Africa’s Boom – A Reality?

Recently, there has been a lot of talk whether Africa will be experiencing a Boom or a Bust in the next few decades. Many have an optimistic view on this issue. They think that Africa’s advancement will continue to improve. However, there is also the opposing side that is pessimistic about the continent’s future.Screen Shot 2014-03-29 at 12.16.10 AM

 The Reasoning of the Optimists

The people that believe in a bright future for Africa have a lot of compelling evidence for their argument. First of all, the GDP (gross domestic product) rates have mushroomed. A report from the AfDB stated that one-third of Africa’s countries tan_1863are growing by more than 6%. This has made it world’s fastest growing continent. Another indication of Africa’s boom is the fact that poverty is declining. Since 1996, the rates have been falling 1% each year. In 2005, 52% of the population of the continent was living on $1.25 a day; this decreased to 48% in 2008. There is no doubt that 48% people living on a little more than $1 is catastrophic. There are still millions of mouths to feed and a lot of development to be done; however, the point is that a massive shift is currently occurring. More people are making more money and that has children-laughingindefinite effects, which all cause the living standards of people to go up. The costs of starting a business have fallen by more than two-thirds over the past seven years and the middle class is rapidly growing (Some 350 million Africans now earn between $2 and $20 a day). All this change results in a 10% increase in life expectancy and an expected per capita income of $1000 in 2025.

“We believe that Africa has the capacity to leapfrog to new technologies and become a global leader in sustainable development” – Donald Kaberuka, President of the African Development Bank Group

More evidence for Africa’s boom
  • Secondary School enrollment has increased by 50% in the past 10 years.
  • Even the 20 states that do not produce oil managed an average increase in GDP rates of 4% between 1998 and 2008.
  • The continent has been attracting $50 billion a year of private capital, exceeding foreign aid.

 

 The Reasoning of the Pessimists

The pessimists of this argument are of the opinion that Africa’s boom is a boom and nothing more: a short spark that is not long-term. The developmental troubles that are shoved under the rug at this moment will have visible consequences and will hinder Africa from experiencing durable economic growth. One of these christo-cartoontroubles is poor infrastructure. Lack of communication and transport will stop Africa from promoting industrial development, which is vital for economic progress. Currently, global manufacturing is extremely disproportionate to Africa’s population. While 15% of the world’s people live in Africa, only 1% of global manufacturing actually occurs there. This is a huge issue and Africa has not been able to build these roads that lead to a core foundation for economic growth. Another argument is that inequality due to extractive institutions hinders a democratic, profitable, and healthy economy. If very few people hold most of the economic power, then a country will not be able to maintain growth. Public initiative, inventiveness, and new ideas cannot be produced if a country’s people are in authoritarian environments.

What the historical evidence suggests is that nations with inclusive political and economic institutions are capable of sustained growth. Nations with extractive political and economic institutions are not. End of story. – Daron Acemoglu and James Robinson, co-authors of “Why Nations Fall”

More evidence for Africa’s future downtrend 
  • The Transparency International’s Corruption Perceptions Index ranks the majority of African states at less than 3 out of 10 (10 being corruption-free).
  • Political Instability is a big issue. One-third of Sub-Sahara is currently in violent conflict.
  • The manufacturing sector has not increased since 1970. This will have drastic consequences once Africa will be unable to continue riding the current “commodity wave”.
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