Written by Samwel Ndandala*
Look at the world. Africa is ripe for a take-off. Europe still has hangovers from a perfect storm of a recession, a debt and currency crises. American politicians don’t get anything done unless under a threat of a default or government shut down. The Middle East is exploding, Japan is aging and China is slowing down after three decades of economic miracles that lifted one third of its people out of poverty. The optimism of the 60’s is back, the 21st century is Africa’s. Correction; Africa is not ripe for a take-off, it has just left the runway! But has it really?
I intend to inject a healthy dose of realism. Part of my job involves convincing people that Africa is the next China (with a straight face). I also speak a little about why it is not and might not be. The questions are the same, why should we think this time is different? We have been here before, in the sixties we expected Africa to soar, it did not happen. What is all this fuss about? I give two reasons, (1) I am an African; we can’t help but be optimistic (2) The facts on the ground say so. Of course my answers come in reverse order.
Some good news; Africa is a 1.7 trillion dollar economy and a billion people strong. The World Bank, the IMF and the African Development Bank all predict that the next decade will see growths of about 5%. Africa’s population is the youngest on the globe. According to the United Nations, Africa’s median age last year was 19.7, ours is a continent of teenagers! This unique population profile excites economists; they predict a ‘demographic dividend’, the fruits of having a greater proportion of the populace within the working-age. By 2050, the UN estimates that the median age will be a lowly 25.4. HIV is being tamed with fewer infections every year, medicine is reaching millions more. Africans will live longer.
Good governance still eludes Africa, but compared to the last half of the 20th century, the continent is certainly better governed today. It is true that Mo Ibrahim found no one worthy of his USD 5mil prize for the fourth time in five years, but his foundation reported that 94% of people living in Africa live in a country which has shown overall governance improvement since 2000. Democratic space is opening up; coups in the 2000’s were half of those that happened in the 1990s. According to writer Mike Obel, ‘‘One reason Zimbabwe’s president is so frequently in the news is because he’s increasingly becoming an exception.’’ This trend is clearly irreversible.
Heavens favoured Africa. From gold in South Africa to copper in Zambia, from oil in Ghana to gas on Indian ocean’s shores. Africans are finding out that they are in fact walking (and swimming) on top of wealth. 6o% of the world’s uncultivated land is in Africa. Most of it is so fertile all you have to do is ‘throw seeds over your shoulder and return a few months to pick your produce’. That will become even more significant when the world’s population hits 9 billion in 2050 (37 years away for those who think that is distant). Africa might as well become an agricultural giant.
Armed with the ubiquitous mobile phone, rural Africa is leapfrogging itself into financial inclusion. Yes, this time it is for real! A burgeoning middle class is demanding more from Africa’s leaders. There are more educated Africans today. The information age is making it difficult for politicians to conceal incompetence. The late Meles Zenawi compared the Africa in this decade to India in the 90s; right on the verge. Ingredient-wise, he was right. But let us balance the picture with some not so good news.
Population is a great catalyzer. In my chemistry class ten years ago I remember learning that catalysts have nothing to do with the actual chemical reaction. They only alter the pace. In other words, population makes good things better and bad things worse because both come faster. At the moment, we are witnessing a bad economic reaction catalyzed by a swelling population, dangerously young and uneducated. Mthuli Ncube, AfDB’s vice-president and chief economist has repeatedly warned of a ‘jobless growth’ that is happening across Africa. Unless these young energetic people have jobs, demographic dividend might turn into a demographic disaster.
Karl Marx was right, ‘social progress can be measured exactly by the social position of the fair sex, the ugly ones included.’ An average African woman is beautiful, but she gives birth to at least five children in her lifetime. This means that while economies in Africa will expand, there will be more mouths to feed, more children to school and more schools and hospitals to build. That is in itself daunting. Africa is failing its girls; far too many of them marry early. We know the solution to poverty; it is called ‘girls’ education.’ Girls that are educated are unlikely to marry early, they are more likely to plan their families and have a sense of career. More importantly, educated women raise educated children. There you have it; that is how you break poverty’s vicious cycle.
More bad news; Africa is not one. Economically speaking, there is nothing called Africa. Africa is arguably the most diverse continent, which is a great thing. You will find people of every conceivable culture and race as you trek from Cape Town to Cairo. Their interactions with the world are equally diverse; this is not a great thing. The Francophone countries gravitate towards Paris, the Anglophones are happy dealing with Britain and companies in Angola and Mozambique are now attracting Portuguese nationals. It may take up to 25 hours flying from Dar es salaam to Libreville, roughly six hours less than it takes to fly to Shanghai. This should tell you how connected Africa is.
Trade, just like charity, begins at home. The fact that intra-African trade accounts for only 11% of the continent’s GDP should be alarming enough. No other region trades with itself less. You will have to part a sea of paperwork before you can get a container from Dar es salaam port to Kinshasa. There are currently eight regional economic groupings in Africa; too many if you ask me. Most have overlapping and sometimes divergent mandates. This has to change. ‘Africa must unite,’ cried Kwame Nkrumah half a century ago.
Almost a third of African countries are landlocked, many have bad neighbours. Some are just not viable standing alone. They need the good neighbours to open up, trade and invest. You need the movement of people and goods to be faster, cheaper and safer. If Africa is ever going to harness its potential, it will have to look inwards and trade more with itself. The most promising experiment is the East African Community whose countries recently signed a protocol for a single currency. But even the EAC has disagreements on the pace and range of issues they are willing to surrender sovereignty on.
Finally, if having natural resources meant automatic economic progress, Nigeria’s per-capita income would not be USD 1’600 today. Managing resources is a difficult task. In fact, if you looked at the areas in Africa with the most conflict in the last five decades, you will find that much of it was triggered by natural resources, what Oxford’s Paul Collier calls a ‘resource trap.’ There are reasons for this. One is that it builds false expectations of rapid economic transformation. In my country Tanzania, the discovery of gas seems to cause too much optimism. But it will take close to a decade for the fruits of the resources to be tasted. Even then the country will have to contend with corruption and mismanagement; a rule rather than an exception on the continent.
Throughout history, Africa has fed the hungry world with its resources; from the salt back in the Mali empire days, the diamonds from Kimberley, the oil in Nigeria and all kinds of metals in Congo. Natural resources have always been plenty in Africa. It is what people do with them that will make a difference. One thing about resources is that they are finite. Real progress comes from investing in human capital. Countries can choose to go down the path of Gaborone which starting next year will auction its diamonds locally, or they may choose the path of DRC, a paradoxically poor country sitting on untold wealth.
Africa has not taken off. It is on the runway and it is accelerating. But it must take off now because it is running out of tarmac. I sure hope the pilots recognize it. ‘‘There is a tide in the affairs of men, which taken at a flood, leads on to fortune. Omitted all the voyage of their life is bound in shallows and in miseries,’ wrote the Bard of Avon. And if I may paraphrase the second part, ‘‘on such a full sea Africa is now afloat, and it must take the current while serves, or loose its ventures.’’
*Samwel Ndandala is a Transfer Pricing and Value Chain Transformation Consultant at PwC Switzerland. The views expressed are entirely his own.