Wednesday, June 13, 2012

Africa Takes Off - Sub-Saharan Africa is starting to shed its reputation as an economic laggard. The West should pay attention

Pity sub-Saharan Africa -- but maybe for not much longer. In the first decade of the new millennium, six of the world's ten fastest-growing economies (Angola, Nigeria, Ethiopia, Chad, Mozambique, and Rwanda) were from this region. And in eight of the past ten years, it has grown faster than Asia.

To be sure, some of the region's growth stars owe their success in part to the global boom in commodity prices, most notably in oil. But Ethiopia managed to grow by 7.5 percent last year without producing a drop of petroleum. (Ethiopia's brightest newest export: cut flowers.)
Note, too, that average incomes in sub-Saharan Africa are still very low; for example, the per capita income in Chad is below $1,800 measured in terms of purchasing power, less than a tenth that of Poland or the Czech Republic. It will thus take decades of years of growth to bring living standards to acceptable levels.
But according to the IMF, the region is on track to grow by six percent this year, about the same as Asia. And there are convincing reasons to believe that a healthy pace can be maintained for the foreseeable future. Indeed, in the World Bank's view, Africa "could be on the brink of an economic take-off, much like China was 30 years ago, and India 20 years ago." That should be raising doubts about the appropriateness of international assistance policies based on the presumption that Africa still lacks the capacity to break out of its dispiriting cycle of poverty, dysfunctional governance and tribal violence. More on that later.
Ready to be surprised? Trade between Africa and the rest of the world tripled in the last decade. And by no coincidence, Africa has attracted more private foreign investment than official aid since 2005. Consider, too, that Africa's share of global foreign direct investment -- the most prized sort, since it brings along technology and management skills -- rose from less than one percent in 2000 to 4.5 percent in 2010.
But perhaps the most visible evidence of widening prosperity is the incredibly rapid penetration of mobile communications. Take Ghana, which, by the World Bank's reckoning, graduated to middle-income status last year. In the late 1990s, the country has a mere 50,000 working phone lines in a country of nearly 20 million. Now, three-quarters of the population has access to cell phones with both voice and instant-message capability.
In fact, the amount of money directed towards phone use has forced government bean counters to reconsider their (sometimes very rough) estimates of the region's income. In Ghana's case, the government recently revised upwards its estimate of private GDP by an astonishing two-thirds.

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