Africa is largely seen today as the next big thing. It is the fastest growing continent; and has a largely youthful population, about 75% of which is under the age of 35. Four of the ten fastest growing economies in the world are found in Africa, and an African Development Bank report forecasts the average growth rate of African countries for 2014 to stand at 4.8%, a 0.9% increase from 2013. That's actually not a bad improvement when you consider the scale of economic activity it represents. And if you belong to the 'School of Thought' that this has all come due to trade in natural resources, you are wrong, at least not entirely right. Sure exports of natural resources have helped enhance this growth, but the most part of this growth has been as a result of a boom in less traditional business such as retail, transportation, insurance, telecommunications and manufacturing. All this is very good news in the ears of investors who desperately look for havens to throw their money. And one more thing, the average African economy is expected to grow at the rate of 5.7% in 2015.
This shows how far Africa has come in such short time. There was a time when Africa was only known for civil wars, corruption, embezzlement, extreme poverty and ruthless dictators like Sani Abacha of Nigeria, Mobutu Sese Seku of the DRC and Idi Amin of Uganda. These people put Africa in the spotlight for the wrong reasons, and brought untold suffering to their people. It would be unrealist at best, but stupid at worst to assume that Africa has resolved all these issues, at least not with Boko Haram's abduction of hundreds on Nigerian teenage girls, the severe brutality of Al-Shabaab in Somalia and Kenya, or the sectarian violence in Lybia and the Central African Republic. However, it does give africans a glimmer of hope that these horrible incidents do not dominate African headlines as much as before.
But individually too, African countries have been improving on many indices of development like the Corruption Perception Index, Gender Equality, Infant Mortality Index, Human Development Index and many others. To add to this, Africa has a young and increasingly educated workforce that promises to be a big asset as Africa continues on it's path of development. However, some have raised questions about whether this youthful population (Africa has more people under the age of 20 than anywhere else in the world) is an asset or a risk.
In recent years, investors and businesses in general have had good cause to invest, or even move to Africa. This was evident with the visit of US president Barack Obama to Africa. The visit was largely seen as the US trying to catch up with China on the issue of trade with Africa, which has come to be known as the most untapped market. China's trade with Africa currently stands at more than $200 bn annually, double that of the US which stands at just above $109 bn. This highlights how strategic this continent has become. China recently launched a $2 Billion African Development Fund through the African Development Bank at a conference in Kigali to further strengthen it's ties with Africa, and to ensure transparency and ethics.
Trade with Africa has not only been with China and the US. Brazil, India and the EU have also been making serious advances in trade with Africa in recent years. India for example, expects it's trade with Africa to reach $100 billion by 2015, and Vrazil recorded a serious jump in trade with Africa in 2012. In that year, trade between Brazil and Africa reached $26.5 billion and is expected to have grown further. The EU has ben trying in recent years to negotiate with Africa, in order to re-ignite trade ties. It definitely shows that Africa is on its way to a brighter future.
Here's my perspective. In the past, we were always told of the huge amounts of foreign aid that African governments receive from Western governments and International Organizations, the figure stands at about $60 billion a year. Zambian economist Dambisa Moyo in her 2009 op-ed for the Wall Street Journal argued that foreign aid is actually hurting Africa, and she makes a very strong case; for example pointing out that the the number of Africans living on less than $1 a day has doubled in the last 20 years. But her opinion could be contradicted by looking at a country like Rwanda that has come to be known as a 'foreign aid success story'. The thing is, it's not that straight forward - Rwanda relies on foreign aid for about half of it's budget, so in the end, Moyo has apoint.
The point here is not to argue for or against foreign aid (we'll leave that for a later article), but to highlight the fact that Africa in the past took the wrong 'path to development', reliance on foreign aid. That didn't work.
With the failure of the 'foreign aided economy', African countries took used another model, the 'export of raw material reliant economy'. This was also a tragedy, and the IMF raised a red flag on African countries. It was this model that created the disparity in income that exists in many countries today, like South Africa, Angola and Nigeria; and with the recent discovey of one of the world's largest natural gaz reserves in Mozambique, the same fate may befall it. In the back of all this, western companies and economies were the big winners.
African countries seem to have learned a lesson, and are now advocating for 'win win' trade terms, and rightfully so. Finally, a growth model that seems to let the benefits reach the common people in the form of higher disposable income. Unless African governments continue to pursue benevolent economic models, Africa would contine being just the 'black continent'.
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