Abu Dhabi, UAEThursday 27 February 2020

The news from sub-Saharan Africa is growth and declining poverty

For some African countries, the future is especially rosy

Parts of Africa are enjoying an economic renaissance hardly conceivable just a decade ago.

Sub-Saharan Africa is expected to grow at 5.5 per cent this year, second only to South East Asia, according to the World Economic Forum (WEF), which ended an Africa summit in Cape Town last Friday.

"It is interesting to know that seven of the 10 fastest-growing economies will come from sub-Saharan Africa in the next five years," said Katherine Tweedie, the head of the Africa WEF.

As a result, international equity investors are beginning to pay the same attention to a continent that was previously the focus of charities and ageing humanitarian rockers.

The global accounting firm Ernst & Young says foreign direct investment in Africa (FDI) could reach US$150 billion (Dh550.94bn) a year by 2015. This is almost double last year's $84bn.

"While Africa's challenges are well-documented, there is an increasing recognition that the continent is on an upward trajectory - economically, politically and socially," Ernst & Young said in its 2011 Africa attractiveness survey.

The only sub-Saharan country not expected to grow is Ivory Coast, which is emerging from months of civil strife.

And, for the first time in recent history, North African states are falling behind those south of the Sahara. Strife in Egypt, Tunisia and Libya has brought growth down to a negligible 1 per cent.

For some African countries, the future is especially rosy. Ethiopia, which for years epitomised the desperate image of the continent, is expected to grow at 8.5 per cent this year, according to research published by the stock brokerage Imara Africa Securities.

Ghana, one of Africa's poorest countries, is doing even better; the IMF has revised its growth forecast for this year upwards to 13.75 per cent. This makes Ghana by far the fastest-growing country in sub-Saharan Africa this year.

It seems hardly conceivable that just 10 years ago Africa was the focus of world leaders who set out the Millennium Development Goals, an effort to eradicate poverty. At the time it appeared the continent was doomed to fall further and further behind the rest of the world unless it received substantial aid.

Today, so much progress has been made that Shanta Deverajan, the World Bank's chief Africa economist, noted recently that poverty was declining at about 1 per cent a year. Child mortality, a crucial and emotive benchmark, is beginning to fall sharply.

Countries such as Rwanda, Ethiopia, Gambia and Malawi have seen declines of 25-40 per cent in under-five mortality in the last decade, Mr Deverajan said.

Africa seems to be emerging from decades of stagnation. Demand for commodities such as oil, iron, gold and copper, which Africa has in abundance, are driving growth. Such booms are nothing new, and in the past, the benefits have usually had little impact on the lives of ordinary Africans.

This time, however, it seems more people are seeing the rewards of the continent's abundant wealth. Africa's middle class is growing at 3.1 per cent a year and accounts for about 300 million people, Mthuli Ncube, the chief economist at the African Development Bank, told the WEF forum.

"It is rising faster than Africa's population growth, which is growing at about 2.6 per cent per annum," Mr Ncube said.

This group was entrepreneurial, and usually owned their own homes and cars. They spent money on imported goods and services and frequently sent their children abroad to study, he said.

Corporate Africa is also doing well. The revenue of the top 500 companies on the continent rose more than 8 per cent, Tito Mboweni, the chairman of the mining house AngloGold Ashanti, told the WEF.

And its not just mining; the transport, telecommunications and tourism sectors are flourishing. So, too, are construction and property. As African economies begin to diversify, the ability of their people to escape from poverty increases.

Still, the continent has a long way to go before it can truly shake the lingering spectre of poverty. Almost half its 1 billion people still make do with less than $1.25 a day, says the IMF. More than 240 million are chronically malnourished.

Other challenges include corruption, rapacious governments and a lack of skills.

"Africa is an exciting but a hell of a difficult place to do business," said Mr Mboweni. "This does mean that one can do business in Africa. But one has [to have] a certain stamina."

 

business@thenational.ae

Updated: May 10, 2011 04:00 AM

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