Digging beneath Africa’s headlines - PDF document

Digging beneath Africa’s headlines Greg Mills Scarcely a week goes by without someone saying something positive about Africa. At the end of 2011, the Economist’s cov er was ‘Africa Rising’, explaining why four of the world’s fastest growing economies were from a continent only a decade earlier labelled, in May 2000, by the magazine as ‘The Hopeless Continent’. They are not alone. At the start of 2012, the UK Guardian p ublished an editorial entitled ‘A fresh chapter is opening in Africa's history’, while the Financial Times , hardly known for its hyperbole, followed suit with ‘Why Africa is leaving Europe behind’. These stories are backed up by a welter of emailed statist ics and news of fresh African business opportunities. Africa’s turnaround shows, fundamentally, that growth matters. A s ix percent annual increase for a decade does make a difference, and begets stability and that, in turn, further growth. Little wonder t he number of African conflicts has declined threefold to just four today form the peak in the mid - 1990s , though that should not obscure a new prominence by African rather than foreign peacemakers . T his economic upswing has little to do with charity. D urin g a decade when Western leaders were urged to double aid to the continent as the only way out of its seeming morass, growth is related not to external donations but improving commodity prices, better and cheaper telecommunications, and African government p olicy more responsive to the ballot box through democratisation and to private sector needs. This does not mean that aid does not have a role, especially in fragile or post - conflict countries. Aligning it better, however, to promote economic activity in these environments has not proven that successful, where the key metrics have been the volumes spent rather than the results achieved. O f course growth alone is not enough for development, even though sustainable progress is impossible without it. That sub - Saharan Africa has only in 2011 exceeded the per capita income levels of the early 1970s is i ndicative, too, of how difficult and painstakingly slow it is to undo the effects of collapse. Sub - Saharan Africa also remains an exceedingly poor continent, with a n annual per capita income level of just over $600. The patterns of growth have also been h ighly differentiated between states; some have got richer, while others have failed. This is however a positive phenomenon, that Africa is no longer one single category of country , but like other developing regions made up of performers, failures, small st ates (which usually perform much better in Africa), big ones, landlocked, littoral, democratic (by now the overwhelming majority) and autocratic examples . In particular, Africa’s larger countries (think of the Congo) have generally had a poor development r ecord since independence, which in part relates to the expanse of territory and complex make - up of their societies, of many nations within a single state. There are other ongoing challenges which cannot also be glossed over in the new - found hype about th e continent. First, Africa’s middle class is exceptionally small, under one - fifth of the population. The health of this segment is both an indicator of the spread of wealth beyond a tiny elite, and also a buffer against pressures from the top and the botto m – put differently the glue that moderates behaviour. A small middle - class is not a recipe for stability and social cohesion. This relates to a second fact: T he vast majority of Africans, skilled and unskilled, lack formal sector employment. This situat ion is especially acute among the youth, nearly two - thirds of sub - Saharan Africa’s 800 million people. This cohort presents a tremendous development opportunity – a demographic dividend – of large numbers of high - energy young people coming into the market at one time, but only if they are skilled and basic services are in place. Third, basic infrastructure lags. While digital communications has enabled the cut - off continent to be quickly connected, roads, ports, railways and airports take a while longer, a nd have equally to circumvent the biggest obstacle of all: recalcitrant and sometimes venal authorities. This is particularly the case in the cities where, by 2025, more than half of the continent’s people will live. Again, this offers great development op portunities in terms of economies of scale and concentration of labour, but the infrastructure facilities need to be in place. Fourth, Africa’s growth rates have traditionally tracked commodity prices. These have risen on the back of Chinese and Indian de mands. What will happen if this demand, for whatever reason, diminishes? Fifth , the threat of populist political reactions and policies are ever - present especially where politics is fractious, politicians inept and populations impatient . In some cases , thi nk Zimbabwe, this is radically destructive, in others (as with indigenisation programmes) less threatening. The further countries get from independence the less the likelihood and rationale for such policies. In all, however, it raises suspicions among for eign and some local investors. And related to this, sixth, and finally, Africa’s private sector remains small and vulnerable to political whim. Outside of the natural resources sector, African entrepreneurs battle in global markets, critical to divers ification and employment. Private capital flows to Africa lag compared to other regions. When African politicians actively promote the private sector without vested interests, the continent could be said to have truly turned a corner. Dr Greg Mills heads the Johannesburg - based Brenthurst Foundation.