Africa on the move: quest for sustainable growth
Over the past decade, Africa’s GDP has more than tripled.
In recent years, an encouraging economic environment — with significant reforms in macroeconomic management, improved incentives for the private sector and a broadly favorable international context for commodity exporting countries — has spurred high growth rates in many African nations.
While most of the world is facing major economic and political uncertainty, Africa is expected to continue its growth trajectory in the coming years.
Factors driving Africa’s success
In Africa, a broad range of factors have created favorable conditions for economic transformation, which could see rapid growth become sustainable and inclusive in the future.
- Improving macroeconomic indicators and business environment
Government reforms and initiatives have reduced inflation, budget deficits and debt levels in Africa. Africa’s regulatory, legal and business environment has also improved.
According to the World Bank’s 2013 Doing Business Report, among the 50 economies globally that have most improved their regulatory environment for business since 2005, the largest share — a third — are in Sub-Saharan Africa.
- Demographic dividend, rising middle class and urbanization
It is estimated that Africa’s population will double in the next 40 years to reach two billion — which will be 20% of the world’s population in 2050. The median age in the continent is just 20 — making it the world’s youngest continent.
As a result, by 2040, Africa’s potential labor force is expected to be more than 1.1 billion people, which exceeds projections for the Chinese and Indian workforces.
- Growing links with emerging economies
There has been a substantial increase in the economic presence of other emerging markets in Africa. The BRIC’s share in African trade has increased from just 1% a generation ago to 20% today.
By 2030, this share is expected to be 50%. China and India in particular are looking to Africa to help meet their energy security needs, as a market for manufactured goods and potentially for long-term food security too.
- Private sector participation
African leaders are eager to move away from dependence on aid and the accompanying conditions imposed by donors. This development has spurred a rising technocratic class in SSA that is well aware of the challenges to raising income and competing globally, including infrastructure investments, regulations and maintenance.
The growing influence of the private sector in Africa is evident in the increasing number of leaders and cabinet members from the corporate world.
- Natural resources
Africa has great reserves of natural resources. Nigeria and Angola are among the top 20 oil producers in the world. African countries make up 11 of the top 50 countries in terms of proven oil reserves.
South Africa, Ghana and Tanzania are among the top 20 gold producers; Zambia and the Democratic Republic of Congo the top 20 copper producers.
Economic transformation: the key to sustaining growth
Although Africa’s economy has grown rapidly over the past decade, questions are sometimes raised about the sustainability of this growth. While some observers believe that the continent will play an increasingly important role in the global economy, others are apprehensive about whether Africa’s current development is sustainable and inclusive.
More than anything, the concern is that economic growth will fail to create sufficient jobs and improve living standards for Africans. This highlights the need to implement transformation policies that expand the private sector, increase productivity levels and, most of all, create quality jobs.
A robust structural transformation is the key to shaping Africa’s ability to generate inclusive growth and tackle serious challenges, such as poverty and unemployment.