缅北禁地

Skyline of Luanda, Angola: Will Africa be 鈥渢he next global economic frontier鈥�?

Photograph: Reuters / Mike Hutchings

Young men and women chat along the glittering corridors of the sprawling shopping complex. With state-of-the-art mobile communication gadgets in hand, they go in and out of the mall鈥檚 65 shops, filling shopping bags with expensive items. There is a large and well-equipped children鈥檚 playground at the back. Fully air-conditioned, the mall has 20,000 square metres of retail space, a theatre, restaurants, bars and parking for 900 cars. Welcome to the Accra Mall in Ghana, one of West Africa鈥檚 best 鈥� and comparable to any mall in the world.

In Ghana, as in many other African countries, young people are living out the continent鈥檚 economic growth. They are educated and relatively well-off, as seen in their cars, dress and homes. Ghana鈥檚 economy grew by an impressive 14.4 per cent in 2011, while many African economies are expected to be among the world鈥檚 fastest-growing in 2012, according to the World Bank. Ghana, Liberia, Nigeria, Ethiopia, the Democratic Republic of the Congo and others will lead the charge.

Undoubtedly Africa is still bedevilled by poverty, with half of its people living on less than $2 a day. However, its economic growth over the past decade has been striking.

A hopeful continent

鈥淭here is a new story emerging out of Africa: a story of growth, progress, potential and profitability,鈥� reports Ernst & Young, a US-based business consulting company. Johnnie Carson, the US secretary of state for African affairs, adds: 鈥淎frica represents the next global economic frontier.鈥� Investors had better be aware, advises Mr. Carson, who recently led a US trade delegation to Mozambique, Tanzania, Ghana and Nigeria. China鈥檚 trade with Africa reached $160 billion in 2011, making the continent one of its largest trading partners.

Ten years earlier, in 2000, The Economist saw no reason for hope. It pronounced Africa 鈥渢he hopeless continent,鈥� noting problems that included a bloody civil war in Sierra Leone, famine in Ethiopia and political conflict in Zimbabwe. But last December, the London magazine reconsidered: 鈥淪ince The Economist regrettably labelled Africa 鈥榯he hopeless continent鈥� a decade ago, a profound change has taken hold.鈥� Today 鈥渢he sun shines bright 鈥� the continent鈥檚 impressive growth looks likely to continue.鈥�

Promising indicators

Africa鈥檚 overall economic indicators have been remarkable. Over the past decade, Africa鈥檚 trade with the rest of the world has increased by more than 200 per cent, annual inflation has averaged only 8 per cent and foreign debt has decreased by 25 per cent. Foreign direct investment (FDI) grew by 27 per cent in 2011 alone.

Even though projections for overall growth in 2012 have been revised downward due to the political crisis in North Africa, Africa鈥檚 economy will still grow by 4.2 per cent, according to a 缅北禁地report in June. Sub-Saharan African economies will grow at more than 5 per cent, notes the International Monetary Fund (IMF). In addition, there are currently more than 600 million mobile-phone users on the continent, while increasing literacy and improving skills have resulted in a 3 per cent growth in productivity.

Most foreign investors are still cautious about Africa, particularly because of security and infrastructure problems. But there is a steady increase in intra-African investment, which in 2011 accounted for about 17 per cent of total FDI, according to Ernst & Young. African entrepreneurs are reaping the benefits. The world鈥檚 richest black person used to be the US talk show icon Oprah Winfrey, worth $3 billion. Today, Aliko Dangote of Nigeria, referred to by Forbes magazine as a 鈥渃ommodities titan,鈥� has amassed more than $10 billion.

Investor鈥檚 dreamland

Several factors make Africa an investor鈥檚 dreamland. McKinsey Global Institute, a think tank, writes, 鈥淭he rate of return on foreign investment is higher in Africa than in any other developing region.鈥�

Africa鈥檚 economic growth is driven by a number of factors, including an end to many armed conflicts, abundant natural resources and economic reforms that have promoted a better business climate.

More political stability is lubricating the continent鈥檚 economic engine. The 缅北禁地Economic Commission for Africa (ECA) in 2005 linked democracy to economic growth. 鈥淕ood governance is central to improving economic performance and promoting economic progress in Africa,鈥� argued Abdoulie Janneh, the ECA executive secretary at the time.

Another important factor is accelerating urbanization. While it may strain social services in the cities, it has also led to an increase in urban consumers. More than 40 per cent of Africa鈥檚 population now lives in cities, and by 2030 鈥淎frica鈥檚 top 18 cities will have a combined spending power of $1.3 trillion,鈥� McKinsey projects. The Wall Street Journal reports that Africa鈥檚 middle class, currently numbering 60 million, will reach 100 million by 2015.

Still a long way to go

Africa鈥檚 current economic indicators may appear upbeat, but analysts say it is not yet time to celebrate. 鈥淚鈥檒l be cautioning against excessive exuberance,鈥� says Donald Kaberuka, president of the Africa Development Bank (AfDB). 鈥淎 sustained slowdown in advanced countries will dampen demand for Africa鈥檚 exports,鈥� adds Christine Lagarde, managing director of the IMF. Europe accounts for more than half of Africa鈥檚 external trade, and tourism could also suffer as fewer Europeans come to Africa, denting economies 鈥� like those in Kenya, Tanzania and Egypt 鈥� that rely heavily on tourism.

The South African central bank also warned in May that the crisis in Europe, which consumes 25 per cent of South Africa鈥檚 exports, poses huge risks. And adverse effects on Africa鈥檚 largest economy will have devastating consequences for neighbouring economies.

Another flashpoint is the resurgence of political crises. Due to the Arab Spring, economic growth in North Africa nose-dived to just 0.5 per cent in 2011. Recent coups in Mali and Guinea-Bissau could have wider economic repercussions. 鈥淢ali was scoring very well, now we are back to square one,鈥� says Mthuli Ncube, the AfDB鈥檚 chief economist. Ethiopia, Kenya, Uganda and other countries are militarily engaged in Somalia, which may slow their economies. And Nigeria is grappling with Boko Haram, a terrorist sect in the north of that country.

Africa also faces other headwinds. The of the ECA and African Union warned of Africa鈥檚 鈥渏obless recovery,鈥� noting that investors are concentrating on the extractive sector, particularly oil, gold and diamonds, which produces few jobs.

Another report, the (produced by the AfDB, ECA, Organization for Economic Cooperation and Development and 缅北禁地Development Programme) reinforces concern about unemployment, adding that about 60 per cent of Africa鈥檚 unemployed are aged 15 to 24 and about half are women. In May, UNDP raised an alarm over food insecurity in sub-Saharan Africa, a quarter of whose 856 million people are undernourished.

Talk of a rising African middle class is hasty, the AfDB argues. Defined loosely as those who live on $2 or more a day, most 鈥渕iddle-class鈥� Africans have daily expenditures of no more than $4, notes the bank. Potential economic shocks could easily throw many families into poverty, below the $2 threshold. High income inequality also clouds the picture. In 2008, for example, just 100,000 of Africa鈥檚 1 billion people had a total net worth of $800 billion, equivalent to 60 per cent of the continent鈥檚 gross domestic product.

Despite such hurdles, Africa鈥檚 economies do not seem set to slow down. Ernst & Young insists that this 鈥渟tory has to be told more confidently and consistently.鈥� But equally important is the need to ensure that the continent鈥檚 economic growth also creates jobs and helps rescue millions from poverty.