From economists to development agencies to investors, the team of Afro-optimists is increasing. High oil prices, strong domestic demand, investment in infrastructure, regional trade and business growth will push growth in most African countries to more than 5 percent in 2013-2015, according to Pulse, a twice-yearly report by the World Bank. As result, the continent will grow faster than the global average and remain among the fastest growing in the world.
Africa’s natural resource is so abundant. The Bank estimates that by 2020 four or five countries will not be exploiting mineral resources. Because price levels have decreased, consumers are spending more and investors have increased the pace and quality of their investments.
Jim O’Neill, outgoing chairman of Goldman Sachs Asset Management, who was in Africa last week, reiterated that if Nigeria, writ Africa, made significant improvements in technology, education, rule of law, and the reduction of corruption, “this is going to be Africa’s decade”.
O’Neill further notes that if Africa could behave more together economically, “then by 2050, BRIC (Brazil, Russia, India and China) would become BRICA from an economic perspective”. Take technology. Despite the continent’s huge digital gap, it has aided leaps in banking, education, health and access to information. Continued expansion in these areas, contends Jim O’Neill, could grow the economy at an unprecedented rate.
Carlyle, the second largest private equity company in the world, reckons Africa’s growth is sustainable and wants to tap into it, “anything that touches the consumer, fast-moving consumer goods, agriculture, mobile telephony, financial services”.
The optimists, however, are not blind to the challenges. Africa’s impressive growth has not reduced poverty enough. Poverty can be reduced and prosperity broad-based if the large revenues from mineral resources are prudently managed, coupled with rising income levels and “a dramatic expansion of agricultural productivity”. Agriculture and electricity were identified as areas that need to improve quickly.
Analysts contend that better political ties between Nigeria and South Africa could boost intra-continental trade. Countries and politicians, in especially Nigeria and South Africa, have to cease fighting within and against themselves. These energies are better expended on good governance, fighting corruption, sticking to policies that allow infrastructure to be built, and businesses to meet the underserved population trooping into the cities. For O’Neill, “In the short time I spent in both cities [Lagos and Abuja]… it is impossible not to get caught up in the enthusiasm.”
Nigeria’s population is approximately 15 percent of the continent’s. When Nigeria’s already fast-growing economy is rebased, it will be a few million dollars (and decades) shy from overtaking South Africa as the continent’s economic heavyweight. Yet Nigeria cannot match South Africa’s sophisticated financial markets and institutions. These are complementary features best put to use to expand trade within the continent.
“South Africa,” O’Neill argues, “given its more advanced financial markets and rule of law, should really think about using this to help build cross-border capital and trade flows to play their own part in allowing the continent to be more economically attached, and therefore successful.” Hopefully, frosty bilateral relations will thaw – President Jacob Zuma visited Nigeria this week and President Goodluck Jonathan is expected in South Africa in May.
