The African Transformation

An increasing number of African countries are beginning to step away from aid dependency, as the domestic private sector becomes the engine of growth across much of Africa...

There was a time when Africa was was seen as a poor and backward area. Many economists believed that African countries were better off poor because wealth – especially resources that could be sold on international markets – inevitably fueled civil wars. Not any more. The new thinking now is to share Africa’s wealth more equitably. That’s right: Africa’s wealth.

Today, a diverse group of determined African technocrats – from Ghana to Uganda, Zambia to Kenya, South Africa to Rwanda – have joined forces with technologically savvy, globally oriented capitalists to launch a quiet revolution in development thinking. In time, their changes have helped lead to Africa’s dramatically improved economic performance, and greater prosperity.

Sample this: six of the world’s ten fastest-growing countries are in sub-Saharan Africa – Angola, Nigeria, Ethiopia, Chad, Mozambique, and Rwanda. In eight of the past ten years, sub-Saharan Africa has grown faster than Asia. By 2025, the International Monetary Fund expects Africa to grow at a rate of 6 per cent, about the same as Asia.

By 2035, Africa’s labour force will be bigger than that of any individual country in the world, which offers the continent a chance to reap a demographic dividend, using its young and growing workers to boost economic growth.

A new consuming class has taken its place: since 2000, more than 40 million African households have joined the world’s consuming class. At the point when household incomes exceed $5,000, measured at purchasing power parity, consumers begin to direct more than half their income to things other than food and shelter. The continent now has around 90 million people who fit this definition. That figure is projected to reach 150 million by 2025.

The experience of other emerging economies shows that Africa could accelerate its creation of stable jobs dramatically. When they were at a similar stage of development as Africa today, Thailand, South Korea and Brazil generated jobs at double or triple the rate of Africa’s.

This would lift millions more Africans out of poverty and vault millions of others into the consuming class. It would also cut the time needed to reach East Asia’s percentage of stable employment by more than half, from over 50 years to just 20 years.

Africa’s most developed economies, such as South Africa, Morocco and Egypt, are on track to create more wage-paying jobs than new entrants to the workforce. Three sectors have a proven capacity to create jobs and can do so in the future: agriculture, manufacturing, and retail and hospitality.

Africa has about 60 per cent of the world’s unused cropland, providing it with a golden opportunity to simultaneously develop its agricultural sector and reduce unemployment. On current trends, African agriculture is on course to create 8 million wage-paying jobs between now and 2025.

Lesotho, a country of just 2 million people, has 100 times South Africa’s exports of apparel to the United States on a per capita basis because it made investment attractive to foreign players and put the necessary rail and distribution infrastructure in place.

So what has realy changed? Partly, the boom in commodities. Sky-high copper prices have lifted copper-rich Zambia. Record cocoa prices are bringing $2 billion annually into Ghana. Kenyan farmers, mostly small, are responsible for $1 billion in annual exports of fruits, vegetables, and flowers, a figure that dwarfs the country’s traditional coffee and tea exports. And, of course, high demand for oil and gas has helped a number of countries enormously. But even countries without such natural resources, such as Rwanda, have seen significant gains, mostly because of improved economic governance and the return of money and skills from Africans who left their countries during the bad days. Rwanda, for instance, long an importer of food, now grows enough to satisfying the needs of its people, and even exports cash crops such as coffee for the first time.

Technology also plays an important part in the new African boom. Probably the most astonishing development success since 2000 in Africa has been the communications revolution. A dozen years ago, merely making a phone call (or receiving one) was virtually impossible even in Africa’s most important commercial centres. An elite business person might hire two or three people fulltime simply to repeatedly dial phone numbers over the crumbling, puny, and perversely sub-optimal government-owned telephone systems. Nigeria, at the time a country of 100 million people, had at most 100,000 working dial tones. It was not remarkable for one call out of every 50 made to be completed. Naturally, the effect on productivity was devastating, but equally as bad was the sense of isolation. Everything had to be done face to face, consigning people to long trips for even trivial maneuvers. Waiting became a way of life.

No longer. The advent of mobile telephones has brought instant communications to hundreds of millions of Africans, rich and poor, urban and rural. Africans are now on the move. Text messaging and digital money-transfer services, such as Safaricom’s M-pesa in Kenya, have transformed ordinary life. Yet this most visible of all African advances, this gigantic step forward in linking Africans to each other and to people around the world, occurred with virtually zero assistance from the professional development community of donors and economists, aid workers and development agencies. Uniformly, these “experts” said Africans were simply too poor to benefit from mobile telecommunications, so they provided scant assistance in the 1990s and early 2000s when African governments, in the main, relaxed their long hegemony over telecommunications and permitted private companies to lead the push into mobile phones.

Some Africans have made fortunes. The Sudanese engineer Mo Ibrahim even became a billionaire from piecing together a regional network of mobile companies. In virtually every single African nation, the leading mobile phone company is now the leading taxpayer to the government, the leading local donor to local causes, and one of the leading employers.

But more important than the economic impact of the mobile revolution was the mental impact. The twin values of self-reliance and exceeding expectations were cemented by the success in mobile telephony, which compelled development experts to rethink their commitment to African under-development. The striking improvements in living standards in Africa, especially for small farmers, have triggered a new optimism about the prospects for the continent.

Expectations are radically different now. Now the question increasingly asked is how Africans can share their wealth more equitably. Inequality in sub-Saharan is rising even as, in most countries, the basic standard is also rising.

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