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Global 13

Inbox OUT OF AFRICA Anver Versi Th e rise of the African economy T phosed into the ‘continent of hope’ performing African states will enjoy similar producing giants in the near future. It is alsofrom $1 billion in 1965 to $235 billion today,and the continent is on track to join the gas-will rise from the current $2 trillion to $29trillion by 2050, and that some of the bestoday, Africa, once dismissed as the‘hopeless continent’ has metamor- – not only for itself but as the salvation for per capita incomes as Germany does today. set to become one of the leading producers European economies struggling to keep their Africa, the study contends, is at a similar of iron ore, coke, coal and even steel. It is al- heads above water; and the rampaging Asian stage to developing South-East Asia in the ready the world’s largest producer of cobalt Tigers whose appetite for Africa’s resources 1980s and India in the 1990s, and is exhib- and platinum and is among the top producers and markets is becoming keener by the day. iting matching trends in terms of acceler- of gold, copper and diamonds. Kenya is the “Remove Africa from the global equation ated growth. But Africa has added advan- world’s biggest exporter of tea and, together today,” says Steven Jennings, CEO of one tages that will allow it to outstrip the Asians with Ethiopia, fl owers. of the world’s biggest investment organisa- over the next four decades. But what is signifi cant is that commodi- tions, Renaissance Capital, “and look upon a ties form only a third of the increase in landscape of broken and ruined economies.” Africa’s GDP. The other two-thirds come Over the past decade and a bit, Africa has from services, manufacture and construc- indeed created more wealth and generated tion, which have led to a sharp rise in the more sustained growth than it has ever done in continent’s new middle-classes. its history. But, according to a new study, this Africa’s governance has improved almost is only just the beginning. By 2050, Africa’s out of all recognition and its macro-econom- GDP will equal that of the USA and the EU ic management has outperformed that of combined in today’s money and, in all proba- Europe, with very low public debt and gen- bility, will begin outstripping the Asian growth erally a positive balance of trade. Research rates. The study, The Fastest Billion, is lead indicates that countries that achieve an av- authored by economist Charles Robertson and By 2050, Africa’s GDP will rise to $29 trillion erage of $10,000 per capita income become contains contributions by several other Africa- ‘immortal democracies’ – in other words, based economists and project directors. These advantages are the vast reserves of they do not revert to autocracies. Botswana While Africa’s sterling economic per- essential natural resources and the ‘demo- and Mauritius are already there and several formance seems to have taken many com- graphic dividend’. Africa’s population is more countries are about to join them. mentators by surprise, the study says there young and this segment of the population will Similarly, corruption is inversely linked to is nothing unusual about the continent’s increase by 15 to 20 percent over the next dec- national income – the lower it is, the greater the rapid upward mobility. It is simply follow- ade at a time when both Europe and Asia will amount of corruption. Many African countries ing a pattern of global economic transfor- suffer a 30 percent decline in the same age are now reaching national income thresholds mation that began roughly two centuries composition. Growth follows youth, both in that are resulting in dramatic drops in corrup- ago. Countries go through four stages of terms of productivity and consumption, and tion levels. While corruption will not be wiped growth – from agrarian to industrial states, Africa’s population, unencumbered by the off the continent by 2050, it is expected to be- then to service economies, and fi nally into need to provide for an ageing, unproductive come negligible over most of the continent, the age of the information economy. population, will have greater surplus income, barring the least developed countries. “By 2050, Africa is set to be the fi nal ben- and energy, to push growth charts further. In addition, there have been substantial efi ciary of this revolution, and will become Urbanisation is a vital component in wealth improvements in the provision of education the fastest continent to reach the fourth eco- creation as it tends to fl atten out ethnic and re- and health care, and there has been a spate nomic stage,” says Robertson. gional differences, generates productive ideas of infrastructure projects, including roads, The process of growth has itself been ac- and new skills, vastly increases demand (and railways, port and airport expansions, and celerating. “What took the UK centuries can supply) of goods and services, and produces large-scale housing. A number of new pur- now be a matter of decades, or even years,” greater effi ciencies, economies of scale and pose-built cities, like Tatu City in Kenya says the report. Moreover, technological productivity. UN Habitat estimates that 11 and King City and Appolonia in Ghana, are transfer has never been easier, and adapta- African cities will see population growths of already in the process of being constructed. tion to new technology, as in the case of as- over 50 percent from 2010–25 – a rate similar Given Africa’s promise, it’s no surprise tounding growth of IT in Africa, is quickest to that prevailing in China today. this vast continent has now become the in ‘green fi eld’ regions that do not have the While the spectacular growth of the Asian investment destination of choice. Roll on baggage of previous industrial frameworks. economies was based initially on the export 2050 – Africa’s time has come. Africa is therefore sitting in a very good place of cheap manufactures, Africa growth has to leapfrog generations of technical advances. been underpinned by its commodity exports. Anver Versi is Editor of London-basedAfrican The study predicts that Africa’s GPD For instance, oil revenues have increased BusinessandAfrican Bankermagazines global first quarter 2013 www.global-briefing.org l11


Global 13
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