June 25, 2010
The World Cup, now being played out in South Africa, is not a mirage. It is succeeding beyond anyone’s wildest dreams. Not only has the game thrilled its adherents all over the world, the new infrastructure has not failed to impress visitors – from the amazing stadiums, to the new roads and the high speed rail link to the airport. All was completed on schedule, testimony to the country’s growing expertise in management and sophisticated technology. The “crime wave” foreseen by many has not occurred.
But for those who can take their eye off the ball, think not of football but of the African continent as a whole. It is beginning to roar. As the tigers have growled in South East Asia the last three decades, with an almost stratospheric rise in economic growth and living standards, the roaring African lions seem intent on emulating their Asian cousins which only a couple of generations ago were at the same economic level as West Africa.
Of course, as the BBC reported recently from Niger, drought and bad management can reduce a poor African country to widespread hunger. But for most of Africa this is not only not true it is distorting reality – a common problem among broadcasters who are attracted to visual suffering far more than they are to the non-visual, dry as a bone, statistics of the International Monetary Fund.
Africa has played its cards well during the US-led “Great Recession”. It confronted the recession from a position of strength, following years of policy reform. Nigeria has used significant amounts of its saved oil revenues to counter the dampening effects of the recession. Kenya’s proactive measures by the central bank helped mitigate the recession’s impact on the banking sector – it remains liquid and well capitalized. Many countries have a sound fiscal position and were able to increase government spending – mainly on health and education – to buttress economic activity. Interest rates were brought down and today the business friendly environment attracts a huge amount of foreign investment.
The World Bank ranked Rwanda as the world’s top performer in encouraging entrepreneurship. The IMF predicts that next year economic growth will average in sub-Saharan Africa 5.75%. In Tanzania it will be 8%, in Uganda 7%, in Mozambique 8%, in Ghana 7.3%, in Mali 6.3%, in Nigeria 8% and in Kenya 5.8%. Even the Zimbabwe of the Marxist dictator, Robert Mugabe, has begun to show signs of recovery from its years of mismanagement with an expected growth rate of 4% and an inflation rate falling from over 1000% to 8%.
Foreign direct investment in Africa has increased from $10 billion a year to $88 billion – compare this with India’s $42 billion and China’s $108 billion. Is this just a reflection of the world’s lust (especially China’s and India’s) for oil and minerals? Only in part – the natural-resource sector accounts only a third of Africa’s growth. The Boston Consulting Group in a report published earlier this month says there are a number of African countries whose performance rivals the Bric countries (Brazil, Russia, India and China). The report says that 500 African companies have been growing at more than 8% a year since 1998, helping produce a rise in export growth of 18%. Some of these countries are in North Africa but most are in sub-Saharan Africa- in particular South Africa but also in Nigeria, Angola and Togo.
