During the last decade, Africa’s real GDP growth has amounted to 5.4% per year, more than double the rate in the 1980s and 1990s. Accordingly, the continent’s overall GDP totalled $ 1,600 billion in 2008, or the equivalent of Brazil or Russia. In addition, Africa has tended to prove highly resilient to the global crisis, with growth of 2.5% in 2009, the second most dynamic region after emerging Asia.
This acceleration is related to the sharp rise in commodity prices recorded since 2003. For example, after stagnating at around $ 20 between 1990 and 2003, the price of oil jumped to $ 145 during summer 2008, and now amounts to $ 80. Africa has profited from this boom. The continent’s oil production has risen 24% since 2000, the biggest regional increase. However, we should not restrict the African “awakening” solely to commodities. According to a study by the McKinsey Global Institute, natural resources, as well as the increase in public spending prompted by these resources, account for nearly one-third of the continent’s growth between 2000 and 2008. More generally, African countries that do not have substantial natural resources recorded average annual growth of 4.2% between 2000 and 2008. This performance is not very far removed from that of African countries exporting commodities (6.6%).
The continent has also benefited from the dynamism of other emerging countries, driven by China and India. Like the trend in the demand for oil (1), Africa’s trade relations have refocused on emerging countries. Since 2000, Asia’s share in commercial trade has doubled and now exceeds 28%, whereas Western Europe has seen its share fall from 51% to 28%. The growing importance of “South-South” relations is also illustrated by substantial foreign direct investment (FDI): China has promised to invest $ 6 billion in the Democratic Republic of the Congo, in exchange for special access to this country’s substantial mining resources. More generally, FDI in Africa jumped from $ 10 billion in 2000 to $ 72 billion in 2008 (the figure was $ 59 billion in 2009).
Two final significant factors explain this growth.
- Firstly, most of the countries have embarked on far-reaching macroeconomic reforms. On average on the continent, public debt fell from 72% of GDP in 2000 to 38% in 2009. At the same time, external debt has been reduced from 130% of exports to 52%. The business climate has also improved. As a result, Rwanda was named “the top reformer” by the World Bank’s latest Doing Business report.
- Secondly, the continent’s political situation has generally improved. The number of conflicts has declined significantly. Whereas in the 1990s, 22 African heads of state were toppled by a coup d’état, this number has declined to 7 since the year 2000.
There is likely to be further confirmation of the continent’s dynamism, with growth potential in excess of 5%.
Once again, the commodities factor is likely to come into play since Africa has large commodity reserves: 10% of the world’s oil reserves, and 8% of gas reserves. In terms of mining, the continent has 30% or more of the world’s aluminium, cobalt, copper, diamond, uranium and PGM (Platinum Group Metals) reserves. However, the rapid growth of emerging countries is at the origin of a structural increase in commodity demand. For example, according to the US Energy Information Administration, emerging countries’ total oil consumption looks set to increase by more than 60% by 2035, whereas it is expected to stagnate for OECD countries.
Africa could also develop considerable agricultural potential, currently largely untapped. At present, whereas the continent contains a quarter of the world’s arable land, it accounts for only 10% of global agricultural output. In order to develop this potential, the continent will have to respond to numerous challenges: fragmentation of farms (85% are less than 2 hectares, vs. 11% in Brazil), lack of investment and infrastructure.
Longer term, the demographic factor will represent the main source of growth. Whereas the other continents have largely begun or terminated their demographic transition, Africa has barely started it: the continent will benefit from a sharp rise in its working population (15-64 years). According to UN forecasts, the proportion of the working population as a percentage of the total population will decline in Europe and North America as from 2010. This reversal is likely to take place in 2030 in Asia and South America, whereas in Africa, the transition is only likely to occur after 2050. The continent’s working population (currently estimated at 500 million) is expected to exceed 1.3 billion in 2040, a higher figure than for China or India. Urbanisation has also been rapid: in 1980, only 28% of Africans lived in a town; today, 40% of the continent’s population is urban. The urbanisation phenomenon often reflects the structural decline in the number of agricultural workers (low productivity sector), to the benefit of the industrial and services sectors, where productivity is higher. Therefore, urbanisation is often accompanied by an increase in productivity.
This demographic growth will be accompanied by the emergence of a middle class. Africa already has more households belonging to the middle classes (defined as having income of over $ 20,000) than India. This emergence of the “African consumer” is reflected in the growing interest of major multinationals. For example, Wal-Mart has announced its intention to buy the South-African distributor Massmart, present in 13 African countries, for $ 4.6 billion.
In addition to the major challenges that the African continent will have to face in order to fully realise its growth potential (notably in terms of infrastructure and governance), this “lift-off” must not conceal two realities.
- Firstly, this strong growth sometimes remains a purely “accounting” factor, and the living conditions of most Africans remain difficult. African countries continue to bring up the rear in most development rankings: out of the 24 countries with “low human development” according to the UN, 22 are African.
- Secondly, while the “collective” growth potential is considerable, individual trajectories seem to diverge and there are several very diverse groups of countries, confronted with different challenges.
(1) Demand for oil (in volume terms) from OECD countries fell 5% between 2000 and 2009, vs. a 35% increase for emerging countries.