Change can happen!
Over the past decade sub-Saharan Africa’s real GDP growth rate jumped to an annual average of 5.7%, up from only 2.4% over the previous two decades.
An analysis by The Economist finds that over the ten years to 2010, no fewer than six of the world’s ten fastest-growing economies were in sub-Saharan Africa.
The only BRIC country to make the top ten was China, in second place behind Angola. The other five African sprinters were Nigeria, Ethiopia, Chad, Mozambique and Rwanda, all with annual growth rates of around 8% or more. During the two decades to 2000 only one African economy (Uganda) made the top ten, against nine from Asia.
Standard Chartered forecasts that Africa’s economy will grow at an average annual rate of 7% over the next 20 years, slightly faster than China’s.
Africa’s changing fortunes have largely been driven by China’s surging demand for raw materials and higher commodity prices, but other factors have also counted. Africa has benefited from big inflows of foreign direct investment, especially from China, as well as foreign aid and debt relief. Urbanization and rising incomes have fuelled faster growth in domestic demand.
However, commodity-driven growth does not generate many jobs; and commodity prices could fall. Hence, African governments need to diversify their economies.
There are formidable obstacles to Africa’s continued progress. These include political instability (Ivory Coast, potentially Rwanda, Ethiopia, Kenya, Nigeria, Zimbabwe) the weak rule of law, chronic corruption, infrastructure bottlenecks, and poor health and education. Without reforms, Africa will not be able to sustain faster growth. But its lion economies are earning a place alongside Asia’s tigers.
See full story in the Economist 6th January 2011