Thursday 23 October 2014

Roar of 
Africa's lion economies is unstoppable

Published 24/08/2014 | 02:30

MODERN HEADACHES: Sub-Saharan Africa has enjoyed a remarkable turnaround, and a congested street in Lagos brings more benefits than bellyaches

Africa gets bad press. Sub-Saharan Africa gets the worst press of any region of the world, with the possible exception of the Middle East. Recent newsflow from the region has been stereotypically grim: the worst ever outbreak of the Ebola virus, civil war in the new state of South Sudan, Islamist terrorism in Kenya, and child abductions in Nigeria are just some of the bad news stories coming out of Africa.

These stories re-inforce the impression shared by perhaps the majority of people in Ireland and the West that the world's least developed continent is a basket case - condemned forever to poverty, famine, poor governance and disease.

This impression is, thankfully, profoundly wrong.

One of the best news stories of the 21st century so far has been sub-Saharan Africa's remarkable turnaround from the relative and often absolute decline of the second half of the 20th century.

In almost every aspect - security, democracy, health, education and wealth - things have been getting better in most countries and for most of the one billion plus people who inhabit the continent.

This is not just good for Africans, it is good for us in Ireland. Rapid growth rates create business opportunities for Irish companies. Better economic conditions in Africa reduce the "push" factors that contributes to outward migration of all kinds - resulting in brain drain losses for Africa and increased political focus on immigration in Europe. And the ongoing positive trend offers the prospect that Irish taxpayers' money spent on official aid (currently standing at more than €600m each year) might one day no longer be necessary.

Underpinning all of these improvements has been an economic lift-off. Up until the 1990s, average per capita incomes stagnated or fell in many parts of the continent as a whole, widening the already big gap with all other continents. But things have been very different in most of the continent's 50-odd countries for well over a decade.

According to the IMF, sub-Saharan Africa has been the second fastest growing region in the world (after Asia) so far this century. With rates of economic expansion well above population growth rates for almost 20 years, standards of living have been rising at a decent clip.

And this growth acceleration has been geographically broad-based, with the vast majority of economies posting significant gains in living standards. Included among the fast-growing economies, as it happens, are six of the seven countries Ireland's official aid programme prioritises - Ethiopia, Lesotho, Mozambique, Tanzania, Uganda and Zambia (Malawi is the partial exception, enjoying less growth than the regional average).

The chart below illustrates the turnaround in stark graphic terms. Up until the late 1990s, growth in sub-Saharan Africa as a whole lagged far behind the global average and was considerably slower than the advanced economies - economic theory says it should be vice versa, as developing economies are supposed to benefit from "catch-up" growth by adopting the technologies more advanced economies have had to pay to develop.

Until the late 1990s Africa made a mockery of that theory, but then things began to change. As the chart shows, growth accelerated in the late 1990s and surged past the developed world and global rates in the early years of this century.

If it far from clear whether growth is causing improved political outcomes or vice versa, but regardless of the direction of causality, each passing year suggests that sub-Saharan Africa has broken out of the vicious cycle it had been in during the early decades of independence and - in the case of a majority of countries - has entered something approach a virtuous cycle.

A cornerstone of the change has been the decline of violence.

Although conflict and violence remains all too prevalent in many parts of the continent, figures from Uppsala University's Conflict Data Programme show that conflict fatalities have more than halved since the turn of the century compared to the 1990s.This reflects greater stability in the continent's politics over a decade and more.

While in the past, news of coups and army takeovers were commonplace, they have been much less frequent, according to Pat Thaker, who heads the Africa team at the Economist Intelligence Unit.

Among the biggest challenges in bedding down democracy is having political participants agree to smooth handovers of power. In the decades after European colonisers left, only a handful of leaders who lost elections accepted the result. In March 2000, Senegal's Abdou Diouf became the fourth one to do so and since then there have been many more across the continent.

With political outcomes in many African countries getting better, relations between the continent's countries are also improving. This, in turn, is allowing more economic integration (usually, it has to be said, from a very low level) and offers the prospect of tapping into the huge existing potential. This is particularly beneficial to many border regions which were cut off from their hinterlands when new independent states were formed as European countries dismantled their empires.

The changing mindset was nicely illustrated in a co-authored article* published recently by the leaders of Ethiopia, Kenya and Rwanda.

In it they underlined the benefits from sub-regional trade integration in consolidating the gains made over the past decade and a half and ensuring that the developmental momentum is maintained. It is hard to imagine such an article being written 20 years ago.

Ultimately, what really matters is whether all of these political and economic changes make people's lives better. The best news of all from Africa is that they are doing so most emphatically.

Almost every available indicator points to that, but perhaps the best overall measure is the UN's Human Development Index. It aggregates health, education and income indicators to gauge how quality of life is changing across the world.

As our second chart shows, sub-Saharan Africa recorded the smallest improvements in the index in the 1980s and 1990s of any region of the world, but since 2000, the rate of improvement has jumped - overtaking East Asia (dominated by China) and almost matching South Asia (dominated by India).

While absolute levels of development are still the lowest of any region, the evidence to pointing to a broad-based turnaround in Africa is now quite overwhelming.

There is a long way to go, but the extreme pessimism that many people in the rich world have about the continent is thoroughly misplaced.

Africa is on the move and in the years and decades to come will be a place of opportunity - for its own people and enterprising outsiders.

* http://www.project-syndicate.org/
commentary/paul-kagame-et-al-emphasize-the-need-for-regional-integration-to-sustain-the-continents-progress

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