hopeless no more

Published 11 years ago

Annual meetings of the African Development Bank (AfDB), Africa’s premier financial institution, are no longer what they used to be. While Africa remains the world’s poorest continent, the narrative and attention it receives has changed in the past decade. And nowhere is this more visible than in the conversations at the annual meetings of the AfDB, rated AAA by all the major rating agencies—Standard & Poor’s, Moody’s and Fitch.
In Marrakesh, Morocco, this year, a record 3,000 delegates showed up, ranging from the owners of the bank—the finance ministers of the 53 African countries—to non-governmental organizations and the ubiquitous consultants from around the world. Africa’s newest country, South Sudan, is not yet a member.
The mood was buoyant, as befitting a continent that is growing faster than any other. The bank forecasts economic expansion across Africa will average 4.8% this year and climb to 5.3% next year. If you exclude South Africa, the continent’s largest economy, the advance tops 7% at a time when most of Europe is in recession, the United States is battling anemic growth at around 2% and the Chinese locomotive is slowing.
“Now is the time. After 10 years of improved stability, sound macroeconomic policies and blossoming trade links, growth has made African nations freer than ever to choose their own development paths and implement active policies for economic transformation,” says the bank’s vice president and chief economist Mthuli Ncube.
This is a far cry from the doom and gloom of the two decades ending in the 1990s, when the London-based Economist published its now infamous `Hopeless Continent’ cover, which to be fair, was recanted years later.
According to the International Monetary Fund, seven of the 10 fastest-growing economies are African—Mozambique, Zambia, Ethiopia, Nigeria, Ghana, the Democratic Republic of the Congo and Tanzania. Growth has been broad-based, with 27 of the region’s 30 largest economies expanding since 2000. Mckinsey & Co. notes that Africa already has a bigger middle class than India.
While some suggest this is due to China’s resurgence, there is little doubt that painful economic and political reforms carried out in the 1990s and Africa’s new leaders are responsible.
The private sector believes in the reforms and sustainability of the continent’s new growth path and is, in many instances, outpacing government initiatives through investments on the ground. Aliko Dangote, Africa’s richest man, is pouring $7.5 billion in his businesses in the next four years.
Acha Leke, a director at Mckinsey & Co. in Johannesburg, says that Africa has gone from battling to generate growth, to the challenge of how to improve the quality of jobs and ensure that the rising tide carries all boats.
This was reflected at this year’s meeting, the theme of which was Africa’s Structural Transformation; it aimed to ensure that future growth is equitable and sustainable. While economic expansion has lifted some people out of poverty, the majority of Africans remain desperately poor, according to AfDB.
“Structural transformation is about improving the quality of African growth by diversifying the sources of that growth, and expanding economic opportunities for all. In many ways it is about turning natural wealth into created wealth,” says AfDB president Donald Kaberuka.
The governors, economists and other delegates addressed how to use wisely the continent’s vast natural resources; how Africa’s cities of the future might look and strategies to take advantage of the world’s youngest population.
To ensure the current economic growth is sustained, the AfDB approved a 10-year strategy, built on infrastructure development, regional economic integration, private sector development, skills, technology and improved governance and accountability.
“The strategy reaffirms the bank’s strategic choices around infrastructure, economic integration and the private sector. It charts the way towards inclusive growth that spans age, gender and geography,” says Kaberuka, who is in his second and final term.
The 2013 meetings were also notable for the launch of the bank’s Africa50 fund. It will address Africa’s infrastructure funding gap, which is estimated at more than $50 billion annually.
Africa’s positive economic outlook is set to further improve, especially with new mineral discoveries. But some warn that Africa must guard itself against the Dutch disease, a conflict fuelled by the fight for resources, which would set it back and dash both Kaberuka and Ncube’s dreams of making Africa the new workshop of the world.