countries than with the needs of developing countries.

Debt relief
Advocacy for debt relief has become widespread. Each year Africa sends more money to Western bankers in interest on its debts than it receives in foreign aid from these countries. Debt relief is not a panacea, but relieving some of the burden, especially of debts that were run up by regimes for their own benefit, may help the economies of Africa grow and prosper. However, arguments against full and unconditional debt relief exist.

First, debt relief punishes nations which have managed borrowing well and do not need debt relief.
Second, unconditional debt relief will not necessarily cause nations to spend more in social programs and services, on the one hand, or to solve their financial problems without stifling the economy with the need for more taxes, on the other hand.

Finally, debt relief may make it more difficult for nations to receive credit in the future.
It has been suggested that any debt relief policy be conditional upon a commensurate reduction in aid. The Heavily Indebted Poor Countries initiative was launched in 1996; if implemented, it would greatly affect Africa's economy.