Africa’s image as a basket case where war, famine, and poverty are endemic might finally be changing, according to recent studies that show that the continent’s star might finally be on the rise.
Early this year, the National Bureau of Economic Research in the United States published a paper by Xavier Sala-i-Martin and Maxim Pinkovskiy that showed that not only is African poverty falling rapidly, but that if present trends continue, the Millennium Development Goal (MDG) of halving poverty by 2015 will be achieved on time.
The results of this somewhat controversial study contradict figures published by the World Bank and the United Nations, which continue to portray a doom-and-gloom scenario for African countries.
The 2010 Millennium Development Goals Report published by the UN, for instance, states that “all developing regions except sub-Saharan Africa, Western Asia, and parts of Eastern Europe and Central Asia are expected to achieve the MDG target.”
The paper also debunks the commonly held belief that economic growth in African countries has led to rising inequalities and that gains from natural resource wealth in mineral-rich countries accrue to a very small elite and have no impact on poverty reduction.
“Contrary to the commonly held idea that African growth is largely based on natural resources and helps only the rich and well-connected,” state the authors, “we show that Africa’s income distribution has become less rather than more unequal than it was in 1995, and therefore, a great deal of this growth has accrued to the poor.”
The researchers further note that their computations of poverty and inequality in a diverse group of African countries show that poverty reduction on the continent cannot be explained by the size of the country, whether it is coastal or land-locked or even whether it is mineral-rich or resource-poor.
A more recent report by the McKinsey Global Institute is even more optimistic. It states that while many of Africa’s countries face serious challenges, the continent’s collective GDP, at $1.6 trillion in 2008, is now roughly equal to that of Brazil or Russia. Real GDP rose by 4.9 per cent a year from 2000 to 2008, more than twice its pace in the 1980s and 1990s.
Soaring prices for oil, minerals, and other commodities have contributed to the rise in GDP, but forthcoming research shows that these resources accounted for just a third of this growth; the remaining two-thirds came from the wholesale, retail, transport, telecommunications, and manufacturing sectors.
Africa “is among the world’s most rapidly growing economic regions” says the report, and the key reasons for this include government action to end armed conflicts, improved macroeconomic conditions, and a better business climate.
The question many policymakers are asking is whether this boom represents a one-time event or will be sustained in the long term. Many African countries still suffer from the threat of political instability, which could cancel all economic gains. Moreover, it is difficult to predict if the demand for natural resources will wane once demand from large consumers, such as China, declines.
There is also the issue of whether economic growth is translating into better human development for the majority of Africans. Sub-Saharan Africa still accounts for the largest share of people living with HIV and access to electricity remains a pipe dream in large swathes of the continent.
However, all is not lost. Another study published in September by the Centre for Global Development states that the turnaround in Africa is expected to last for many years as more countries adopt more democratic and accountable governance structures and as new technologies create new opportunities for business and political accountability.
More importantly, says the study, “a new generation of savvy, sharp and entrepreneurial leaders” is bringing new ideas and vision to various sectors.
With this new generation at the helm, Africa’s future looks bright indeed. Unfortunately, as Kenya has witnessed in recent years, this new generation may not be living up to its promise. Many of the chief suspects of the post-election violence and of the country’s major corruption scandals involve prominent members of this new generation.
It seems we still have a long way to go before we are counted among Africa’s most promising nations.