The Promise of Africa

Africa faces daunting challenges, but no one should write off its entrepreneurial dynamism
The Promise of Africa

Is Africa rising? Judging by the buzz and optimism of the young business leaders and political trailblazers from across the continent who gathered for the World Economic Forum on Africa earlier this month, the answer is a qualified “Yes.” The African Leadership Network—co-founded by Stanford graduates Fred Swaniker, now the CEO of the African Leadership Academy, and Achankeng Leke, director of McKinsey’s Nigerian operations—is emblematic of a new generation of leaders who brim with sophisticated confidence about Africa’s emergence. They are part of the coming elite whose ideas shaped the discussion in Cape Town.

There is a new discourse on African development. Echoing last June’s U.N.-sponsored Rio Plus 20 summit on sustainable development, many young leaders want to replace the 2015 Millennium Development Goals, defined in the global North, with Sustainable Development Goals defined in the global South. Their call is to follow an era of loans and aid with one of investment and trade by Unlocking Africa’s Talent—the WEF theme for the Cape Town meeting.

Optimism about Africa’s prospects is not new. Fifteen years ago, then South African Deputy President Thabo Mbeki heralded a coming African renaissance. He turned out to be prescient. Helped along by a sustained boom in world commodity prices and insulated from the worst of the global financial crisis by low levels of debt, at least when compared with the United States and much of Europe, many African economies are thriving. Last month Africa Monitor singled out South Africa, Nigeria, Angola, Ghana, and Ethiopia as high-growth economies to watch. Of the world’s fastest growing economies, five of the top 12 and 11 of the top 20 are now in Africa.

Rwanda, best known for the genocidal murder of a million people less than two decades ago, is now peaceful and flourishing, with a 7.8 percent projected GDP growth rate for 2013 and an announced goal of eliminating dependence on foreign aid. According to the World Bank’s 2013 Doing Business report, Rwanda is the world’s second most improved nation since 2005 and the most improved in sub-Saharan Africa. 

Recent discoveries of vast quantities of natural gas in Mozambique promise to grow that country’s GDP by a factor of 10 in the coming decade. Hedge funds have been investing even in Zimbabwe—to the point where investment Director David Stevenson was wondering in Moneyweek in 2010 whether it might be “the next emerging market dynamo.”

In an era of financial upheavals and bursting bubbles, we are bound to ask how much of this Africa enthusiasm is hype. Global GDP, trade or investment figures do not show the continent having that much impact yet, and 18 of the world’s 20 poorest countries are still in Africa—the other two being war-torn Afghanistan and earthquake-devastated Haiti.

The African situation might be even worse than the statistics suggest. As noted by WEF co-chair and philanthropist Mo Ibrahim, born in South Sudan and who went on to study in Britain before and founding the telecommunications firm Celtel, there is no reliable data on poverty for many of Africa’s poor countries. This is to say nothing of the effects of civil strife roiling North and West Africa. At least 50,000 have now died in Libya’s post-Gadhafi continuing catastrophe. Egypt, with its decimated tourist industry, exploding population, and collapsing infrastructure may be heading for the ranks of failed states. Somalia and Mali stagger along.

There was much talk at the WEF of reducing poverty and inequality, often uttered almost as a single word. It is far from obvious that the two go so easily together. China has pulled millions out of poverty over the past few decades, but inequality there has increased dramatically. South Africa has also made inroads into its high poverty rates since the 1994 transition, but its Gini coefficient, a standard measure of inequality, remains unchanged and one of the highest among countries for which data are available. There are contrarian examples, Lula’s Brazil being a country in which poverty and inequality were reduced together. But people in Cape Town were not talking about Lula.

Demographic Worries

There are also demographic worries. The median age on the continent is 20. Countries like Nigeria are even younger: 30 percent of its 180 million citizens are under the age of 10. These people must be educated and employed. In South Africa, unemployment has come down to a (still staggeringly high) 25 percent, but its youth unemployment rate, at over 48 percent, is the third highest in the world. Because of the AIDS tragedy, the country’s ratio of working age to dependent population is the highest it has ever been, or will be in the coming decades, but that does not help much if the working-age population does not work.

Former British Prime Minister Gordon Brown noted at one WEF session that currently 61 million school-aged children in Africa are not being educated. The demands on educational infrastructures suggested by these numbers are almost beyond comprehension—not least because of the dearth of qualified, or in many cases even literate, teachers.

Then there are concerns about the shape of economic growth. Unless economic resurgence steers Africa’s economies in more diversified directions, the dangers of cronyism and misgovernment long associated with the oil curse will remain. Winner-take-all economics begets loser-lose-all politics. Mozambique’s natural gas bounty could do for it what North Sea oil did for Britain and Norway, but there are also the Libyan, Venezuelan, and Russian possibilities. Ditto for Nigerian oil.

Economic diversification is easier said than done. Mo Ibrahim noted that there are now 650 million cellphones in Africa, a remarkable fact for which he and the telecommunications firm he founded deserve a good part of the credit. This reality makes instant communication, retail banking, and other forms of commerce possible overnight—all of which would have required decades of infrastructure building a generation ago. But Ibrahim also pointed out that not one of those cellphones is manufactured anywhere in Africa.

By itself this is not such a devastating fact. Economists tell us that everything need not be built everywhere; people must play to their comparative advantages. The failure to grasp that led to plenty of wasted effort on import-substitution industrialization in Latin America in the 1970s and 1980s. But Africa’s emerging-market economies are in desperate need of diversification and employment in an era of deskilling. The Chinese do not have any particular skill or resource endowment for manufacturing cellphones. Africans should be competing with the Chinese rather than just selling them raw materials, the extraction of which often does not even create local employment when Chinese companies bring in their own nationals to do the work.

Africa faces daunting challenges, but no one should write off the entrepreneurial dynamism pulsing through Cape Town’s International Convention Center this month—a venue that consistently calls to mind the amazement at what has been achieved every year since South Africa’s transition began in the early 1990s. But one could also have looked forward in any of those years at challenges so forbidding that it would have been hard to imagine the country meeting them. In South Africa, as elsewhere on the continent, this gap between what has been done and what now awaits will partly be filled by the new generation of African leaders who shaped the conversation at the WEF. They represent hope for a better African future.

Ian Shapiro is Sterling Professor of Political Science at Yale University, where he also serves as Henry R. Luce Director of the MacMillan Center for International and Area Studies. With permission from YaleGlobal Online. Copyright © 2013, Yale Center for the Study of Globalization, Yale University.

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