US President Barack Obama has called on African leaders to encourage youth and women entrepreneurs as well as anti-corruption initiatives to boost the hopes among the continent’s 1.1bn people for a better future. He asked US investors to reward those efforts and announced more than $1bn in new private and US government commitments for start-ups.
Africa’s long-term growth potentials, sure, are enormous. The African Development Bank has estimated that the continent has 120bn barrels of oil reserves, no less than half of Saudi Arabia’s. It has 600mn hectares of uncultivated arable land, half of the world’s total. Add to that the continent’s vast mineral riches, ingredients for a decent growth rate by any measure are on the table.
Africa’s fast-growing economies and cheap labour make it the final frontier among emerging markets. Sub-Saharan countries have averaged an impressive 5.2% growth rate since 1995, according to Bloomberg data. And by 2025, the World Bank is likely to classify three out of five African countries as middle-income.
With Africa’s current market of 1.1bn people set to swell to 3bn by 2045 – including 1.1bn people of working age (more than in China or India) – its long-term economic and commercial prospects are reminiscent of China’s when it opened up more than three decades ago.
But here is the more conflicting other side of the “African Dream”: from 1990 to 2010, the number of people living in extreme poverty ($1.25 per day) across Sub-Saharan Africa rose from less than 300mn to nearly 425mn, while the number living on less than $2 a day grew from about 390mn to almost 600mn. North Africa remained the hardest-hit region of the globe in 2013 with an unemployment rate of 12.2%, according to the International Labour Organisation.
This “exclusive growth” pattern is also feeding into violent religious extremism across the continent.
Sure, change cannot take place overnight. But there are some steps in the right direction. Africa’s more advanced economies, including those of Kenya, Nigeria and South Africa, can take better advantage of the recently renewed African Growth and Opportunity Act, which allows many African goods duty-free access to the US. African economies need to diversify and lessen their reliance on natural-resource exports; they should form more regional pacts to attract foreign investment and speed up industrialisation. The countries are also in urgent need to build better infrastructure, especially in densely populated urban areas and across borders, to encourage international trade.
Africa, assisted by the US, Europe and other donor countries, needs to develop its institutional capability. This will steer the continent towards rapid and sustainable economic growth to help address chronic poverty and build an inclusive education and social system. Longer term, for any growth model to be sustainable, every country in the continent has to embark on an urgent mission to bridge the economic and social divides.
“The more we can encourage entrepreneurship, particularly for young people, the more they have hope,” Obama said.
