This is not the first time that the continent’s promise has featured prominently in global awareness. The Economist magazine with its 2011 cover of Africa Rising helped to succinctly message a change in fortune for the world’s least understood continents and helped propel a narrative of market opportunity and human development at a time that multinationals were still smarting from the immediate aftermath of the global financial crisis. The idea that Africa has not only survived the coordinated global downturn much better than most, but that the continent had actually represented the second fasted growing economy globally over the preceding 5, 10 and 20 years caught many by surprise.
As compared to the 2011 headline, the last five years have been less comfortable for the continent. Africa’s PPP-weighted growth slowed to an average of 3.1%, below the global average, implying that the economic convergence gains of the earlier two decades were slipping away. These headlines understate the underlying resilience of the African economic story, however. At the IMF’s recent Spring Meetings, one of the clear messages that came from the firm’s updated World Economic Outlook was that of Africa’s 54 economies, 35 were projected to grow at least as fast as the global average in 2019, 22% were expected to grow at 5% or more, and six African countries are projected to be in the global top ten – including four of the top five.
Why then the apparent focus on some continental headlines that have focused on Africa’s macro challenges rather than exciting successes? In part this is down to the impact of generally weaker commodity prices. In the 2000s commodity prices had largely gone one way, and this helped pull many of Africa’s resource-intensive economies along with it. Notwithstanding the country-specific success stories where new resource finds are currently being commercialized, the underlying tone for commodity exporters has been more difficult as the economies find themselves with fewer fiscal levers to pull and less helpful terms of trade as economic support. For example, oil exporters in Sub Saharan Africa are projected to grow at an average rate of 2.2% this year, which whilst up from the 0.5% growth of two years ago is still well below the 4.3% growth for 2019 projected for oil-importers in the region.
Similarly, the economic headlines around Africa have also been “unfairly” influenced by broader challenges in some of the continent’s largest economies. Representing together about a third of Africa’s GDP at market prices, Africa’s two largest economies, South Africa and Nigeria, both averaged economic growth of barely 1% over the last four years, whilst the rest of Africa grew at an average of 4.4%. For South Africa the story has been one of very weak business and consumer confidence as the ruling party was seen to have lost its way on both economic policy and moral authority under its previous leadership. Fresh from elections, hope for a firmer economic recovery rests with President Ramaphosa’s ability to make clear and pubic progress on the fight against corruption and to engage a more reformist economic policy agenda. Nigeria, the continent’s most populous nation, has also struggled for the last half-decade as efforts to tackle corruption, improve the security of its citizens, and diversify its economy away from oil have yet to produce tangible economic benefits. Absa’s own forecasts suggest that the recovery for both economies will be slow.
A focus on the recent challenges of these two countries risks missing the broader, and broadly positive, narrative. Africa’s young and growing population is not only generating consumer markets that increasingly draw the attention of global and regional brands, but also help provide the global workforce tomorrow as population growth slows (and in some cases reverses) not only in the rich west, but also in China and others. Despite the critical challenge of climate change, many parts of Africa may hold the key to helping feed the world, as the region has attractive options for bringing more agriculture land under commercial cultivation, for using better technology and skill to increase yields. Beyond agriculture, key natural resources, not only in energy and tradition bulk and precious metals – but also in many of those materials that are at the center of a low carbon battery-led economy – are in abundance in Africa. African policies themselves, like the ratification of the African Continental Free Trade Area can help build larger regional markets and build efficiencies, whilst China’s growing engagement with Africa, through huge initiatives like Belt and Road, can aid the continent’s global competiveness and interconnectivity.
Is it any wonder then that over 2019-2023, half of the world’s ten fastest growing economies are projected to be African, or that where the next five years Africa’s domestic economy is projected to balloon from $2.4tr currently (market prices) to well over $3tr?