For decades it seemed any headline about Africa was about the subjects of starvation, war and unruly dictators. However, while these problems still exist on the continent there is another more uplifting story that can be written about Africa. It’s one about economic growth, higher household incomes and a more prosperous future. As a result we are increasingly seeing new stories online with buzzwords like “opportunity”, “growth” and “emerging markets” being written about the continent.
So why is Africa on the rise and what is all the optimism about?
Every since the BRICs nations, we are all looking for the latest emerging economies. Now we have MINTs – Nigeria being the “N”. Surprisingly, the majority of the top ten fastest growing countries in the world are situated in Africa and the IMF estimate that economic growth in sub-Saharan Africa will be 6.1% this year. That’s a figure that David Cameron would be including in every sentence he speaks if it was happening in the UK. Other fast growing economies include Ghana, Ethiopia and Angola.
Growth in Incomes
Africa has around 90 million people with household incomes exceeding $5,000 meaning they can direct more than half of their income towards discretionary spending. It’s expected that this figure will reach 128 million by 2020. The World Bank believes that most African countries will reach “middle income” (meaning at least US$1,000 per person a year) by 2015. The increase has already resulted in more shopping malls being opened, with global brands already eyeing up potential countries. Where big brands go, business tends to follow.
Education, Education, Education
In terms of education it’s envisaged that nearly half of the labour force in Africa will have some secondary level education by 2020. This should result in increasing employment rates and more people spending as well as creating money. Education is the foundation of progress and the younger generations value and embrace change wholeheartedly. If one considers that the economic powerhouses of Africa like Nigeria, Angola, Sudan and Ghana have seen the growth they have seen with their current, less than ideal education systems, imagine what it will be like once proper investment is made.
One good reason for the recent growth is the long term changes that have been taking place that have sown the seeds for economic success. Between 2000 and 2012 poverty rates fell from 60% to 44%. Life expectancy has risen to 55 and child mortality rates have also decreased. If this continues then the future will see Africa with higher numbers of people working and fewer elderly dependents. By 2040 it’s predicted that there will be 1.1 billion people of working age in Africa, and anyone who knows Africa knows the potential the people have to be inventive, creative and entreprenuerial.
The size of African cities and towns are increasing and it’s anticipated that by 2030 more than half of Africans will live in cities (it’s currently around 45%). Increased urbanization creates a more attractive operating environment and market for businesses thus encouraging more growth.
Improvements in technology have helped too with the majority of African adults now owning mobile phones. It totally changes the way business can be carried out with access to the internet meaning farmers can check the latest prices instantly. Telecomms companies are seeing their businesses boom as Africans spend more and more on telecommunications. As the technology infrastructure increases, the gap that once existed within the digital space will very soon dissapear.
The Rule of Law
Protecting rights, rule of law, maintaining discipline and cracking down on corruption are vitally important to Africa. To ensure continual growth they must not fall back into the old habits that have caused so many problems in the past. Problems like corruption don’t just go away easily and new problems including tax avoidance, secret mining deals and financial transfers are believed to be costing the continent around £25bn a year. However, things are changing as the next generation of leaders come into power with a clearer perspective on how things should be done. The role of the law is now appreciated as being the only way of managing such societal issues.
Keeping it Local
As governments make more money through taxation and natural resources, they have more to spend. The new generation of leaders are realising the need to secure skills and knowledge within Africa and not allow a brain drain. Funds are now being pumped into education, skills training and giving young people a chance to establish careers. Botswana, for example, have taken the revenue earned from its diamond mines to invest in education and health care while also introducing training in how to cut and polish diamonds thus reducing the need for employing foreign employees. In this way the revenues being earned stay in the country and this needs to continue. More localization will help Africa grow and keep skills in-house.
So, what do you think? A right to be optimistic?