Capital Ethiopia Newspaper

Africa as the next global growth pole

Africa is a place of great crises and humanitarian disasters. Or at least that is the image that exists in the minds of many Westerners. Speaking of Africa inevitably evokes the popular interpretation of the horsemen of the Apocalypse which is pestilence, war, famine and death. The litany of negative stereotypes continues when the discourse becomes more specific: underdevelopment, corruption, violation of human rights, malaria and HIV/AIDS, environmental disasters, land grabbing, exploitation of women and children, human trafficking, child soldiers, sorcerers, street children etc. The list is endless.
Despite being well intended in terms of setting things right, start from the assumption that Africa cannot succeed on its own. Rather, it needs foreign assistance even just to survive.
A few weeks ago, a video posted on the Internet attracted the attention of the world. It proposes ways to stop Joseph Kony, the leader of the Lord’s Resistance Army, a brutal rebel movement without a cause that has existed in Uganda for over twenty years. The video, titled “Kony 2012”, is very innovative in terms of its communication design, but not for its proposed solutions because it begs for an American military intervention to stop Kony. Once again, it seems to suggest that salvation for Africa can only come from the outside.
For decades in the missionary world particularly, people have asked whether it is ethical to use negative images of Africa to raise money or to invoke action for African causes. Most missionaries today reject this strategy, although there are occasional exceptions. But many aid organizations, even those of international stature, still use these methods.
While surfing in the internet, anyone can encounter an icon with the face of an African baby imploring to be supported. If you clicked on the icon, you will encounter again well crafted messages which petition you to donate to the appealing NGO to help the millions of African children who are terribly affected by war, famines, disease and extreme poverty.
This is an oversimplification that highlights only the negative aspects of Africa. Yet it is only an example, and not even one that uses the strongest pictures and words, compared to the numerous humanitarian appeals, including those with the positive intent to move towards a greater sense of solidarity, depicts the entire continent as a failure, a place where the apocalypse has already begun.
But in Africa much of the story is totally different. There is an acceleration of economic development. While the West is in crisis, and while China and India are giving signs of economic fatigue, the economies of most African countries continue to grow at an average rate between 6-7% per annum.
Some weeks ago, the United Nation’s continental economic commission, UN Economic Commission for Africa (UNECA) announced that Africa has come to the global economic scene as the next major pole of global growth. In a related development, Ethiopia currently successfully organized the 22nd meeting of the World Economic Forum (WEF), one of the first in its kind in which Ethiopia was specifically selected to be a venue for it. Many believed as it is clearly evident, that Prime Minister Meles was very instrumental both for the selection of Ethiopia as a venue and for the successful conclusion of the forum.
In beating the pre-event public relations drum hard and loud, the government made an announcement heralding Ethiopia, probably for the first time, as the emerging “African Lion” taking note of its highly emphasized two digit fast economic growth in non-oil producing African countries. The government also announced Africa as a place of strong and steady economic development and good public mood as opposed to Europe and the United states and its emergence as the next new global growth pole.
To assert the above in a more elaborate manner and to add some weight to the proposition, Prime Minister Meles Zenawi of Ethiopia said that, Africa is emerging as a new global growth pole with enormous resources and potential for development. Prime Minister Meles made this remark on a high profile, a two day conference on Africa’s integration process under the theme “Africa: 54 countries, One union” which was held at the Headquarter of the African Union Commission in Addis on May 10-11, 2012.
Well, in doing so, UNECA, the government of neither Ethiopia, nor Prime Minister Meles is the first. In different time and occasions, the world prominent international financial and economic organizations of the likes of the World Bank, the International Monetary Fund, and the McKinsey Global Institute, predicted Africa as the future global growth pole on the basis of its current economic performance, rich human and natural resources. Africa’s demographic transition, improving political and economic governance, ever improving business and social environment are also played their important part for the institution’s well mentioned prediction. 
The above mentioned prominent financial and economic institutions including UNECA witnessed the ever increasing global recognition of Africa as a profitable destination of investment. As it is well documented in the world history books of economic development and growth, since the end of the Second World War, the drivers and poles of the global economic growth and development were countries of the top five largest economies of the world.
The current Africa is taking off to fly solo to line up itself on the group of countries which are driving the global economic development. Africa is now well convinced to play its role in the effort to solve the problems of low global growth, high unemployment and global imbalances.
Largely untapped human potential and vast natural resources provided Africa a significant investment potential for both local and foreign investment. Taking Africa’s natural resources in numbers, Africa contributes about 12% of the world’s oil reserves, 40% of gold, around 90% of rare earth and strategic metals and, of course, significant amounts of the world’s agricultural and forest land.
In terms of economic growth, as a matter of fact, the era of the Asian Tigers appears to have passed. A good provocative question which will follow this is, could this mean the era of the “African Lions” countries like Ethiopia is arriving? As per the facts on the ground, the answer for this question is a bold “Yes”. According to the IMF, Ghana is projected to grow by 13.5% in 2012, Niger by 12.5% and Angola by 10.5%. Ethiopia for instance, for years was the poster child of famine and war.
Today, that “old Ethiopia” is gone with the wind. Currently Ethiopia transformed itself from economic stagnation into one of the fastest growing non-oil producing economies in Sub-Sahara. A good number of other countries, among them Kenya, will stabilize at an annual growth of around 7%. Sierra Leone’s economic growth is also expected to leap by a record scale.
Many notable economists estimated that on the average, the African continent’s economic growth will be around 6%. Quite emblematic is the case of Angola, which is negotiating with Portugal, ready to extend a helping hand to its former colonial power. According to diplomatic sources, the Angolan Embassy in Lisbon is currently flooded by tens of thousands of visa requests by Portuguese unemployed who are seeking employment in Angola. The authoritative British weekly, The Economist, in December 2011 devoted an entire issue to the topic of Africa’s economic growth.
Indeed, the reality in Africa is profoundly changed for the better. If the facts on the ground revealed the above, the question worth mentioning to discuss is the one which follows: How can we reconcile these two conflicting images of Africa? Common misconceptions and prejudices die hard, but this may not be sufficient to explain such a gap between perception and reality.
Perhaps the simplest explanation is that both images of Africa, that of a terminal case and that of a potential economic Lion, are true. Things are happening at a very fast pace in Africa and around the world, and just as Pope Paul VI denounced already almost 40 years ago, “the rich get richer and the poor get poorer” scenario.
According to the recent study of the global wealth distribution, the poorest half of the global adult population owns only 1% of the world’s wealth. A total of 3 billion adults, representing 67.6% of the global adult population, have only 3.3% of the world’s wealth. In contrast, the richest 10% have 84% of global wealth, the richest 1% owns 44% and the richest 0.5% of the world population own 38.5% of the world’s wealth.
The world economic crisis has only enhanced the concentration of a high proportion of the world’s wealth in the hands of a small minority. In 2010, the companies Capgemini and Merrill Lynch Wealth Management published a report on the situation of the rich world, where the total number of individuals in the global high income bracket grew by 17.1% in 2009, and even though the global economy contracted by 2%, the total wealth of these individuals increased by 18.9%.
The basic tenets of the above mentioned inequalities visibly evident also in Africa. Despite its two digits fast economic growth, the grim reality and stark contrast in Addis Ababa, Ethiopia, can be sighted as a case in point to further explain the above. In Addis, the coexistence of two parallel economies is increasingly visible, at least for those who have the eyes to see.
Though the government, in its recent report asserted the significant reduction of poverty in the country, however, affluence, technological development and sophisticated media are accessible only to the small minority of the population, while quite considerable majority live in a state of dire situation. The ever increasing price inflation wiped out the small middle class and posed a serious challenge for the majority of the people. Particularly for tens of millions of low income families putting one decent meal on the table is now a real nail-biting task to achieve. Likewise, similar problems also happened in Kenya, Malawi, Uganda, and Rwanda, some of the fastest growing non-oil producing African countries. 
Despite the good opportunity for investment and fast growing economy in Africa, there are a number of major challenges that needs to be addressed without further ado. Lack of vibrant capital, finance for entrepreneurship, corruption, lack of capacity, political instability and lack of information are few of the challenges on the long list to Africa’s investment.
According to the 2012 UNDP’s Africa Human Development Report, many African countries have posted world beating rates of economic growth. However, Africa is still unable to feed itself. Close to 218 million people and 55 million children are malnourished and the numbers are set to rise still further. Despite Africa’s huge rivers and water resources, 93% of the arable land is rain-fed. To make the matter worse, African governments, historically, have neglected rural areas in favor of towns and high rates of effective taxation deter farm products.
So what should we do? Should we deny assistance to the poor who are not assisted by their wealthy countrymen? Should we close the era of aid and open the era of the trade? Should we allow international corporations to be in charge of establishing justice with their “social responsibility” program? Should we surrender to the fact that human progress is only measured by the index of economic growth? Should we accept that the new global political equilibrium is controlled by those who have more weapons and are more arrogant? Better yet, should we become determined to be in the group of the rich, and keep the poor at a safe distance, letting them learn to fend for themselves if they are unable to compete in the social ladder? These are the challenges Africa will face in its quest to reconcile the two opposite and conflicting images of Africa.