The Rise of Africa
Although the African continent is not yet a paragon of peace and prosperity, compared with even a decade ago things are looking way up. While many parts of the world have been struggling with flat or flagging economic growth, Africa looks set to carry on growing at a fair clip.
The World Bank put 2012 growth at a respectable five percent in Sub-Saharan Africa, with a forecast of 6.3 percent in 2013.
From 2001 to 2010, six of the world’s 10 fastest-growing economies were in Africa, and the IMF predicts that seven of the top 10 will be by 2015.
Over the past 30 years, the continent’s middle class has grown significantly, from about 126 million people (27 percent of the population) in 1980 to almost 350 million (34 percent) in 2010, according to figures from the African Development Bank.
AfDB defines “middle class” not only by individual income (exceeding US$3 900 purchasing power parity) but also in terms of education, professions, aspirations and lifestyle. Egypt, Morocco and Tunisia have high percentages of middle-class citizens, as do Algeria, Botswana, Cape Verde, Gabon, Ghana, Kenya, Namibia and South Africa.
Plus, the McKinsey Global Institute says that by 2040, Africa will be home to 20 percent of the globe’s young people and a working population of 1.1 billion people overall, overtaking China’s or India’s labour force.
Plenty of astute observers and powerful investors (e.g., China) are putting their weight behind Africa’s rise. There’s even talk of the African Lion overtaking the Asian Tiger. Even so, there’s no denying that Africa still has a lot of catching up to do. As in India and other developing economies, GDP figures average out some extremes inside and among countries.
At the very poor end, one-fifth of African countries are still hauling themselves up from an extremely low economic baseline. Conflicts and political upheaval have left these very poor nations way behind the rest of the continent.
The upside is that when periods of stability come, opportunities for economic activity and growth happen fast. Installing or upgrading essential infrastructure not only makes life better with here-and-now growth, but it also establishes a framework for future advances.
Despite occasional outbursts of unrest, a growing number of African nations have been largely stable and steadily reaping the benefits of reforms. Nigeria, with its population of 170 million, has averaged growth of around seven percent for the past decade, although unemployment and poverty are still high. Also in West Africa, Ghana (population: 25 million) is projected to have GDP growth of more than 8 percent and continue to lead the way in civil liberty, political rights and political stability.
So why is Africa morphing from basket case to case study?
Abundant raw materials and rising commodity prices have certainly helped Africa’s growth, although history shows that for poor countries, having oil, diamonds and timber can be more of a curse than a blessing. Fortunately for Africa, natural resources and related government spending accounted for less than one-third of the continent’s growth between 2000 and 2008.
According to McKinsey’s Global Institute, the rest came from wholesale and retail, transportation, telecommunications and manufacturing.
Africa was lucky not to be too tightly connected to the mainstream global economy that hit the rocks in 2007-08 and therefore, as Harvard- and Oxford-educated Zambian economist Dambisa Moyo explains, pretty much escaped debt crises and budget deficits.
It also helps that Africa has a patient new friend with deep pockets and a long view. When the rest of the world was dismissing Africa as a troubled backwater, China was busily embracing it, maybe recalling its own rise from famine and chaos. As Moyo puts it, China has been striking deals with struggling developing countries – the “axis of the unloved,” in her words – in return for investment, employment and infrastructure.
There’s more to Africa’s economic development than extracting resources and making textiles.
Kenya is turning into a pioneer of mobile money, and the whole world is watching in admiration. As Financial Times put it, “If Europe = yesterday, the stuff that’s going on in Kenya right (now) could very well = the future.”
It’s talking about a system called M-Pesa (M for mobile; Pesa is Swahili for “money”) set up by provider Safaricom that allows users to send and receive money by their mobile phones – very handy for migrant workers in cities who want to send cash to relatives many hours away.
It’s even used for simple transactions in shops. Customers pay for credit to be loaded onto their phone, then they can send money to a third party by SMS; the recipient can pick up the cash at a nearby vendor or use the credit to pay someone else by SMS.
Annual mobile money transfers in Kenya amount to around US$10 billion, which means half the world’s mobile money transactions are taking place in this country of 43 million people; one in three of the world’s 60 million mobile money users is Kenyan.
One effect of this mobile development has to been to stimulate growth and innovation. Official figures show that Kenya’s financial sector grew by 7.8 percent in 2011 compared with 4.4 percent for the whole economy.
This vast live experiment is just one example of African-style innovation, what Nigerian-American journalist Dayo Olopade calls “recombination, recycling, innovative use of existing objects” in a lean economy where there’s not much room for waste.
Great skills for 21st century living on a crowded planet. – Huffington Post
* Marian Salzman is CEO of Havas PR North America and an internationally respected trendspotter.