Is Africa Rising?

  • Donald Cassell
  • Jan 4, 2012
  • Foreign Aid

This narrative begins in the euphoria of Independent Africa in the 1960s. All was so hopeful then. But by the 1970s Africa had begun a tailspin into decline and collapse. It was a race to the bottom. Most of Africa suffered from bankruptcy, large budget deficits, double-digit inflation, a growing debt burden, thriving black markets, shortages in basic commodities, rising poverty, disease, ignorance, economic mismanagement, an excessive state presence in the economy, capital flight and stagnation. This was an era characterized by misrule and error. It was a period drenched in blood and marked by great loss and sorrow. There were assassinations, coup d’états, wars, rumors of wars, civil conflicts, astonishing levels of violence and brutality, ridiculous dictators, failed states and collapsing societies. Leadership was characterized by intimidation, violence and brute force. It is lamentable to even record those evil days.

The horrific genocide in Rwanda may be considered as bringing that period to a close. By the late 1980s and early 1990s things began to change for the better in Africa. The Cold War ended and many of the cruel dictators lost their legitimacy and no longer possessed the wherewithal to implement their wretched policies. Yoweri Musevni’s rise to power in Uganda also marks a turning point in this sad history. He and Uganda are illustrative of Africa's change from misrule and chaos to order and good governance. There were other indicators such as the rise of Jerry Rawlings in Ghana. Since then, Africa has embarked upon a period of steady improvement in government and society. A number of governments have since begun to adhere to basic political and civil rights, built stronger political institutions and improved governance. Admittedly, there is much work yet to be done, but there are genuine reasons to be encouraged and hopeful.

A new generation of leaders is emerging in Africa. These new policy makers, activists, and business leaders have brought a new global experience, outlook and ideas to their responsibilities. Still, there is need for caution as the failures of the past could arguably be attributed to the educated elite, many of whom also had international experience. The new generation may be benefiting from better ideas. The failure of the past has been painfully instructive. In many ways leadership has been at the center of Africa’s problems, so it is not surprising that leadership is at the center of its recovery. But this begs the question: from whence did these leaders emerge? The new generation is more critical of past policies that resulted in disgrace, decadence and loss. It is impatient with loss and stagnation. It is developing a better appreciation for the complexities of statecraft and perhaps a more critical appreciation of the virtues of African culture.

Since the mid-1990s, Africa has experienced the advantages of quietness and stability. Increased political stability has led to greater economic prosperity. Now many governments are pursuing more sensible economic policies. Governments have tried to live within their means. They have reduced their economic role in the state and cultivated friendlier business environments by lowering trade and investment barriers and improving the regulatory space. Indeed some of the most ambitious ones, like Rwanda, have used the World Bank’s Doing Business Survey to benchmark their performance in corruption levels, strength of legal rights, time required for enforcing contracts and tax rates as a percent of profit.

Twenty-eight percent of sub-Saharan African countries have achieved growth at or above 6 percent with sixty percent achieving growth rates at or above 4 percent. Overall, Africa's collective GDP in 2008 was $1.6 trillion and is projected to increase to $ 2.6 trillion in 2020. There has been a 50 percent increase in average income since the mid-1990s. According to the African Development Bank, the African middle class has expanded by 60 percent. This rather robust growth has not abated even in the face of the recent great worldwide economic recession. 

Africa has expanded its development portfolio beyond the resource extraction industries. Natural resources are still of utmost importance to Africa, but now there are other industries that hold real value for investors as well. Opportunities may be had in Africa’s growing consumer market with a population of a billion people, 313 million of which qualify as middle class. These are figures comparable to China and India. Consumer spending in 2009 was at $860 billion and has been projected to increase to $1.4 trillion by 2020. This new middle class is in need of banking, financial and consumer products. At the moment the growth in this consumer market is limited by scarce infrastructure.

Africa has benefited considerably from new technology in the form of the mobile phones and a growing access to the Internet. With 316 million mobile subscribers, Africa is second only to China as the fastest growing telecommunications market in the world. Africa is also experiencing a boom in the banking sector. The American Citigroup has expanded its presence into twelve African countries while China has purchased a 20 percent stake in one of South Africa's biggest bank, Standard Chartered.  

Africa is less and less dependent on official foreign aid channels. More and more of its financing comes from new private sources in the form of remittances, private philanthropy, foreign direct investment and short term capital—amounting roughly to $90 billion. But even for official aid channels, African countries have found alternatives in China and India as new bilateral partners.

Africa has also benefited from a global commodity boom and the rise of Asia, particularly the reemergence of China and India. Though, South Korea as a developed nation has had a growing interest in Africa. Western Europe remains a major trading partner in Africa in most other areas.

Despite all these positive economic trends, moving forward will require prudent skepticism amidst the celebration. After all, the development of a country or a region is contingent on the development of its people. No economy or institution thrives without people. It is generally acknowledged that in today’s markets knowledge is wealth and power. And while this may have always been true, knowledge is humanity’s singular advantage in nature. Today, investors have the opportunity of investing in people through education and skills training. Presently, there is a huge capacity gap, and much investment is still needed in these areas.

While these changes in Africa are heartening and hopeful, all is not well. Africa is still not for the faint of heart and the continent's turnaround remains fragile. Poverty, hunger, and disease are still problems in many African countries, as are corruption and political instability.  Africa is still threatened by poor government policies, wars and violence.  Still, it is the consensus amongst knowledgeable people, that Africa's turnaround has been established upon sound policy changes in governance and so should have staying power.  Looking forward, much improvement is still needed in infrastructure, the legal and regulatory environments, and human capital. Significantly, there is still no spectacular regional role model though Rwanda comes close. For the foreseeable future, Africa will still need the support of the international community.

  • Find us on Facebook
  • Twitter
  • Subscribe via RSS

Sagamore Institute

2902 N. Meridian Street, Indianapolis, IN 46208 | 317.472.2050 |  | 501 (c)(3)

© All rights reserved.  |  Library  |  Contact  |  Donate  |  Subscribe