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Given the progress and the potential of African economies, many believed the notion that Africa is being a lion on the move. It is compelling for Africans to reflect on such assertions since some reports still sustain a perception that Africa is a sleeping giant, a suggestion dominant even as the post-2008 global economic crisis evidence points differently. It has been widely reported that Africa experienced positive growth when most of the world economies were declining.
Worse still, some prejudicially view Africans as a people without history. For example, ten years ago speaking at a University in Senegal, the then French president, Nicolas Sarkozy cynically observed that: “Africans have never really entered history… They have never really launched themselves into the future… The African peasant only knew the eternal renewal of time, marked by the endless repetition of the same gestures and the same words. In this realm of fancy … there is neither room for human nor the idea of progress”.
The World Bank in its 2004 report entitled “Can Africa Claim the 21st Century?” wrote: “Making matters worse, Africa’s place in the global economy has been eroded, with declining export shares in traditional primary products, little diversification into new lines of business, and massive capital flight and loss of skills to other regions. Now the Africa stands in danger of being excluded from the information revolution”.
Or even more, The Economist magazine in its May 2000 issue had declared Africa as a “hopeless continent”. Yet eleven years later in its December 2011 issue, it carried the title “Africa Rising”. The outcome of this benchmarking reflects changing performance and perception of Africa where: Africa’s collective GDP in 2008 reached $1.6 trillion; Africa’s combined consumer spending topped $860 billion in 2008; Cellular phone subscribers grew by 316 million in year 2000 to 500 million in 2010; At least 20 African companies now have revenues of $3 billion; and Foreign direct investment reached $514 billion in 2009 up from $154 billion in year 2000.
Africa got through the crisis relatively better than many other parts of the world although the effects in the real economy were devastating as millions of jobs were lost. Indeed, signs point to a new commercial wind blowing across Africa as different sectors show signs of stabilization or growth. Besides the renewed commodity demand largely driven by China’s thirst for raw materials, telecommunications, transport and retail sectors are also growing.
These are driven from within as consumer spending grows. In some parts of the continent, tourism is also blooming, and even manufacturing is growing for the first time in three decades. Furthermore Africa is deep in the information technology revolution with unprecedented cellular phone penetration and high speed internet connectivity expanding in unimaginable ways.
Africa’s long-term growth prospects look strong, propelled by both external trends in the global economy and internal changes in the continent’s societies and economies. The current demand for natural resources, spearheaded by the economic expansion of countries such as China and India, will continue to push higher profits back into the continent. Africa has 10% of the world’s oil reserves, 40% of its gold, and 80% of the Chromium and Platinum.
In addition, it also has quantifiable reserves of the Copper, Nickel and Palladium that form the backbone of the telecommunications industry. Demand for raw material is growing faster every year and now accounts for half of Africa’s total export earnings. In turn the growth in exports has necessitated the need for economic partnerships within and amongst African countries.
Economic transformation has also been fuelled by demographic changes such as the youth bulge, education as well as urbanisation. According to the United Nations, projections for increase in urban population in Africa stood at 0.9 billion in 2015. This pushed expendable income higher with the number of households with discretionary income projected to rise by 50% over the next 10 years. By 2030, Africa’s top 18 cities including Addis Ababa could have a combined spending power of 1.3 trillion dollars.
If declarations are anything to go by, G20 outcomes suggest that the developed world now has positive views about Africa. Significantly, the G20 countries agreed that the political heads of the African Union and NEPAD would be regular participants in G20 events. Secondly, the development agenda introduced into the work of the G20 is aimed at supporting initiatives that Africa had embarked upon even before the African Union was formed. G20 leaders believe that the continued growth of Africa has a significant contribution to make to the rebalancing of the world economy.
Thirdly, the G20 committed itself to support regional integration in Africa. They have already seen the benefits, even though the continent still has a long way to go. Because of the progress Africa has made over the last 15 to 20 years, it has won the interest and the respect of the rest of the world. It is up to it to maintain this standing. For Africa to claim the 21st century, it must overcome some of the structural constraints such as lower levels of intra and inter-regional trade. The net effect is a serious trade imbalance between and among the economies of African countries.
For South Africa, for example, this weakness cost up to a million jobs during the recession as the global demand for its goods declined. Whilst South Africa chases FDI, it should acknowledge investments made by African firms in the retail, telecommunications, oil and gas, hotel and tourism, and financial services beyond the borders of their origin. This is positive as it suggests that African grown companies and industrialists affirm their own belief in the growth prospects and economic future of Africa. These investments have had a multiplier effect in secondary industries that they are linked to. The real question here is this: what is to be done? We will deal with this next week.