Africa’s economies are consistently growing faster than those of almost any other region – and at twice the rate of the 1990s. This has led to improvements in several areas such as trade, mobilization of government revenue, infrastructure development, and the provision of social services.
Indeed, over the last decade, Africa has been among the fastest growing regions in the world economy, and it is interesting to note that this improvement in growth performance has been widespread across countries.
Just some few years ago, news on Africa, whether the reality or perception, has suffered from extreme mood swings, with the pendulum moving from episodes of pessimism to bouts of euphoria. But what really is the case in Africa?
The impressive economic and political performance of Africa since the turn of the century has led to the description of the continent as “the hopeless continent” changed into others such as “Africa rising: the hopeful continent”, “Lions on the move: blazing a pathway to prosperity”, “Africa’s rising middle class”; “dynamic African consumer market”; “Growth opportunities for investors” etc.
The extreme pessimism surrounding Africa a decade ago was unwarranted. Can we say the same is the current wave of blinkered optimism? Real gains have been made, but governments and their development partners need to reflect on the weaknesses, as well as the strengths, of the recent record – and assess both the risks and the opportunities that lie ahead.
Exports are booming and export markets have become more diversified. Foreign direct investment has increased by a factor of six over the past decade. Private entrepreneurs have emerged as a dynamic force for change, driving innovation and transforming outdated business models. There is an emergent middle class, although its size is often exaggerated.
For the first time in over a generation, the number of people living in poverty has fallen. Fewer children are dying before their fifth birthday and more are getting into school. Steadier exchange rates, robust commodity prices, increased private capital flows and modest inflation are experienced in Africa. Africa has got a very good fiscal story with debt to GDP ratios at the sovereign level which are no where near the burden of what is seen in Europe, United States and other parts of the world.
Africa as part of the emerging economies is not immune to the economic and political currents that are reconfiguring globalization. Emerging economies are countries that are restructuring their economies along market-oriented lines and offer a wealth of opportunities in trade, technology transfers, and foreign direct investment. These are nations with social or business activity in the process of rapid growth and industrialization. Each of these countries is important as an individual market and the combined effect of the group as a whole is capable beyond all doubts to change the face of global economics and politics.
Emerging markets are regional economic powerhouses with large populations, large resource bases, and large markets. Africa currently has a population of over 1 billion people. This is indeed an asset for Africa to leverage on and this also means a large market for domestic goods. Africa is again blessed with resources beyond measure with most of these resources untapped.
Africa is capable of transforming the lives of its citizen if it can add value to its raw resources. Africa can indeed be a frontier in emerging markets with a strong labor force due to its youthful population.
Africa can boast of a population with about 60% to 70% youths and this is enough for the continent to attract the necessary economic success it so desires. This is really an opportunity for the African continent to transform from economic growth to economic transformation. Africa, just as any emerging economy are sought by investors for the prospect of high returns, as they often experience faster economic growth as measured by GDP.
Emerging economies are experiencing a rising middle class. A rising middle class means a larger domestic consumer market as they tend to demand more compared with the poor. The rising middle again means helping to shape political policies in those countries this is because, the middle class are more likely to hold governments accountable for policy decisions.
As pointed out early on, Africa as part of the emerging economies is not immune to the economic and political currents that are reconfiguring globalization. Therefore, leaders need to find a place in the global economic governance architecture of a multipolar world. Africa’s own demography and human geography are changing, hence, failure to create jobs and opportunity for a growing and increasingly urbanized and educated youth population would have catastrophic consequences, socially, economically and politically.
Globalizations have taken many trends in our world; most importantly is the integration of nation’s economies to promote an increase in world’s output. At the start of the new millennium, human development is again at a crossroad. The 21st century will be molded by the development choices that we make in its functional years. The present era of globalization is characterized by the following distinctive features: shrinking spaces, disappearing borders and the growing of interstate inequality and inequality within states.
The globalization process is linking people’s lives more deeply, more intensely and more immediately than ever before. It is not only about integrating economy, but also culture, technology and governance.
Globalization in its current form, presents a universal challenge, a challenge not only for each country, but for the institutions of global governance as well. Globalization is here and no country or institution can escape it. However, the essential question is how to manage the process. Therefore, we need to question different forms of regulation at the national, continental as well as the global levels.
Globalization can unleash the positive forces of the global market if effective public action is taken at the national and international levels to develop the institutions and policies that would bring about inclusive growth. In addition, globalization can also facilitate the unleashing or our combined efforts and expertise to reach global solutions to major socioeconomic problems.
In an increasingly interdependent world, the manifestation of extreme poverty and the growing gap between the rich and the poor decrease the prospects for global integration and the peacekeeping, the budgetary crisis it has faced over the years, the chronic political conflicts, once between the East and the West and now between the North and the South.
Times are uncertain. But what is increasingly evident is that Africa is on its way to becoming a preferred investment destination, a potential pole of global growth, and a place of immense innovation and creativity. If we respond with courage and in the right way, building on the continent’s many successes, African societies will become more prosperous, fair and equal. This is a prize which we all, wherever we live, will share.
Paul Frimpong of the Centre for Policy Analysis (CEPA) is a Chartered Economist (ACCE-Global) who writes on the macroeconomy and global affairs. He is also an African Affairs Analyst