Africa's Economic Promise
In recent years, the hopes that Africa could become the region with the fastest growing economy in the world have largely been dashed, even as most other emerging markets suffered from a severe slowdown. Not long ago, many African economies were recording very strong rates of growth, raising hopes that the region was finally on the cusp of an economic transformation that would lift hundreds of millions of people out of poverty and make Africa a center of trade and investment. Moreover, Africa’s rapidly growing population raised hopes that Africa would, over time, become a leading driver of growth for the global economy. However, the dramatic fall in the price of oil and other natural resources that dominate many of the region’s economies resulted in a sharp economic slowdown in many areas of Africa. Now, the region faces the prospect of dealing with the consequences of lower rates of economic growth combined with the continued increase in the region’s population.
One of the key reasons why global economic growth rates are forecast to remain below those of previous decades is the simple fact that global population growth continues to slow, with little population growth in developed economies and much slower growth in many emerging markets. However, Africa’s population is forecast to continue to grow at a rapid pace in the coming decades, with population growth there easily outpacing any other region in the world. For example, at the start of the 20th century, Africa accounted for less than 4% of the world’s total population, but today, it accounts for nearly 16%. By the middle of this century, Africa’s total population is forecast to rise to 2.4 billion people, or a startling 25% of the world’s total population. In short, Africa’s population is forecast to double over the next 34 years, adding a number of people to the earth that is nearly equivalent to China’s entire population. Obviously, this poses some massive challenges for the region that include bringing stability to an unstable region, providing water and land resources for such a massive population, and creating jobs for the region’s rapidly-expanding working-age population. However, this population growth also provides the region with the opportunity to attract the investment needed to develop economies that can grow in a sustainable manner in the 21st century.
In order to ensure that this dramatic population growth can drive long-term economic growth in Africa, a number of steps must be taken. First, the region’s infrastructure needs to be dramatically improved so that goods and services can move freely and easily around the continent. Second, education systems must be improved in order to create skilled workers that are attractive for investors, enabling the region to break away from its dependence upon natural resource exports. Third, a complete diversification of the region’s economies needs to take place, reducing the region’s exposure to external shocks and enabling the region to develop a large manufacturing sector and a modern service sector. Fourth, the region needs to develop export-oriented industries and services along the lines of those developed in East Asia in the 20th century. Fifth, the region needs to develop economies that provide benefits for the entire population, as the region’s current natural-resource-dominated economies benefit only small segments of the population and create relatively few jobs. Finally, much more must be done to bring peace and stability to the region, as too many countries in the region have seen their economic development stifled by conflict and unrest.
There is no question that Africa faces some of the world’s most difficult challenges when it comes to developing a modern economy. In particular, the region’s dramatic rate of population growth will be an extremely difficult challenge for Africa, as it will strain the region’s resources and stability. Moreover, bringing peace to a region where the borders within it are often arbitrary and nonsensical will be a very difficult challenge and may prove impossible to overcome. However, as economic growth around the world slows, an increasing number of investors and businesses will turn to Africa as a potential growth market and this hold the promise of more trade and investment for the region, a prerequisite for its long-term growth. If this can bring tangible benefits for large segments of Africa’s society, then there still could be hope for a more peaceful and prosperous future for the world’s fastest-growing region, particularly for those countries that are brave enough to undertake the reforms needed to pave the way towards a brighter economic future.