Of recent, there are discussions about the potentials of African economy to follow in the foot step of East Asian economy and join the league of ‘miracle’ economies. Over the last few years the African continent has grown at an average rate of about 4.5% despite the numerous challenges that are crippling growth on the continent. Top of these challenges are continue war in some part of the continent, death of infrastructures, lack of skill man power, political instability and dictatorship, poverty and famine, lack of coordination, poor planning and absence of continuity. But, that notwithstanding Africa has the potentials to rival Asia as the next global economy engine of growth. With a population of about one billion people, though less than the population of China, alone, Africa has the potential manpower and consumers to drive the next era of global growth. Already, economies like that of South Africa, Nigeria, and Egypt have a combine GDP of over $1.5 trillion, which if they were to be one country they will be the 12th largest economy in the world. In the last decades the average inflation rate of the continent has come down from 22% in the 1990s to 8% of the last 10 years, according to the economist (2012); as a result of improvements in the macro economic management adopted by these countries. The same thing can be said of the debt overhang in the continent as the overall debt has come down by a quarter in the last decade. Today the total number of countries that practice some kind of democracy are in the majority compared with 20 years back. The second largest economy on the continent, Egypt has just elected it first democratically elected civilian president in its history. The era of military dictatorship on the continent is over, and looking at the available statistic on the ground the era of poverty and underdevelopment that characterized the continent will soon follow to become history.
Last year, the performance of the continent slow down due to the events in North Africa, but looking at the performance of sub Saharan Africa alone, its growth is impressive at an average of 5%. But this year, with most of the last year revolutionary events in North Africa over, the performance of the continent will peak up. As the BRIC economies continue with their quest for resources, so will the export earning of mineral resources rich countries in Africa. Already poor economies such as that of Niger who has been ravaged by famine over many years has started to feel the impact of Chinese investors, as they help to build the country’s first oil refinery that is currently refining its not too long ago discovered oil deposit. Over the last few years Nigerien economy grow at a double digit rate, and according to estimates from African economic outlook (2012), this year it is expected to be one of the fastest growing economies on the continent. Resources rich economies such as that of Angola and Libya will continue to grow, despite the recent set backs in the case of Libya in which case if all things are good it is going to be a blessing and put the country among the shining examples of modern African countries. Ethiopia and Rwanda have become the continent role models in term of macro economic prudence, despite their apparent difficult situations they have managed to grow at a higher rate pulling many of their citizens out of poverty. The kingdom of Morocco continues to increase her competitiveness and attraction to the outside world with the recent lunching of ultra modern plant by the France automobile giant Renault-Nissan. In term of political stability the continent still has a long way to go with wars going on in Mali, Sudan, Somalia, Congo, and corrupt regimes everywhere around the continent.
According to the Economist of 3rd December, 2011, Africa as a region grow consistently faster than any other region in the world; this is another testimony to the other reports that see Africa as the next global power house. Ghanaian economy is one of the fastest growing economies on the continent, attracting billions of dollars annually in form of foreign direct investment. With GDP of about $40 billion, though, small when compare to Nigeria or South Africa, looking at the size of the population, the country is doing well and has succeeded in pulling out millions out of poverty. The number of middle class in Africa is growing fast expected to reach 100 million by 2015, with this development the market for western style consumer goods will be vast and with it the dynamism of the African economies will increase. Trade between Africa and the rest of the world continue to increase at much higher rate than what obtained a decade earlier. Some of the biggest economies on the continent like that of Nigeria, South Africa and Egypt boast of sophisticated financial infrastructures like well capitalized banks and emerging capital market. Nigerian economy this year is expected to grow at the rate of about 7% a much higher rate than South Africa 2.9% and Egypt 2%. Nigeria is on it way to produce new billionaires every year, already it boasts of the richest man in Africa Aliko Dangote. Mobile phone penetration in Africa is growing at an increasing rate, according to some estimates there are about 600 million phones in Africa, making the telecommunication sector one of the profitable sectors on the continent. After the general elections that brought the Muslim brotherhood candidate Muhammad Mursi to power, Egyptian economy is expected to bounce back by next year; and if possible follow in the foot steps of turkey another Middle Eastern power with moderate Islamist in power. Turkey, for example, has alienated all fear about the moderate Islamist holding of political power, it is today one of the biggest economies in the world.
The last global economic crisis that made working conditions in advance economics difficult was responsible for the return of many expatriates of African origin back to the continent to contribute their quarters to the development of their countries. This has provided the continent with the much needed skill manpower required to push the frontiers of the regions growth. These combine with the existing skill manpower is helping the growth of sectors such as telecommunications, IT, services, and manufacturing. Despite the negatives in facts of the last global economic crisis on the world economy, in some other ways, it has really provided the continent with opportunities, for example, the growing attractiveness of African bonds compare to bonds that come from the developed countries. Many investors kin on diversifying their investments from the highly toxic assets that led to the last global crisis are moving towards Africa. As a result the stock markets of South Africa, Egypt, Nigeria, Kenya, and Ghana are receiving a lot of foreign inflows. To tell one how rewarding investing in Africa has been in recent years, the richest person on the continent, Aliko Dangote has made most of his wealth by, first believing in Africa and, investing there; at a time when many others run away from it. He is planning to make his cement empire one of the largest in the world with the expected listing of the company on the London stock exchange next year, and further expansion into other African countries. Other giants African companies, such as South Africa’s telecommunication giant MTN that has invested widely across the continent, has been investing in other places around the world more especially in the Middle Eastern region with it presence in Iran. Africa is indeed an aspiring economic power house that is yet to develop it potentials; and as other parts of the world reduce their naturally endowed resources, Africa waits as the spire tire of the global grow machine.
AFRICAN ECONOMIC OUTLOOK, 2012: PROMOTING YOUTH EMPLOYMENT
THE ECONOMIST, DECEMBER 11TH 2012