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Monday, November 9, 2015

Its time to make real "Africa Rising"

“After decades of slow growth, Africa has a real chance to follow in the footsteps of Asia”. With these bold words in 2011, the influential Economist Magazine declared that Africa was rising, surging under its own wings.

In the decade before 2011, six of the world’s ten most vibrant economies were from the continent. In the same decade, African economies grew more rapidly than Asian economies, especially those in East Asia. A band of Afro-optimists, hugely evangelical about the fact this was Africa’s century, burst forth on the global discourse square.

African leaders acquired a swagger. A continent once blighted by poverty and disease was now home to hundreds of millions of consumers. Africa was the new frontier. Everyone, nations like China, India as well globally significant corporations were falling over themselves in the new scramble for the wallets and resources of Africans.

The African Development Bank (AfDB) would not be left behind in the race to hype Africa’s new growth and optimism narrative. In a study conducted in 20011, the AfDB proclaimed that Africa’s middle class was a whooping 350 million (or 34 percent of Africa’s population), nearly the size of the US population. This was of course incredibly overstated and grossly misleading. In 2014, the Standard Bank Group provided a more realistic estimate, of just 15 million middle-income households in 11 African countries.

A handful of African scholars and public intellectuals cautioned that the foundation of Africa’s growth was too feeble to support strong, inclusive and enduring growth. But as always, the voices of African intellectuals is often ignored, drowned or scorned by African governments or dominant establishment Western knowledge brokers. We all drank the Africa Rising Kool-Aid.

Despite a decade long economic boom, the structural transformation of African economies is yet to get off the block. The rural economy, which supports a vast majority of the population, is on its knees; starved of knowledge, technology, inputs, markets, and infrastructure.

The tailwind of commodity price boom and a benign global financial environment (global liquidity), which fueled huge public spending on infrastructure and consumer spending, is weakening. A gale-force headwind has begun to pummel a majority of African economies.

Africa’s expansionary policy has not been a tool for managing business-cycle contraction. On the contrary, ballooning public debt and profligate public spending, especially on infrastructure, has been a growth strategy. It is no wonder that debt continues to mount in countries like Ghana, Malawi, Zambia and Kenya. The list of countries, which face the risk of debt distress, is growing furiously.

Moreover, Africa has failed to harness the demographic dividend. Africa’s large youth population is malnourished, poorly educated and lack skills. In many African countries, youth unemployment is about 55 percent. With unemployment rate of about 62 percent among women, Africa’s labor markets are unfavorable for young women. If Africa’s slips into a sustained stagnation the implications on social and political stability, in a continent where the youth comprise nearly 70 percent of the population could be dreadfully dire.
Weak labor participation by women undermines the hope for demographic transition. Investments in human capital, including health care, education, and especially the integration of women in labor market, are fundamental at the initial stage to speed up the transition, improve the productivity of the workforce, and increase the magnitude of the potential of a veritable dividend.

The Africa rising narrative reminds me of the myth of Daedalus and Icarus. As the story goes, excited by freedom young Icarus flew high to salute the sun. He forgot that his gigantic wings were held by wax. His wings melted and he fell into the sea and drowned.

There is some growth. But poverty endures for the vast majority of Africans. Launching on a firm path of growth and following in the footsteps of Asia will not happen just because of exuberant endorsement by Western journalists. Nor will it happen just because of flattering, cherry picked growth statistics by the Bretton Woods Institutions.

I believe in Africa and its people. Africa has a real chance to follow in the footsteps of Asia. Africa has a real chance to harness the demographic dividend, achieve a demographic transition and launch on a firm path of strong, enduring, inclusive and transformative economic growth. But Africa’s rise must be built from the bottom up, by the people and for the people of Africa.

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