(Its China’s encore for now as it leads the ‘Billion Club’ but will India and Africa come to the party? Photo: Ena Hewitt - Hangzhou, China )
The triple axis of China, India and Africa represent more than half of mankind and Africa is soon to become the newest addition to the world’s ‘1 Billion Club’. According to the latest data from the United Nations Population Division, Africa’s population currently stands at 962 million will climb beyond 1 billion people to join ranks with China and India in 2009.
After their troubled recent history, this massive emerging-market triumvir is slowly rotating into the global spotlight. China is leading the pack having sustained almost 3 decades of economic growth in excess of 10%. India’s economy is starting to pick up pace with its Asian rival and has seen impressive growth of over 8% since 2004.
Africa’s Economic Prognosis
Even Africa is starting to come to the party with its economy having expanded at a rate of 5.4% for the past decade. At a macro level, the continent is definitely heading on the right track. Step back in time 20 years in time and what is now SADC was a very troubled region. Angola, Mozambique and Namibia were all experiencing a civil war. The DRC was hardly any better and apartheid violence was peaking in South Africa. Fast forward to the present and outside of isolated issues in the DRC’s diamond and gold hotspots, it is just our northern neighbours that somewhat ruins a rosy picture.
With more and more democratic elections (the next step is working on more ‘free and fair’ democratic elections) and the advent of pan African ‘from-Africa for-Africa’ institutions such as NEPAD and the AU, the continent is slowly shaking off the doom and gloom shackles that is has been synonymous with for so long. Africa is showing signs of promise on the technological front too. Cell phone penetration has reached 17% of the continent leapfrogging cumbersome landline technology. A 10 000 km undersea cable is being built that will connect 21 countries to the digital age of cheap and fast bandwidth.
A note of caution is that Africa’s economic growth is still largely fuelled by the global commodity boom. Here, China is a key catalyst. Not only has China buoyed international demand for raw materials and is driving their price to all time highs, but China is also investing heavily in raw materials and oil in Africa. These two factors have also seen an increase in Indian and even recently Japanese investment suitors on the continent. This resource money is buffering the national coffers of Africa’s largely trade driven economy and smoothing over some of the more challenging aspects of African society today.
Africa still lacks large scale job creation and this is a pivotal factor needed to lift hundreds of millions above the poverty line. Most current economic growth is jobless and pure resource extraction minus the processing has limited community impact. Massive infrastructural investment is lacking to connect Africa not just to the rest of the world but to itself and this is a remnant of the serious conflict that has hamstrung the continent for so long. Education levels are still shocking inadequate and this is another area that needs urgent attention in parallel with other needs. Furthermore, formalising the informal sector and enshrining land ownership are two pillars of capitalism that Africa is still far, far behind on.
A positive sign is ‘Trade not Aid’ movement that is defining current African debates. Enabling business on the continent is where Africa’s redemption will come from. Making sure this trickles down will sustain this redemption. But if you are not a Chinese or South African company, or do not come from the FMCG, resources or communications sectors then a bit more patience might be prudent.
However, the writing is already on the wall. Continent-wide society political improvements and an enabling commodity surge have taken root and making it an ever more attractive investment destination. The question is now when not if…
