By Masimba Biriwasha | Global Editor At Large | @ChiefKMasimba | January 29, 2014
In recent years, there have been numerous reports of an African economic resurgence. According to the International Monetary Fund (IMF), Sub-Saharan Africa’s economic growth is expected to increase to six percent in 2014, from five percent in 2013, supported by investment in infrastructure and production capacity. But with an estimated 413 million Sub-Saharan Africans living on less than $1.25 a day, grinding poverty remains a grim, daily fact.
This contradiction of economic development begs the question: Is the enthusiasm around Africa’s growing economy much ado about nothing?
The African Development Bank says Africa’s economy grew an average of 4.8 percent per year between 2002 and 2011. McKinsey says the continent’s real GDP rose by 4.9 percent a year from 2000 through 2008, more than twice its pace in the 1980s and 1990s.
In 2012, six of the top 10 fastest growing economies in the world were in Africa including Angola, Liberia, Libya, Ghana, Niger and Sierra Leone.
But this economic growth is not trickling down. According to the Afrobarometer, a survey of Africa’s economic and poverty conditions, 17 percent of Africans in 34 countries surveyed say they frequently go without food, 22 percent lack clean water on a regular basis, and 20 percent often go without medical care. A study by the World Bank attributes the high poverty rate to high level inequality in both outcome and opportunities for citizens.
Africa may need to develop new economic models or indicators that ensure its growth results in visible improvements in its people’s lives and livelihoods. Markets and investors driven purely by profit motives may have a detrimental effect on the lives of Africans if left unchecked.
While Africa is being seen as the last frontier in the global economy a lot still needs to go into the mix to give Africans leverage in the economic resurgence.
In the 1960s when African countries started gaining independence from colonial rule, reports of economic growth and development largely came to naught, with political elites hijacking state resources at the expense of their populations. Some of the most well-known examples being the plundering of national coffers in Angola, Democratic Republic of Congo, Ghana and Zambia.
The danger with todays’ economic growth pattern is indications of the same trends, repeating history. Instead of bring prosperity, rule of law and respect for rights, economic growth in Africa may serve to reinforce and exacerbate governing elites’ stranglehold on power and self-enrichment without any corresponding accountability.
Africa’s economic advance at this stage is highlighting a growing disparity between the rich elite and the overwhelming impoverished majority.
More importantly, economic indicators may be merely aligned to the global economy devoid of efforts to improve African citizens livelihoods, a key factor for the sustainable transformation of African economies.
“While Africa’s increased economic momentum is widely recognized, its sources and likely staying power are less understood,” says a report by McKinsey & Co, a leading research firm.
The paradox of predictions of economic growth, is that many of the continent’s people remain locked out, reduced to mere voyeurs.
The Afrobarometer reveals that the average experience of lived poverty has hardly changed for the last decade among Africans surveyed in 16 countries. Africans give their governments failing marks for economic management. Fifty-six percent say they are doing a bad job of managing the economy and even higher numbers rate them poorly for improving the living standards of the poor (69 percent), creating jobs (71 percent) and narrowing income gaps (76 percent).
A major problem with trying to describe the economic trend emerging in Africa is that – as in that past – analysts have tended to treat the continent as if it were a homogenous whole. Africa is hugely diversified with its 54 countries, 2500 languages, over 3000 ethnic tribes and tremendously diverse cultures. Thus understanding the economic trends on the continent will require a more nuanced approach. Understanding individual African economies will be key in measuring the real impact of the continent’s growth on individual lives.
As Kingsley Moghalu, Deputy Governor of the Central Bank of Nigeria bluntly put it:
“When you look at Africa as a new territory for conquest for business opportunities, the question then becomes: in whose interest?”
According to Moghalu, there is a danger that the current interest about the prospects of the continent may turn it into “a place of extraction that fuels the prosperity of many nations, but not into a prosperous part of the world.”
Take the significant difficulties and barriers that African entrepreneurs face: lack of access to capital, insufficient infrastructure, and inadequate skills and support services. These challenges converge to create formidable obstacles. We must therefore question who exactly is benefitting from Africa’s much vaunted growth.
Lifting Africans out of poverty is a key aspect of development that must be integrated in economic growth measurement models. Investing in health and education, for instance, is key to the long-term growth of the continent. Political stability, which remain precarious in many African countries, is also a key factor to consider in the mix.
A new paradigm that facilitates a deliberate trickle down and empowers Africans to be significant economic actors is an essential component for giving Africa’s new economic growth some staying power.