AFRICANGLOBE – African presidents and policy makers are pushing back against pessimism to tell the world their continent’s economic boom is real and sustained, but they say it must work harder to roll back poverty and create jobs for its restless youth.
From Senegal to Nigeria and Rwanda, officials play down the impact on investment and capital inflows from the U.S. Fed’s unwinding of its economic stimulus programme, or from signs of slowdown in China and its appetite for African commodities.
“You know, some people are talking about writing an obituary for Africa Rising … and I think it’s premature,” African Development Bank (AfDB) President Donald Kaberuka said in a recent interview, a message repeated during the Africa Summit held in several African capitals this week.
Speakers said the drivers of Africa’s headline-grabbing growth in recent years – investment in natural resources, swelling population, rapid urbanization, an expanding middle class and mushrooming consumer demand – were undiminished.
Carlos Lopes, executive secretary of the U.N. Economic Commission for Africa, said Africa’s macro-economic metrics were still headed firmly upwards, helped by better management by governments and other trends, such as the continent’s ability to “leapfrog” to advanced communications and energy-use technologies, leaving older outdated modalities behind.
“All will still go this year in a good direction, less inflation and bigger reserves,” Lopes said.
His U.N. commission sees Africa’s GDP growth, including still-troubled North Africa, accelerating to 4.7 percent in 2014, from 4 percent in 2013, and rising to 5 percent in 2015.
The World Bank this week forecast – excluding North Africa – would grow at 5.2 percent in 2014, spurred by record investment inflows and spending and up from 4.7 percent last year.
“There are some signs of pessimism in emerging markets as a whole, but not really in Africa,” said Jean-Michel Severino, chairman of venture capital firm Investisseurs & Partenaires which funds small businesses promoting economic and social development on the continent. Severino ran the French Development Agency for a decade before joining the firm.
Far from being pessismistic, Africa’s leaders are not afraid to tell investors that if they stay away they will lose out.
“Business opportunities are there, growth is there and the population is there,” Senegal’s President Macky Sall said in an interview on Monday.
“If someone does not see this opportunity, and turns their back on Africa – well, it won’t be Africa that loses.”
Lopes, who is from Guinea Bissau, said the region as a whole needed to foster a positive vision and build on it.
He told African finance ministers in Abuja on March 29 the continent was showing a new brand: “one that exudes confidence, attractiveness for investments, and that has considerably lowered risk, with investment reaching $50 billion in 2012”.
But he acknowledged “Africa still has a branding problem”. The world’s mainstream media tended to focus on the latest conflicts – for example, in Central African Republic, or in Sudan – where images of horrific slaughter of civilians and helpless refugees still colored views of the continent.
This tended to obscure the ‘good news’ naratives of more and more African states, many with wars, genocides and famines in their recent history, whose increasingly better managed economies were now surging ahead and attracting investment.
Ethiopia, Ivory Coast, Sierra Leone, Rwanda, Mozambique and Angola were among these, taking steps to emulate high-performers like Botswana, Mauritius, Seychelles and Cape Verde.
Nigeria’s Finance Minister Ngozi Okonjo-Iweala is another tireless campaigner against what she calls “an incessant picture of Africa unable to cope, Africa disaster etc”.
Her country, Africa’s No. 1 energy producer which was this month elevated by a GDP rebase to replace South Africa as the continent’s largest economy.
“We think the Africa Rising story is real but it does have some vulnerabilities, which we need to look at,” she said.
“If this growth isn’t firmly anchored on really transforming sectors that can create jobs, we will have a youth problem on our hands, we already have it,” Okonjo-Iweala said.
Poverty and lack of economic opportunity are factors seen as driving young northern Nigerians into Boko Haram, which fuses radical Muslim revivalism with an anti-government agenda.
The Nigerian finance minister said Nigeria had to grow faster than its current 7 percent to turn the tide on poverty, a general message Lopes said held good for Africa as a whole.
He told the Abuja meeting: “We still need to move from 5 to 6 percent average growth to the magic 7 percent. The minimum required to double average incomes in a decade. There is still a long way to go as poverty remains high, access to social services weak and pervasive conflict undermines gains.”
Leveraging Resources, Reforms
A new report by AfDB economists says eliminating poverty by 2030 – a World Bank goal set in 2013 – “is out of Africa’s reach”. It said poor accounted for 47.9 percent of Africa’s population in 2010, still the world’s poorest region.
The paper sees a more realistic goal of reducing poverty by a half to two thirds by 2030 through “policies accelerating growth and reducing inequalities”, especially in high poverty states like Nigeria and Democratic Republic of Congo.
Economists and policy makers say steps to maximize Africa’s growth potential must seek to throw off the obstacles holding countries – and the continent – back. This included the region’s huge infrastructure and power deficits – for example, Africa had only exploited 5 percent of its hydropower potential – corruption and governance issues, improving access to long-term financing and also reducing bureaucracy for doing business.
Africa held huge natural resources which governments should leverage to obtain transforming, job-creating investments.
The U.N.’s Lopes cited data showing the continent had 12 percent of the world’s oil reserves, 40 percent of its gold, 80 to 90 percent of its chromium and platinum, 70 percent of coltan, 60 percent of its unused arable land, 17 percent of the world’s forests, and 53 percent of the world’s cocoa.
“Africa needs to fully use its bargaining position by maximizing the demands for value addition in the commodities where it has a dominant position,” Lopes said.
Douglas Munatsi, CEO of southern African lender BancABC, said the case of Nigeria alone showed the continent was just “scratching the surface” in terms of its economic potential.
“I reckon 10-20 years of good governance in Africa, no natural disasters, commodity prices remain stable, I think this thing will explode. It is going to be bigger than people realize,” he said.
By: Pascal Fletcher