The 54 countries of Africa have unique social, economic and cultural attributes with a current total population of 1.1 billion in 2016, likely to double in the next 50 years.
The continent’s economic performance had been depressed and negative for long periods during the 1990s because of the huge national debt burdens and failed economic policies that kept the continent poor.
The Turning Point
There was a transformation at the turn of the century, however, when most African economies suddenly began to grow at an average of 5%. Huge debt burdens were wiped out, there was partial trade liberalisation in critical sectors (like telecommunication, retail and financial sectors) as well as rising prices of the continent’s commodities and natural resources (copper, crude oil, cobalt, coal, cocoa, etc.). This led to a rapid growth in the continent’s middle-class population, which is estimated to have exceeded 350 million people in 2016.
This trend is now faltering and may indeed be reversed over the next few decades based on new episodes of complex stagflation in many African economies, sharp falls in the prices of commodities and natural resources that had been the main source of revenue generation for many African countries.
These challenges are now being doubled by the rising wave of sophisticated technology, green alternatives and startups in developed economies that are disrupting the status quo and making the continent’s natural resources and economic offering unattractive to the global market.
The Way Forward
Major economic changes will be needed across the continent over the next few years to sustain its (dwindling) fortunes and support the economic progress that had been made over the past decade.
Africa’s economic revival must begin with a radical transformation and a paradigm shift in its approach to agriculture and food security, in the first instance. There is an urgent need for Africa to upgrade from arable farming and outdated land use tenure systems towards large scale commercial farming with huge incentives for private sector investment in value-chain addition and backwards integration to create the food surpluses critical to the feeding and nutritional development of its enormous population.
Secondly, there has to be greater focus on manufacturing and industrial cluster development. Once the continent can feed itself, it needs to provide employment opportunities and a decent living for its huge workforce.
An Ace in the Hole?
There are key sectors in which Africa has some comparative advantages that can be exploited, especially in low-skilled manufacturing of textiles, leather, building material and the assembly of mobile phones, automobiles and semiconductors chips.
Thirdly, there must be a much quicker pace in programmes to privatise power supply and infrastructure. Leveraging on current economic progress will require further government incentives and policy reforms that allow private corporations to invest in and own power generation and distribution.
In fact, the diversity of the continent’s geographical landscape allows for the proliferation of profitable business in green energy and expansion of a mix of commercial power generation ranging from solar, wind, biomass, hydrological to natural gas (all of which exist in abundant quantities).
The potential for Africa to strengthen its economic position, harness the talent of its young population and move towards inclusive prosperity is huge but daunting, and many critical reforms are needed if the continent is to continue its transition to sustainable development.
The next few years will be critical, but will the continent manage to take advantage of its opportunities? The rest of the world will be watching.