Africa possesses all the ingredients to be the planet’s dominant economic engine for decades, perhaps the entire 21st century, according to demographers, economists and industrial and agricultural experts. Those ingredients are already lifting a continent once ignored by all but novelists and revolutionaries into the big leagues of global economic dynamism.
Consider the following: Africa’s economy is growing faster than the economies of every other continent, and about one-third of Africa’s 54 nations have a yearly gain in gross domestic product of more than 6 percent.
What’s driving the growth? The convergence of seven potent forces, Jonathan Berman wrote in the October issue of the Harvard Business Review.
Cities. Compare Africa with India, the world’s second-largest country. The percentage of Africans living in cities already exceeds the percentage of people in the subcontinent who live in cities. By 2030, half of all Africans are expected to be living in cities. Africa’s middle class is larger than India’s. Africa has 52 cities with at least one million people, the same number Europe has.
Stability. Coups are declining and market forces, which the continent is progressively embracing, are tamping down inflation and cutting sovereign debt. Global bond traders are increasingly buying up African government bonds for their high yields and relatively strong ratings. As can be seen in the graph below, the number of coups has plummeted since the 1990s. According to the Polity IV Index, which gauges the level of a nation’s democracy, Africa’s ranking has more than doubled since the 1990s. One reason Zimbabwe’s president is so frequently in the news is because he's increasingly an exception among the continent’s heads of state, a relic of the last century.
“Once there wasn’t a counterparty to bankroll socialist agendas, African governments had one port of call,” said Phuthuma Nhleko, chairman of MTN Group, Africa’s leading telecommunications provider, with operations in 21 countries.
Trade. Intra-African trade is embryonic, with just 11 percent of the continent’s trade occurring inside its own borders. But that's changing: today there are five identifiable, active and growing trade blocs on the continent. In sum, Africa has a $2 trillion economy.
People. The continent will soon have the planet’s biggest workforce. It will grow to 163 million in this decade and by 2035 Africa will have more workers than China. By the middle of this century, Africa will be home to 25 percent of the world’s workers. Further, those workers will be supporting far fewer elderly dependents than workers in China, Europe and elsewhere.
Education. Africa’s booming population is benefiting from robust government commitment to education. Overall, 20 percent of government spending goes to education – about twice the level of nations in the Organization for Economic Cooperation and Development. Primary school enrollment climbed to 76 percent in 2008, a 14 point gain in a decade, while secondary school enrollment rose 10 percent. Achievement levels still lag those of students in developed economies, but the gap is closing.
“Today you’ll be in negotiation with somebody in Africa and learn the man’s been to Oxford, Cambridge and Harvard and speaks six languages,” Aidan Heavey, CEO of Ireland’s Tullow Oil, said. “I barely speak English.”
Smartphones. Cell phone use is exploding. The mobile industry’s penetration shot up from 2 percent in 2000 to 78 percent today, and it is expected to soar to 84 percent by 2015. Put differently, mobile Internet traffic in sub-Saharan Africa will jump 25-fold in the next four years.
“Before mobile phones, Nigeria had 600,000 lines for 120 million people,” Nhleko said. “You had to wait months and spend thousands of dollars. Today, there are over 70 million lines. Evolution is an understatement.”
Farmland. While awareness that Africa holds vast amounts of oil, gold, platinum and numerous industrial metals is widespread, it is little known that Africa holds 60 percent of the world’s uncultivated cropland. Latin America has 300 million hectares (741 million acres) of uncultivated cropland; Africa has 590 hectares (1.46 billion acres) of uncultivated cropland. Only 24 percent of the continent’s growth from 2000-2008 came from mineral and petroleum extraction, but that 24 percent is drawing huge investments. Petroleum discoveries in Mozambique, Tanzania and Uganda alone are expected to attract tens of billions of dollars in foreign direct investment.
Mike Obel assigns, edits and writes stories about business, markets, finance and economics. Before coming to International Business Times, he worked on the Finance Desk of...