By Richard MunangRobert Mgendi on November 4, 2016 — The term ‘Africa rising’, coined to describe the rapid economic growth on the continent, has generated a lot of hype over the years, yet it does not tell the entire story. As the old saying goes, every coin has two sides, and Africa’s economic boom typifies this idiomatic expression.
A woman takes in the sunset. Photo/Islxndis/Flickr.
If one read only the one side of the coin, one would conclude that these are boom times for Africa. Over the past decade, six of the world’s 10 fastest-growing countries were in Africa. The continent’s share of global trade has also steadily increased, doubling over a 10-year period, from USD277 billion in 2001 to approximately USD1 trillion, or 4,6%, in 2011. The middle class in Africa is also expanding and consumer spending is expected to surpass USD1 trillion by 2020.
On the flip side, however, the picture is not as rosy. Poverty levels have hardly shifted and almost one in every two Africans lives in extreme poverty. More people on the continent are today likely living on less than USD1,25 a day and it is estimated that most of the world’s poor will be living in Africa by 2030. The United Nations Food and Agriculture Organisation (FAO) also notes that nearly 240 million people in Sub-Saharan Africa, roughly a quarter of the population, lacks adequate food. Lastly, Africa’s growing population of young people is set to double by 2045. With youth unemployment hovering at around 60%, the rapidly escalating number of unemployed young people constitutes an impending threat to stability on the continent, a possibility acknowledged by the African Union.
Pathways towards inclusive economic growth
Africa needs a paradigm shift, and investing in a development strategy that prioritises the protection of the environment, which is the primary source of economic growth, is the way to go. Here is how:
Harness Africa’s agricultural potential
Africa has 65% of the world’s arable land and 10% of internal renewable fresh water sources, yet many African countries import much of their food. According to figures released by the Africa Progress Panel, in 2011, the continent’s food import bill (excluding fish) totaled USD35 billion. This means that many people do not have access to healthy, affordable and nutritious food. African governments can reduce these bills and increase food security for their citizens by committing more resources to their agricultural sectors and improving institutional and legal frameworks.
Increasing investment in agriculture could also contribute to economic growth across the continent. Deutsche Bank estimates that, with the right measures in place, African agriculture and agribusiness could be worth USD 1trillion by 2030. Moreover, building a strong agribusiness private sector could better connect farmers with consumers and lead to wider job creation.
Build energy sufficiency
Although Africa has a wealth of clean energy resources at its disposal, access to electricity is uneven and unreliable across the continent. The continent’s hydropower potential alone is estimated at 1852TWh annually. This is three times greater than its current energy demands of 554TWh per year. In addition to hydropower, Africa also has vast geothermal, solar, wind and biomass resources. Investing in these resources can give more people access to safe and affordable power.
There are already impressive ongoing projects that will both expand access to energy and spur economic growth. A particularly good example is the Sahara Solar Breeder, an international collaboration that involves using the large amount of solar radiation and silica in the Sahara Desert to generate large quantities of renewable energy. Such projects will also encourage the creation of highly skilled positions over the next decade, as a large number of African scientists and engineers will be trained to establish plants and implement research and development for them. Furthermore, increasing electricity through these projects will also allow smaller businesses, such as offices and shops, to employ more staff.
Education on the continent has grown exponentially in the last decade, but there is a real need to make these systems more inclusive for Africa’s growing young population. (Photo: Maurizio Peddis/Flickr)
Make African education systems more inclusive
Education on the continent has grown exponentially in the last decade, but there is a real need to make these systems more inclusive for Africa’s growing young population. At present, education systems are wedded to the classic primary-secondary-university model, but African countries need to provide training and other opportunities for young people who do not want to go to university. By investing more in vocational studies, these countries can create more employment opportunities for these young people and empower them to make a positive contribution to society. These investments will also help tackle the ‘infrastructure deficit’, as they will increase the number of engineers who can build infrastructure and technicians who can maintain it.
Africa rising for all citizens
In addition to investing in a development strategy that prioritises the protection of the environment, Africa can also recoup some of the billions of dollars lost either through criminal activity or lost economic, trade or job opportunities. The following, specifically, should be considered to ensure that ‘Africa is rising’ for all its citizens.
- Mobilise African governments through regional bodies like the African Union, with support from the international community, to put in place appropriate policies to stem illicit financial outflow (IFFs) from the continent. Every year, the continent loses billions of dollars through criminal activities such as illegal logging, which costs Africa up to USD17 billion annually; illegal and unregulated fishing, which costs West Africa alone up to USD1,3 billion every year, tax evasion and profit shifts by corporations, to mention a few. It is estimated that, cumulatively, Africa lost USD1,2 trillion to USD1,3 trillion between 1980 and 2009 through IFFs. This is an amount that could have covered Africa’s external debt four times.
- Remittances from Africans in the diaspora are rising. In 2013, transfers to the region were valued at USD32 billion, or around 2% of GDP. Projections to 2016 suggest that remittances could rise to over USD41 billion. That said, the amount of money the continent hemorrhages through transfer charges is colossal. Charges on remittances to Africa are at 12%, well above the global average of 7.8%. This translates to a yearly loss of approximately USD1,4 billion. By reforming financial governance and increasing efficient access to financial services in Africa through appropriate global policy and private sector action, Africa can recoup these finances.
- Intra-regional Africa trade presents another opportunity for Africa to reduce poverty and enhance inclusivity. At present, it accounts for only 12% of trade, compared to 65% in Western Europe, 45% in North America and 25% in South East Asia. Under-developed infrastructure, which directly impacts on the speed with which goods are moved across borders and also drives up the cost of logistics, has been cited as a major stumbling block to intra-regional trade. One sure way to strengthen between countries on the continent is by improving road and ICT infrastructure connectivity.
The road ahead
As the year 2016 comes to an end, it is a fervent hope that African countries drive more sustainable economic growth by building the capacity of their agricultural sectors, investing in renewable energy and expanding opportunities for vocational training. The ‘Africa rising’ narrative will only become a reality when the continent’s entire population can share in its wealth.