Are economists too optimistic about Africa?
After yearning for positive image in the international arena for decades, Africa finally seems to be reaping more than it bargained for in the first place.
It is an appealing gift that purveyors have opted to wrap in dry statistics. It starts with a middle class population that is bulging at the seams, making Africa the world’s largest consumer of anything on sale — refrigerators, television sets, mobile phones and automobiles.
“By 2010, Africa’s middle class had risen to 34 percent or nearly 350 million people, up from about 126 million in 1980,” African Development Bank (AfDB) says in one of its 2012 reports.
In the past, African governments have blamed their inability to attract international investments, tourists and develop export market, on poor image.
In its mainstream thinking, a negative image can only be peddled by the afro-pessimists — mostly civil society organisations, disgruntled politicians and international media.
However, things may have changed.
The continent is seeking to project itself as a home of innovations and a frontrunner in the race by developing nations to set up knowledge economies.
With more than 700 million mobile phone subscribers and increased internet usage, the stage is set for another revolutionary invention of global proportion, hardly six years since Kenya’s Safaricom launched its game-changing M-pesa payment system.
This theme that projects Africa as the new destination for high-return investments continues to echo through the outlook reports of the World Bank, IMF and other multilateral organisations.
The continent will shrug off the economic troubles of its two key markets, Europe and the US to record a sustained growth rate of 5.25 percent in 2013, the IMF says.
In its 2012 outlook report, the IMF alludes to the downside risks that may be gathering at the horizon.
“Further deterioration in the world economy could quickly spill over into slower growth in Sub-Saharan Africa, potentially reducing the regional growth rate by about one per cent a year.” Antoinette Monsio Sayeh, director of the IMF’s African Department in a Press released distributed to media houses last year.
“The impact would be most severe in countries where exports are undiversified and policy buffers low,” she said.
Despite the warning, Africa is expected to maintain its robust growth, even as Europe struggles to climb out of its economic black hole.
“We expect the billion Africans — who in the past decade have already experienced the fastest growth the continent has ever seen — to become the fastest two billion, and Africa’s GDP to increase from US$2 trillion today to US$29 trillion in today’s money by 2050,” said Charles Robertson, Renaissance’s global chief economist and head of the emerging market.
Robertson is a lead author of a new book titled “The Fastest Billion— The Story behind Africa’s Economic Revolution”, which argues that in the next 37, years Africa’s annual GDP will be higher than the US and eurozone combined.
While there is no basis for disputing the positive statistics, bandying them without their negative mirror reflection may make the continent’s politicians continue the business-as-usual mentality.
In the very language of figures, the current wave of optimism can only last as long as negative statistics that portray the region’s troubles are kept safely, under lock and key.
First, Africa governments are still saddled with public debts and have scored poorly in the United Nation’s MDGs.
Millions of people either die of hunger or suffer from malnutrition.
Tropical diseases kill millions every year. For instance, 90 percent of 655 000 malaria deaths recorded in 2010 occurred in Africa, affecting mostly children below five years, statistics from WHO show.
The continent is grappling with a growing number of urban poor with no access to basic social amenities even as UN-Habitat forecasts an evolution of its urban centres into 11 African metropolitan cities coupled with over 50 percent population increase by 2025. Robertson has a different idea.
“Rendeavour, a development arm of Renaissance Capital, is now building the kind of modern cities required by this expansion, from Tatu City in Kenya to King City and Appolonia in Ghana.”
At the continental level, the political class continues to push for monetary unions and a single currency to ease intra-regional transactions amid concerns over poorly developed financial system.
The African capital markets are generally at an early stage of development — small, illiquid and lack attractive investment products. Experts paint the road to financial sector development to the level of matured local currency bond market as a long and winding one.
Despite of sharply contrasting statistics, Renaissance Capital predicts the growth of democracies in the continent to reach 50 by 2050, up from current 34 countries.
The continent, whose defence budget is also projected to increase from US$34 billion in 2011 to US$471b by 2050, will, however, retain a few autocratic, energy-rich exporters.
• This article has been excerpted from Business Daily