Economist Admits Africa’s Promise

Economist Admits Africa’s Promise
Johannesburg, South Africa

AFRICANGLOBE – In May 2000, the respected international weekly magazine The Economist published a provocative lead article describing Africa as “the hopeless continent”.

To illustrate the hopelessness, the magazine picked several of Africa’s cities as case studies. Among those cities was Freetown, the capital of Sierra Leone, which, according to the magazine, symbolised Africa’s “failure and despair”.

Sierra Leone itself was described as being “of no great importance” because the country’s only relevance to the world was the sympathy needed for its people.

This beleaguered country, it was said, was nevertheless “a symbol of Africa”.

The article elicited condemnation from various quarters, including African government leaders, the academia and analysts. The magazine was reinforcing age-old negative perceptions of Africa, it was said.

The magazine would later atone for its pessimism – albeit 10 years later.

The cover page for the December 2011 edition labelled Africa “The Hopeful Continent”. And they had statistics to back it up.

Over the past decade, it was noted, “six of the world’s 10 fastest-growing countries were African”. In eight of the past 10 years, the magazine said “Africa had grown faster than East Asia, including Japan”.

It was as if there were two Africas: the one described in the May 2000 issue and the other as described in the December 2011 edition. And The Economist is not alone in having had to retract (although tacitly) its own coverage of developments in Africa.

Before South Africa’s successful hosting of the 2010 World Cup, the London-based Guardian newspaper carried an article in which one of their reporters warned potential tourists against visiting South Africa for the spectacle.

In “Why going to South Africa for the World Cup terrifies me”, Guardian journalist Louise Taylor claimed that South Africa was “more dangerous than Iraq and Afghanistan”.

Taylor added: “Deep down, there must be some VIPs pacing Fifa’s corridors of power who harbour nagging regrets that Egypt or Morocco did not pip South Africa and win the vote.”

Interestingly, Taylor had not visited the country before. Her article was based entirely on anecdotes and desktop information. The stereotypical view of Africa as a “dark continent” persists, despite evidence pointing to a continent on the rise.

Africa’s economy is growing at a rapid rate despite the global economic downturn that is adversely affecting some of the continent’s major trading partners, especially those in the euro zone.

The continent is also increasingly adhering to principles of good governance, which include regular democratic elections, adherence to the rule of law and the creation of a climate conducive for trade and investment.

Once a continent known for coups d’état, Africa now holds more elections than ever. In the 1960s and 1970s, according to a recent study, African countries held a total of 10 elections a decade.

This is on a continent of 54 countries.

Latest stats indicate that Africa now holds 41 elections every five years.

Of concern remains the ability of African countries to trade among themselves. Current trade among African countries stands at a paltry 10 percent, excluding trade in oil. Simply put, Africa trades with everyone except itself.

The overwhelming majority of African countries are single-commodity economies, exporting raw materials at a fraction of their value to markets in Asia, North America and Europe.

Together with other countries, South Africa has expressed its belief that integration and intra-trade at the level of regional economic communities will pave the way for greater continental economic integration. A lot of progress has been made regarding the establishment of a Tripartite Free Trade Agreement (T-FTA) between the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (Comesa) and the East African Community (EAC). The T-FTA will combine the markets of 26 countries with a population of nearly 600 million people and a combined gross domestic product of $1 trillion (R9.8 trillion).

In summary, this key initiative will provide market scale that could launch a sizeable part of the continent onto a new industrialisation trajectory. The T-FTA will also form part of an Africa-wide FTA, which will create a market of $2.6 trillion.

Delivering south Africa’s Department of Trade and Industry’s Budget Vote in Parliament recently,Minister Rob Davies said negotiations were proceeding, but that efforts in this regard had to be complemented by the promotion both of infrastructure development and co-operation to transform productive sectors and industrialise Africa.

The minister said investors had not been put off by challenges, but recognised Africa as the next growth frontier and the key strategic importance of South Africa as the most industrialised African country.

The 2013 Africa Competitiveness Survey by Ernst and Young says: “Africa’s rise over the past decade has been very real. While sceptics still abound, and there are people who still seek to debate the point, the evidence of the continent’s clear progress over the past decade is irrefutable.

“Over this period, a critical mass of African economies have grown at high and sustained rates; so much so that, despite the impact of the ongoing global economic situation, the size of the African economy has more than tripled since 2000.

“The outlook also appears positive, with many parts of the region forecast to continue experiencing relatively high growth rates and a number of African economies predicted to remain among the fastest growing in the world for the foreseeable future.

“At the same time, though, individual countries and the region as a whole still need to address significant challenges in order to sustain this progress, and to emulate the kind of developmental path we have seen in places like South East Asia over the past 30 to 40 years. We are of the view that Foreign Direct Investment (FDI) will play a key role in this process as both a source of capital, but, more importantly, as a catalyst for job creation, skills development, technology transfer, and ultimately, the longer-term diversification and transformation of key African economies.”

The growth in the African economy has increased the potential for FDI projects into Africa, as well as creating positive growth for investors in Africa. With South Africa being the single largest investor (2012 FDI projects) in Africa, there is ongoing confidence and interest among African countries regarding its potential growth and future.

The highest levels of growth have been found to originate in equatorial Africa, with the lowest in north Africa. This stagnation in the north is mainly caused by the political instability within the region which has discouraged potential investors and caused certain levels of divestment.

The boom in the southern region is mainly due to the large levels of investment by South Africa in countries in the SADC region.

The role of South Africa as a strong investor has increased over the past decade as it is placed fifth on the list of top 20 countries that source FDI projects in Africa.

This makes it the largest African source of FDI projects with a compounded growth of 57 percent, in South African-originated projects into Africa, since 2007.

The pessimistic view of Africa as a hopeless continent is being challenged by concrete stories of economic development and a general improvement in the standard of living of Africa’s people.

 

Clayson Monyela is the deputy director-general: public diplomacy at South Africa’s Department of International Relations and Co-operation