An African Century?

Rajiv Sethi disagrees with Bill Easterly’s post on Aid Watch, “Was the poverty of Africa determined in 1000 BC?” regarding the role of History in determining present African growth.

« A large role for history is still likely to sit uncomfortably with modern development practitioners, because you can’t change your history. (…)

Twenty years ago nobody would have predicted that China and India would be the big drivers of growth and political superpowers they have become. And there is no reason to believe the countries of Africa cannot make similar leaps in the decades to come.... just as people have spoken of an American century and an Asian century, I believe we can now speak of an African century...

I believe the new African growth will come from five sources;

• a faster pace of economic integration in Africa's internal market, and between your market and those of other continents, facilitated by investment in infrastructure

• a broader based export-led growth, founded on new products and services

• investment in the private sector from African and foreign sources in firms that create jobs and wealth

• the up-skilling of the workforce, including through the acceleration of education provision, IT infrastructure and uptake and finally through

• more effective governance to ensure that effective states can discharge their task of creating growth and reducing poverty

Each of these five priorities will be difficult to achieve. But we should remember the value of the prize. Because if we can agree (that there is) a new model of post-crisis growth then Africa - already a 1.6 trillion economy - will continue to grow even faster than the rest of the world. This is not my assessment, but that of the world's leading companies and analysts. For example a report just published by the McKinsey Global Institute claims that Africa's consumer spending could reach 1.4 trillion dollars by 2020 - a 60% increase on 2008. In other words in ten years African consumer spending will be as big as the whole African economy is today.

It is those sorts of projections which mean people are now rightly talking not just of East Asian tigers, but of African lions. »

Rajiv Sethi finds a similar line of analysis presented by a Managing Director of the World Bank, Ngozi Okonjo-Iweala, in an article “What’s the Big Idea? Africa as the next “BRIC” “, suggesting to “reposition Africa as the fifth BRIC, i.e. a destination for investment, not just aid.

Excerpt:

« What trillion dollar economy has grown faster than Brazil and India between 2000 and 2010 in nominal dollar terms and is projected by the IMF to grow faster than Brazil between 2010 and 2015? The answer may surprise you: it is Sub-Saharan Africa... At a time when Asian equity and debt markets are saturated and no longer offer substantial returns, SSA could be poised to provide the best global risk-return profile. »

Many investors, and obviously Chinese enterprises investing in Africa, seem to agree …