By Francis Kokutse, IANS,
Accra : Defying the festering Eurozone crisis, Africa is poised for an economic upsurge, with international observers and the World Bank hailing it the “continent of opportunity.”
“This is the Africa of opportunity…the Africa where people take charge of their own futures… the Africa where people are looking for partnerships,” International Monetary Fund (IMF) managing director Christine Lagarde said during her first official visit to Africa earlier this month.
Growth across the 54-nation continent has averaged 5-6 percent or more over the past decade, the World Bank has noted. It varies from country to country, said the bank, adding that it was significant that the poverty rate declined from nearly 60 percent to just over 50 percent in the 10 years up to 2005, it added.
Noting that Africa has been able to shield itself from the ongoing global economic crisis, Lagarde attributed this to “good economic policies” that have provided a platform for higher growth and more investment, leading to a reduction in poverty.
There are, however, apprehensions that growth would be impeded if the population surge is not put under control. The UN says the continent has joined India and China as the third region of the world to reach a population of one billion people. This figure is certain to shoot up to 1.3 billion by 2050. This is staggering, considering the fact that, by 1950, there were just 500,000 people living in the urban areas across the continent.
“A number of African countries have demonstrated strong growth in 2011 as growth slowly returns to trend, post-crisis. Of these, Ghana, with an estimated 13.6 percent growth rate, is by far the most impressive,” Standard Chartered chief economist Gerard Lyons told IANS.
Another country that has also performed well is Angola. The country, which is the third-largest sub-Saharan African economy, is set for a growth resurgence. “Rising oil production will likely drive a growth rebound to 8 per cent in 2012, with oil production set to rise to 1.8 million barrels per day (mbd) from 1.6mbd in 2011,” Standard Chartered said in a continental review.
Of the other countries, it said: “Mozambique is set to remain a star performer in Africa in terms of economic growth. The economy expanded at an average rate of close to eight per cent over the last decade and is likely to grow by more than seven per cent in 2012.”
Lyons said: “South Africa underperformed even relative to pre-crisis trends….South Africa with its deeper linkages to the global economy is now threatened with a slowdown in the global economy, especially the euro area, the destination of most of its manufactured exports.”
In Nigeria, Africa’s most populous nation, the resurgence of religious attacks by the Islamist group, Boko Haram, is likely to create some security problems for the country and affect the investment climate. The resource-rich Democratic Republic of Congo is still trying to come to terms with a contested election result and there are indications that this would affect any attempt to develop the economy. The famine in Somalia and the crisis in Sudan are yet to be fully solved and this is likely to impinge on growth in the two countries.
Lagarde’s hope for Africa hinges on the assessment that, though “the food and fuel crisis of 2008 had a severe impact on the continent and the global financial crisis that followed, policymakers responded effectively. Most countries were able to maintain critical spending on health, education and infrastructure. And we saw countries in the region recover quickly, with growth rates now returning to levels enjoyed in the mid-2000s.”
“This is a testament to the hard work and dedication of policymakers and people across the region. Before the crisis, they reduced budget deficits and public debt; they brought down inflation, and built up foreign exchange reserves. In short, they put their economies on a fundamentally stronger footing,” she added.
The optimism is also buoyed by Lyon’s views that the continent’s fundamentals are improving. “Even though Africa is often talked of as if it is a commodities story, it is more than that. Commodities are a key part of many countries’ success, and the challenge for them is to make sure that they build on that. But a key part of the Africa story this year – and one which can sometimes be overlooked – is stronger domestic demand. And this is a key reason to be optimistic. If Africa can build on this then it will generate a stronger basis for a growing middle class.”
“Africa too is investing in its much under-developed infrastructure. And this – alongside the growing middle class – should make Africa a more attractive destination for private sector investment, including higher Foriegn Direct Investment flows,” Lyon added.
The continent has also found a new way of dealing with the adverse effects of the global financial crisis by accelerating its engagement with emerging economies. Jean Ping, chairperson of the African Union Commission (AU), told a meeting in Istanbul, Turkey in December that “this adverse impact is alleviated thanks to the strong partnership that Africa has forged with countries like Turkey, China and India.”
“This gives us an assurance that while we cannot be fully insulated from current crisis in Europe, we have developed enough resilience to enable us to cope better with its adverse impact,” Ping added.
Against this background, Mthuli Ncube, chief economist of the Africa Development Bank (AfDB), has urged Africa to use this new relationships to beat the Eurozone blues. “While the economies of Europe and North America have stalled, the gloomy picture is by no means worldwide,” he said. “All was not lost as the BRIC nations – Brazil, Russia, India and China – continue to forge ahead. The Chinese economy is likely to continue with its phenomenal rate of growth: nine and a half percent this year, and nine percent in 2012. In India, we’re likely to see growth holding steady at around the 7.5-percent mark.”
Ncube also noted that “Russia looks on course to maintain growth above four percent, and Brazil is expected to dip only from 3.8 percent this year to 3.6 in 2012,” and therefore Africa needs to be looking up to the BRIC countries for their potential to contribute to the continent’s growth over the next few years.
(Francis Kokutse can be contacted at [email protected])