What is it that gives Botswana one of the highest growth rates in the world, while other African countries still rely on overseas aid to balance the books? This region-by-region analysis examines how some nations have been able to forge ahead, while others are stuck in the slow lane.
Africa as a whole has been growing at roughly five percent for more than a decade, but, of course, that is not equally distributed among the 54 countries. While most have shown positive growth over the last two years, a few have failed to keep pace and registered negative growth over the decade.
Perhaps the most surprising has been South Africa where growth declined from 3.6 percent in 2008 to -1.5 percent in 2009, before gradually rising to a projected 3.6 percent this year.
Others in the slow lane in 2003 included:
■ Burundi (-1.2%)
■ Central African Republic (-4.7%)
■ Cote d’Ivoire (-1.7%)
■ Eritrea (-2.7% in 2003; -1.0% in 2006 and -9.8% in 2008)
■ Guinea Bissau (-0.6%)
■ Liberia (-31.3%)
■ Seychelles (-5.9%)
■ Zimbabwe (-17.2% in 2003; -6.9% in 2004; -2.2% in 2005; -3.5% in 2006; -3.7% in 2007; -17.7% in 2008, before registering a positive growth of 6% in 2009)
All sub-Saharan countries returned to positive growth from 2009 onwards with the surprising exception of Equatorial Guinea, which declined to -0.8 in 2010 before rebounding to a positive 7 percent growth the following year. North of the Sahara, the biggest loser was Libya with a disastrous plunge to -41.8 percent in 2011, for well-known reasons.
Africa’s growth champion must be Ethiopia, which registered -2.7 percent in 2003, before beginning a series of spectacular growth performances in 2004 with 13.6 percent. After that, growth figures for each succeeding year to 2011 were: 11.8 percent, 10.8 percent, 11.5 percent, 10.8 percent, 11.4 percent, 10.7 percent before pausing for a breath in 2012 with 7.0 percent.
Other African countries that have registered double-digit growth for at least one year between 2003 and 2012 include:
■ Equatorial Guinea 14.4% in 2003, 32.7% in 2004, 21.4% in 2007 and 10.7% in 2008
■ Chad 13.2% in 2003, 34.2% in 2004 and 14.3% in 2010
■ Angola 11.2% in 2004, 20.6% in 2005, 18.6% in 2006, 22.6% in 2007 and 13.8% in 2008
■ Nigeria 10.2% in 2003 and 10.5% in 2004
■ Uganda 10% in 2005 and 10.4% in 2008
■ Sudan 11.3% in 2006 and 10.2% in 2007
■ Rwanda 11.5% in 2008
■ Ghana 13.7% in 2011
■ Libya 13% in 2003 and 20.1% in 2012
Of the countries above, only Ethiopia, Rwanda and Uganda do not earn a substantial segment of their revenues from hydrocarbon resources, although Uganda has considerable oil reserves. Apart from these highs and lows, the majority of African countries have averaged steady growth rates of around five percent, with the bulk of the growth coming from expansions in services, construction, telecommunications, banking and trade. Some countries have made the transition to middle income status and are projected to maintain growth levels over the next decade to join the ranks of emerging nations.
West Africa– In the fast lane
Ghana
Ghana and Nigeria are easily the stand-out economies in West Africa, but Ghana is rapidly emerging as the current African star. After a peak of 13.7 percent growth in 2011, Ghana has consistently hit the seven to eight percent mark.
However, it has been discovered that the system used to calculate growth levels is outdated – for example, some US$15 billion was left out of the calculations for the 2011 figures. In addition, poor tax collection has meant that considerable value added has not been factored in. The statistics that are in the process of being recalculated are expected to revise figures upwards, with some analysts suggesting the country will register a 16 percent growth in 2013.
Although there is considerable excitement over Ghana’s oil and gas production and its potential, hydrocarbons are not the principal drivers of growth. They will provide welcome additional revenue, estimated at around $1 billion per annum going to the government, which will, perhaps, help balance its books.
Mining, in particular gold, and the cocoa industry are still the major revenue earners. Construction has boomed on the back of improved personal incomes and diaspora Ghanaians returning to build homes and investing in new business premises. The infrastructure is being upgraded, mainly through Chinese money and expertise.
The oil boom is likely to give an added spurt to industry by providing easier and cheaper access to gas and electricity. Gas from the Jubilee oil fields is also expected to provide feed stock for thermal power plants to complement additional generation capacity from the 400MW Bui hydro project, developed by Chinese firm Sino Hydro and which is nearing completion.
Ghana is the world’s second largest producer of cocoa with around a million tons a year and it is also Africa’s second largest producer of gold, currently standing at around 100 tons a year. With new investors entering the field, the outlook for the mining sector is very promising. The, generally smooth, transfer of power from the late President John Mills to the current incumbent John Dramani Mahama has settled investor nerves. Ghana, like its larger neighbour Nigeria, is rapidly becoming the investment destination of choice in West Africa.
Equatorial Guinea
Apart from a blip in 2010, Equatorial Guinea has been the fastest growing country in West Africa over the decade. The country is heavily dependent on oil revenues and there have been few attempts to diversify the economy, although a rapid injection in public spending will see growth rising to around seven percent this year. With its small population and very limited land area, it is essential that Equatorial Guinea opens up to the rest of Africa and the world if it is to put its oil wealth to work and raise the living standards of its people.
Liberia
After the devastating conflict that brought the country virtually to its knees, Liberia has made a remarkable turnaround under the leadership of Ellen Johnson Sirleaf. It has achieved growth levels of around six percent for eight consecutive years and the trend in expected to continue through 2013. This is largely as a result of its first iron-ore exports and a resumption of rubber and timber exports. Heavy foreign investment in its iron-ore, timber, rubber and palm oil plantations pushed growth to around 12 percent in 2012.
However, the infrastructure is still in a poor state and doing business remains difficult. Nevertheless, the prospects for Liberia remain very promising.
Sierra Leone
This is another West African country that has made surprising strides forward after a damaging period of internal conflict. Largescale investments in iron-ore production and exploration were expected to spike growth on a one-off basis to over 50 percent in 2012. But, as in Liberia, the infrastructure urgently needs upgrading and a considerable improvement in business climate is essential if sustainable jobs are to be found for the country’s youth.
West Africa – In the slow lane
Cote d’Ivoire
Once the economic star of West Africa, Cote d’Ivoire fell victim to the political power struggles that have characterised this nation over the last decade. Growth contracted by 5.9 percent in 2011, following the post-election violence. A period of stability under President Alassane Ouattara could see this potentially rich country (the world’s largest producer of cocoa) return to better times.
Other West African countries in the slow lane include Mali, Benin, Burkina Faso and Senegal, which, despite a sound basic structure, has failed to match the growth levels of other comparable nations in the region.
East Africa – In the fast lane
Ethiopia
Since 2004, Ethiopia has maintained high growth rates, making it the fastest growing non-oil African country. Ethiopia is a classic ‘developmental’ state, which – like China, Korea and Singapore, – places economic development ahead of other considerations, such as deeper democracy, in which the state plays an all-important part.
However, Ethiopia has also encouraged the private sector, both local and foreign, in line with its Five Year Growth and Transformation Plan, which emphasises an expansion and upgrading of its agricultural and industrial sectors. Both agricultural and industrial exports have increased considerably and there has been a large expansion of the construction and infrastructural sectors, with the Chinese playing a leading part in the latter.
With the new leader, Hailemariam Desalegn, pledged to follow the path set by the late Meles Zenawi, Ethiopia should maintain growth levels of around seven percent over the next five years. Ethiopian entrepreneurs, especially women, are proving themselves some of the boldest and most innovative in Africa.
Ethiopia has been constructing a series of giant hydroelectric dams, including the Grand Ethiopian Renaissance Dam – the largest in Africa – which will increase capacity from the current 1GW to more than 11GW by 2015. This will not only be sufficient for its own needs, but will allow plenty for export to other countries in the sub-region.
Kenya
Despite an often turbulent political environment – the worst of which brought about large-scale violence and slashed growth following elections in 2007 – Kenya continues to be the dynamic hub of the East African Community, in common with Tanzania, Uganda, Rwanda and Burundi as the other members.
Kenya is the largest exporter of tea in the world and one of the major producers of coffee in Africa. Flowers and horticultural products from Kenya find ready markets in Europe and it is the most popular tourist destination in Eastern Africa.
Over the past few years, large construction projects, including new roads, skyscrapers and housing developments, have made real estate in the capital Nairobi and along the coast some of the most expensive in the world. The country also hosts the headquarters of a number of international organisations including the UN Environment Programme and the African headquarters of several multinational companies.
It has a dynamic industrial and financial sector and has become the regional leader in telecommunications technology, including the innovative mobile phone money transfer system that has taken the country by storm.
Tanzania
With projected growth rates of 6.8 percent in 2012 rising to seven percent this year, Tanzania’s growth has been above the sub-regional level. Industry, services and construction are the main driving forces with gold mining and gas production seen as important pillars of the economy.
New offshore gas discoveries by Statoil and ExxonMobile, estimated at around 12 trillion cubic feet, is likely to make Tanzania largely self-sufficient in its energy needs, boosting its still fledgling industrial sector.
Mauritius
The island nation has been an African star for decades. It has regularly attained the top spot in a number of benchmarks, including the ease of doing business. The economy is currently based on its four pillars – sugar, textiles, tourism and financial services, but it has also been developing its fisheries and canning sectors. The government is now keen to position the country as the investment gateway into Africa.
East Africa – In the slow lane
Uganda
Once the industrial heartland of East Africa, Uganda has still to fully recover its economic muscle, following the disastrous rein of Idi Amin in the 1970s and the period of violence and instability that followed. Being landlocked and largely dependent on road transport to export its agricultural products has not helped.
The discovery of oil promised a rapid acceleration of growth, but contractual issues have delayed the development of the sector and political uncertainties hamper further investment. Nevertheless, Uganda registered a growth rate of six percent in 2010, before it declined to 4.1 percent in 2011. Inflation is still high, putting additional pressure on growth. Uganda has been punching well below its weight.
Burundi
A fractious political climate and the economic disadvantages of being landlocked continue to hamper growth beyond four percent. More recent reforms and public spending on education are expected to yield productivity gains over the course of the next five years – if the political equilibrium can be maintained.
Southern Africa – In the fast lane
Botswana
The biggest success story in Africa, Botswana went from being one of the least developed economies at independence in 1966 to attaining middle income status with per capita income of around $6,500.
Botswana is one of the very few African countries not to fall prey to the dreaded ‘resource curse’ that has blighted the economic development of several oil producing nations.
A sound, even conservative, management of it main natural asset (gemstone diamonds), excellent political leadership for more than four decades, good governance and a small, but well-educated, population has ensured that Botswana’s growth rates have been among the highest in the world.
Over the past few years, exploration has revealed economically feasible reserves of gold, coal and other minerals. Development of these resources will provide a buffer to demand fluctuations for diamonds, which is dependent on healthy personal incomes in the main markets in the West and particularly in Asia.
A sharp decline in demand for diamonds in 2009 brought about a negative growth of 5 percent but the country has rebounded strongly since. Encouragingly, the new growth has came from an expansion of the capital formation, manufacturing, construction and service oriented sectors. This diversification of the economic base is likely to create more jobs for the country’s youth; underemployment has been one of the few, but socially and politically significant failings of the economy.
Mozambique
After its own long drawn-out and ugly war, during which whole regions were depopulated and millions of land mines were planted along the length and breadth of the country, Mozambique can now be said to have turned the corner in 2011 with its first export of coal.
The country has vast reserves of coal, which are in high demand in India and China, in particular, and, together with Tanzania, it has sufficient off-shore natural gas to encourage the building of Liquefied Natural Gas (LNG) trains to serve a vast market in Europe and Asia.
High foreign investment in the extractive industries, together with strong growth in agriculture and infrastructure investment, has generated an average growth of around seven percent over the past decade.
The government is committed to its Action Plan for Poverty Reduction, which runs to 2014. It aims at increased agricultural production, employment creation through the support of small and medium sized industries and the overdue development of human and social capacity. It is also creating safety nets for the most vulnerable groups.
Mozambique is already a large producer of cashew nuts and fishery products for export, but new investments are likely to see a major increase in output.
Angola
Yet another African country building on the wreckage of devastating conflict, Angola is Africa’s second largest oil producer after Nigeria. It is also richly endowed with diamonds and other minerals, cash crops, such as coffee, and possesses rich fisheries. An anticipated increase in oil production to two million barrels a day, and LNG exports, should raise growth to eight percent this year.
However, Angola’s development has been very uneven, with small pockets of wealth in the midst of rural and urban poverty. There are also severe capacity deficits in government and the private sector, with unemployment rising to unacceptably high levels.
The government has made ambitious attempts to close the gap though large-scale housing projects and a nationwide education roll out. Brazil is becoming an increasingly significant foreign partner and the former colonial overload, Portugal, seems to be looking to opportunities in Angola to tide it over its own economic problems.
Southern Africa – In the slow lane
Malawi
Still one of the poorest countries in Africa, Malawi relies mainly on the agricultural sector, which received a boost when former president Mbingu wa Mutharika defied the Bretton Woods institutions and subsidised fertiliser to farmers. This resulted in bumper crops and Malawi became a food exporter instead of an importer. The country still relies on overseas aid to balance its books.
Zimbabwe
The country has been slowly recovering from a very low base since the inception of the inclusive Government in 2009, when inflation reached over a trillion percent. Everything will depend on how the elections, scheduled for the later this year, turn out.
North Africa – In the fast lane
Libya
Despite the regional upheaval, not all is doom and gloom in North Africa, indeed there are pockets of real and rich potential. In Libya, where the war is officially over but battles and skirmishes continue on an almost daily basis, the country’s undisputed energy wealth is proving to be a driver for peace.
During the civil war that saw the end of long-term dictator Muammar Gaddafi, a controversial $900 million programme of deep water drilling for gas in the Gulf of Sirte was postponed. However, despite ongoing security problems, Libya’s new government has announced it will go ahead with the scheme later this year, making Libya one of the region’s potential economic hot spots.
Morocco
The kingdom of Morocco has emerged from the events that began in Tunisia in 2011 relatively unscathed. Although there were some expressions of discontent in the early days, these, for the most part, remained low key, defused by King Mohammed VI who announced constitutional changes and the holding of an election that brought an Islamist-led government to office.
The government in Rabat is currently involved in free trade talks with the European Union (EU) as part of a project aimed at deepening trade ties between Europe and North African states. The fact that Morocco has suffered little disruption to everyday life over the past two years makes it an ideal place to launch the initiative.
Morocco is the largest recipient of European Neighbourhood Aid, money given to the EU’s immediate periphery, with €580.5 million ($760 million) earmarked for 2011-2013, according to the European Commission.
“Smooth negotiations of the free-trade agreement are crucial, because they serve as an example for other countries in the southern Mediterranean,” says Marielle De Sarnez, a French member of the European Parliament. “This agreement will also allow, in the long term, greater regional integration for the Maghreb countries.”
Morocco has also embarked upon an ambitious ports programme, which is intended to position it as a transshipment hub between the North Atlantic Basin, the Mediterranean, the Middle East and the Indian Ocean.
North Africa – In the slow lane
Tunisia
Before expressions of dissatisfaction became prominent across the region, Tunisia had been widely lauded as a bastion of stability, gender equality and promise – in 2009 it was ranked the most competitive economy in Africa. However, the positive spin masked a cauldron of discontent and, since the revolution, finding a workable political balance has proved elusive. While this situation continues to exist, no appreciable economic improvement is to be expected and important sectors, such as tourism, are expected to remain in the doldrums.
Egypt
Like Tunisia, Egypt continues to struggle to regain political and economic equilibrium. The election to the presidency of Muslim Brotherhood-approved candidate Mohammed Morsi last year had been expected to restore the country’s fortunes, but this has proved not to be the case and, again like Tunisia, important foreign exchange earning sectors like tourism have suffered the consequences of political disquiet.
Egypt’s former tourism minister, Mounir Fakry Abdel Nour, who left office last year, revealed a £2.5 billion decrease in tourism revenue in 2011-2012, alongside 32 percent fewer visitors. “We are living through an unprecedented crisis in the history of this sector,” said the former minister. “We have faced tourism crises before, following one-off events [such as the 1997 Luxor massacre in which terrorists shot dead 62 holidaymakers at an ancient Egyptian temple], but this is different because [the revolution] is a continuous state of affairs.”
With proven gas reserves currently pegged at 77 trillion cubic feet, the third largest in Africa after Nigeria and Algeria, Egypt’s long-term economic future would seem assured but, for the immediate future, prospects are far from rosy.
Algeria
In Algeria, a series of security failures, most recently culminating in the al Qaeda-linked brigade assault on the Tigantourine gas plant attack, south-west of Amenas, have seen short-term economic prospects flatline. Responsibility for the assault has been linked to Islamist groups in neighbouring Mali, while attempts to resolve the issue introduced yet further complications in the form of troops recruited from Chad, with further repercussions in Sudan.
The discontent has also implicated Mauritania, whose president Mohamed Ould Abdel Aziz is currently resisting attempts to be brought into the debacle, suggesting the United Nations would be a more appropriate force for deployment.
Sources: UNECA, Mo Ibrahim Foundation, African Business magazine, African Development Bank.
