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The two faces of Africa

The two faces of Africa


The good news
This is a comprehensive, detailed report that looks at both the progress that Africa has made so far as well as the deficits and the work that needs to be done in the future.

The report sets the scene when it states: “International commentators tend to focus on the outward signs of success. The growth of gross domestic product (GDP), surging exports, rising foreign investment and the emergence of equity markets are easy to measure – and they point to a region of opportunity.

Yet there is another face of Africa. This is the face of a woman farmer struggling to raise yields. It is the face of children denied the chance to realise their potential through education. And it is the face of a generation of young people who have a right to demand and expect more from their governments.”

Another factor behind Africa’s growth is the generally high commodity price, which the report says will continue over the medium term. 

On the good news side of the balance sheet, the report says that an increasing number of African countries are moving towards middle-income status.

“In 2006, 13 countries in the region were categorised as middle income – that is, with per capita gross national income (GNI) between $906 and $11,115, as calculated by the World Bank Atlas. Today, the figure has climbed to 21.2. According to the World Bank, another 10 countries could attain middle-income status by 2025 if current growth trends continue. Excluding South Africa, growth in sub-Saharan Africa reached almost 6% in 2013 – second only to the performance of East Asia.”

Although average income has risen by almost a third over the last decade, the report argues that “translated into real money terms using purchasing power parity (PPP), these gains are modest: the average increase in income for people in low-income African countries is just $567.

But this is a striking turnaround from the sustained decline in average income over the two previous decades. If the average growth for 2000–2012 continues, average incomes in Africa will double over the next 22 years. Between 1980 and 2000, they contracted by over 20%”.

FDI inflows have increased steadily – with the exception of 2009, when the global financial crisis was at its peak. “Other private flows have also increased, with a number of governments issuing sovereign bonds. While the natural resources sector is the primary recipient,” the report says, “services and manufacturing have also emerged as a magnet for FDI. Around one third of FDI in 2012 was directed to domestic markets rather than the extractives sector.”

Another factor behind Africa’s growth is the generally high commodity price, which the report says will continue over the medium term.

“Although prices for mineral exports weakened in 2012 and 2013, they remain high, and export volumes of minerals, oil and agricultural goods have increased. Projections suggest that world prices for Africa’s major mineral exports may fall back slightly over the medium term but will remain well above pre-2000 levels. Prices will depend crucially on developments in China.”

China, and the other BRICS, Brazil, Russia and India, now account for around one third of Africa’s exports – four times the level in 2002.

“This is almost equivalent to combined demand from the EU and the US. China is now the largest destination for Africa’s exports, accounting for one quarter of the total. The BRICS also represent a significant and growing source of foreign direct investment,” the report adds.  

The report says that economic governance has improved considerably over the past decade and monetary policy has helped to reduce inflation over the past two years. “Only one country that benefited from debt relief before 2007 – The Gambia – is categorised by the IMF as facing a high risk of a return to debt distress. The regional fiscal deficit is 2.7% of GDP, albeit with some large variations.”

The report lays to rest the common perception that Africa’s strong growth is solely due to high commodity prices. “But the growth surge has extended far beyond resource-rich countries. It spans coastal economies such as Mozambique, Senegal and Tanzania; landlocked Burkina Faso and Uganda; commodity exporters such as the Democratic Republic of the Congo, Nigeria and Zambia; and middle-income countries such as Botswana.

“In Ethiopia and Rwanda, two of the most prominent economic success stories, growth has been fuelled by agriculture. Service sectors have figured prominently in the growth records of Burkina Faso, Tanzania and Uganda.”

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Written by Anver Versi

Anver Versi, is the award - winning editor of the London - based pan-African business monthlies, African Business and African Banker, was born in Kenya but has been based in London for the last two decades.

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