What comes to mind when you think of the African economy? Do you see exceptional economic prospects, innovative entrepreneurs, a wealth of resources and cities bustling with opportunity? Or are your first thoughts about poverty, failing infrastructure and a lack of development? In both instances, you might be right.
It’s almost like the glass half full or half empty scenario.
Do you see the glass as half empty?
You can’t be blamed for a negative perspective. According to McKinsey.com, 60% of Africa’s population still lives in poverty. While half of the African population lives in countries that show economic growth, the other half lives in countries with less prosperous prospects and that includes Africa’s three largest economies – Nigeria, Egypt and South Africa.
Africa’s population growth is expected to nearly double to 2.5 billion people by 2050 while it is expected to have the world’s largest working-age population by 2040. The growing population can be seen as a negative if you are worried about unemployment. This would typically be top of mind for South Africans who are dealing with a devastating unemployment rate of around 33%. The good news is, however, that unemployment differs quite significantly from one African country to the next and Africa’s rate stood at 8% in 2022, significantly lower than that of South Africa. In such conditions, a growing population might indicate a bigger demand and the requirement of improved productivity to sustain growing populations.
Africa’s wealth of natural resources has been exploited for many years, the continent is home to some of the poorest countries in the world and inequality remains an issue. In a tough global economy, how can we be positive about the economic picture for Africa?
Many do see the glass as half full, however.
There is a lot of positivity about the potential of Africa. Again quoting McKinsey.com: “… the continent presents myriad opportunities for robust, inclusive growth that harness its rich natural resources and abundant human potential to increase prosperity not only in Africa but around the world.”
Like the global economy, Africa is still challenged by Covid and war in Europe, but there are some exemplary countries that are growing consistently because of good investment, exports, urbanization and productivity. Some of the fastest growing economies in the world can be found in Africa. According to the most recent 2023 United Nations estimates, the African economy should become an important player in the global economy by 2025 if its GDP manages to reach the expected $29 trillion. The World Bank anticipates that most African countries will reach “middle income” status in the next 10 years while the African Development Bank reports that Africa’s growth will outperform the rest of the world with an average of 4% compared to the global average of between 2.7% and 3.2%. (Read more)
Those with a positive perspective regard the growing population as an asset in the form of human capital and a resource for the growing services sector that, if it maintains its current growth rate, should create about 85 million new jobs by 2030. (Read more)
When it comes to Africa, it is important to keep in mind that it isn’t one country, but a continent of 54 countries that are culturally and geographically very diverse. This doesn’t mean that we can’t learn from each other. There is a lesson we’ve learned in South Africa that should apply across the boarders to the rest of our continent: While optimism and innovation are essential, covetable and exciting, they do not guarantee sustainable growth. The old stalwarts are required too: productivity, long-term vision, political stability and investment in infrastructure. When you combine the energy with efficiency, then, I think, the glass is half full!