Africa has experienced stellar growth over the last decade. This growth has been supported by improved political stability, prudent macroeconomic policies, robust commodity demand and a growing consumer base. These factors are set to continue propelling African growth in years.
In the next couple of years, Africa is expected to be a key driver of global growth. The International Monetary Fund (IMF) expects sub-Saharan Africa to grow by an average of 5.4% between 2012 and 2013, compared to average growth of 1.6% in advanced nations over the same period.
Africa’s contribution to global growth is not going unnoticed. Cash-laden investors, benefitting from developed economies’ loose monetary policies, are looking towards the continent for investment opportunities as markets in developed economies offer less attractive returns.
Many reckon that Africa can capitalize on the economic and fiscal woes of the developed world to claim a bigger share of global growth. This argument is highly plausible. Europe, given its fiscal austerity measures which will constrain growth, is expected to remain in the doldrums for the next decade.
The opportunity is undeniable for Africa, but with opportunity comes responsibility. As such, WEF’s theme this year could not be more appropriate. Africa is on the brink of major transformation and how this transformation is handled will shape the future of millions of hopeful Africans.
To attain the aspirations of the continent will require out-of-the-box thinking; generating creative ideas that can propel Africa to greater heights. However, ideas, no matter how grand, will remain just ideas if not coupled with bold and visionary leadership. There is no better time than the present for Africans to become doers as opposed to merely talkers.
With the flood of ideas, it is up to African leadership to come to the fore—only when African leaders realize this fact and accept the honor and responsibility of leadership, will these ideas translate into tangible results on the ground.
Unfortunately, Africa leaves a lot to be desired in the leadership category. Political developments in some parts of the continent are evidence of this. This mentality could change with the memories of the Arab Spring still fresh. Recently, the masses in Mauritania protested against President Abdelaziz and his government’s ‘anti-democratic policies’. There is a real risk for unrest in sub-Saharan Africa as people grow increasingly frustrated with poor leadership, which perpetuates underdevelopment and poverty.
Strong leadership is the foundation of Africa’s transformation. Africa needs to invest heavily in both social and economic infrastructure. In terms of social infrastructure, Africa needs to direct significant resources towards health and education. Growth and development will only occur in conjunction with a healthy and skilled population.
According to the World Bank the number of people living in extreme poverty halved in 2010. But more needs to be done, especially in Africa where the challenges are greatest. Robust investment in health and education will go a long way to achieving the United Nations Millennium Development Goals (MDGs).
Equally important to social investment is investment in capital infrastructure. Africa needs to direct enormous resources towards infrastructure development to ensure economic growth in years to come.
Regional economic integration has also been highlighted as key to the growth of the continent. According to a 2010 McKinsey & Co. report, intra-African trade accounts for just 12% of the continent’s total exports. By comparison, regional trade in Western Europe accounts for 61% of exports. African leaders need to take the opportunity to boost economic ties between their counterparts and work towards enhancing trade networks to take advantage of the continent’s growing consumer market, thought to be worth at least $860 billion.
African governments have already taken heed. Almost each and every country on the continent has earmarked significant resources in their budget for infrastructure development. South Africa, the continent’s biggest economy, has budgeted R845bn ($108 billion) over the next three years for capital expenditure.
Infrastructure development will be wasted if not accompanied by regulatory enhancements that improve the ease of doing business on the continent. Africa lags behind the rest of the world in terms of the ease of doing business and governments need to eliminate red tape to ensure that their economies are conducive for business. This will ensure that business invests in that economy, which will translate into job creation, in turn denting the continent’s worryingly high youth unemployment.
The fact that 2012’s WEF on Africa being held in Addis Ababa, Ethiopia, is in itself significant. Ethiopia is the second most populous country in sub-Saharan and a prime example of Africa’s fastest growing economies—according to Ernst & Young, Ethiopia is set to grow an average of 7% over the next decade; well above the average growth of 5% predicted for the rest of the continent. WEF Africa will attract global and pan-African leaders who will help shape Africa’s transformation to ensure that the continent takes its rightful place in the global economy.