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Kushal Maurya

Can Africa be great again?


Ethiopia, with its first satellite representing African presence in space, the determination has been conveyed to the world. African nations are on the move; the most resource-rich land on Earth. Once the center of human evolution, it is now remarkably rich in demographic and cultural diversity, nature & biodiversity, fuel, minerals and land. It has a large population of youth. But the history has caused huge sufferings to the land. Unstable governments, military occupation, diseases, poverty and corruption have plagued the countries in Sub-Saharan Africa.

Yet, against all odds, there are numerous prospects for African countries. However, in order to establish the ground for socioeconomic development, various studies suggest that the rule of law and governance in Africa needs to be revamped.

Africa is the youngest continent that has witnessed the four revolutions of mankind. It has an open world as numerous case studies of what works and what not in the most debated models of economy & governance; what holds importance in a long run and better options than an economy without environment. With all such lessons Africa has a wide road to ride in its own way. This is to explore & analyze prospects, challenges and opportunities for the future to make the continent great again.


The progress report on Sustainable Development Goals (SDGs)

The future is solely driven by the present. The Sustainable Development Goals Report 2019 (United Nations, 2019) depicts the status of Africa on 17 SDGs. On the goal 1, Ending Poverty, although the world altogether needs to exhibit an aggressive stance, there is a substantial result yet to be achieved in Africa. The report estimates about out of 736 million people, used to live below $1.90 per day in 2015, 436 million of them count in sub-Saharan Africa. By 2030, the projections show a decline of only about 2%, in the population living below $1.90 a day if current policies are not reformed.

On the other hand, working population living under $1.90 a day also stood highest at 38% in Sub-Saharan Africa in contrast to 8% of the world average and 31.5% among other Least Developed Countries. Alarmingly, the rate of working poverty in youth is double the rate in adult workers.

Adding to it, the proportion of the population covered by at least one form of social protection benefit, and children covered by social protection, as in 2016 is least at 13% in Sub-Saharan Africa where the world average stood at 45% and maximum 86% in Europe and North America. At the global level, the agriculture orientation index (AOI) - support to agriculture sector was lowest in sub-Saharan Africa (0.20), jeopardizing job opportunities in the sector with low production and poor exports.

Public Health has caused major setbacks to the African economy, which is yet to be improved. Now 59% of the births are attended by the skilled professional. Maternal and child health need sustained investment in sub-Saharan Africa. The continent continues to account for more than 90% of global malaria cases, and the toll is rising.

Governance and economy

Africa in recent years has suffered losses in terms of capital flight. It has severely impacted the industrialization in African countries. A study conducted by Asongu and Odhiambo (2019) validates the of capital flight on good governance. The study established that revamping current industrialization efforts in African nations would non- need good governance systems to recover from the damages that capital flight has caused to industrialization.

The study suggests to limit drivers of capital flight through political and economic stability, accountability, the imposition of capital controls, currency devaluation, checking corruption and enforcement of the rule of law.

 

"For the future to be secured and opportunities to be favorable, African nations need to strengthen the ground on all three fronts- political, economic and institutional."

 

Sub-Saharan Africa is in dire need to boost its business environment in order to establish stable industrialization. Doing Business.org in their 2019 Doing Business Annual Report have presented quantitative indicators on business regulation and the protection of property rights compared across 190 economies. According to the report, the Sub-Saharan African economies score significantly lower than the most efficient economies in all areas.

Figure 1: Average ease of doing business score on 10 indicators to compare Sub-Saharan Africa with OECD High income countries. Source: World Bank (2019, p.6 )

The gap in the score is significantly wider (Fig) in the areas of - resolving insolvency, trading across borders (51 points) and getting electricity (36 points), the two of the indicators. Substantial variations in performance among Sub-Saharan African economies present an opportunity for policy makers to learn from the experience of their neighbors. The report suggests potential areas of improvement as in the area of getting credit, for example, officials in Angola (ranked 184) and Eritrea (186) could learn from the experience of Rwanda and Zambia (both ranked 3). The two latter economies share many of practices found in OECD high- income economies.

Migration and Opportunities

The future can be leveraged on migration in and from Africa. Landau, Kihato, & Postel (2019) analyses the drivers, dynamics, and consequences of African migration. As per their assessment in the coming years, economic inequality, climate change, persecution, political strife and conflict will raise distress migration cross-borders. About a fifth of the African population is expected to be on move to Europe in coming decade. The analysis came up with three variables that will determine the consequences of movement, firstly, the degree of geo-social inequality within Africa; secondly, Europe’s position to accept those migrants and lastly the regulatory strategies to steer such movements.

In a forecast till 2100, Europe shows consistent drop in its working population from 2015 to 2100.

Figure 2: Comparative Population projections for Sub-Saharan Africa and Europe from 2015 to 2100 Source: Source: Centre for global development, 2019

This could prove to be a vital risk for the economic growth of EU but the report also suggests valuable opportunity of partnership with Africa. The working population of Africa contrastingly to EU shows steep rise from 2015 to 2100. Considering the scope of partnership among continents, the Centre for Global Development (2019) in its report lays out a roadmap for how the new European Commission can turn this aspiration into reality. It examines specific policy areas like migration, development finance, trade, and global health security and present four actionable proposals that the EU’s new leadership can pioneer. For migration, it proposes new kinds of legal labour migration pathways with more tangible benefits to countries of origin and destination, suggesting Global Skill Partnership projects within and between Europe and Africa. For development finance the EU could leverage high-risk capital for under-served markets in Africa, with the European Commission driving collective action, better coordination, impact, and efficiency among European development finance institutions. The report proposes ways in which the EU can end tariffs, reform rules of origin, support the African Continental Free Trade Area, pilot “payment by results” for aid for trade, and stimulate transformational economic growth at home and within Africa. It also proposes to find mechanisms to increase sustainability and effectiveness in global health security, for which Africa is in dire need.

Investments on Infrastructure and Energy

The report of International Finance Corporation (2018) validates the opportunities enclosed for Africa in the near future. Prospects on economic reforms, scopes & opportunities for technological advances, increasing consumer base could prove to be significant opportunities for both African economies and private sector businesses seeking to engage with them. The World Bank and IFC were involved in financing infrastructures like electricity, value chains and transportation in African nations which has made the land an attraction for the private investors.

The report flaunts success cases of private enterprises from power generation, solar power, transport, agribusiness to creating the world’s largest rose enterprise all adding to thousands of job opportunities and scopes for investment in Africa.

The continent’s abundant renewable energy resources can help accelerate economic growth while ensuring equitable access to modern energy services in an environmentally sustainable manner. North, the Eastern and Southern Africa can all derive renewable power from other sources, such as wind energy, while concentrating solar power (CSP) will matter specifically in North Africa. Additional renewable power capacity is expected from geothermal sources in East Africa, while solar photovoltaics (PV) will be important in the and Southern regions. In all regions of Africa except the North, hydro-power will continue to be a potential source. Other prospects are analyzed in the report are geothermal energy, bio-fuels, biomass, and energy crops. The report thoroughly discusses the interventions and institutional needs in of support from the government in order to tap the potential.

Nature-tourism can be economy booster

Africa holds world’s richest biodiversity and natural . From the economic perspective, it could be Africa’s major cash cow in the coming decade. According to the data of the World Travel and Tourism Council (WTTC) forecast, the 60% rise in the region’s tourism GDP is expected to rise from 2018 to 2029. Dwelling challenges like hygiene, infrastructure, electricity, the Sub-Saharan Africa holds opportunities on the other hand. The report of World Economic Forum (2019) report suggests the steps need to be taken for efficient utilization of continent’s natural resources, hence, propagate nature tourism. Tanzania, South Africa and Kenya are among the top 20% of those rich in natural wealth, the need is to improve on their competitiveness. But to sustain the opportunity the prime demand of tourism in Africa is to mitigate health & hygiene issues which can be achieved by infrastructure development and policy update. Governance, rule of law and the menace of corruption has to be looked into with utter seriousness.

Conclusion

The future of Africa revolves around energy, employment and migration. African nations undoubtedly hold promising potential of growth in the coming future in terms of economy, trade and investments. But keeping in view the current scenario as depicted in SDG Report 2019, though the world is yet too far from achieving them by 2030, sub-Saharan Africa is much more behind in almost all world averages. Ending poverty, goal 1, is a matter of deep concern for the continent. Apart from that, 85% of the children in sub-Saharan Africa away from learning in reading and basic mathematics. The continent suffers from poor governance that leads to high level of corruption. Yet, there are ways to curb the challenges if the governance is improved. There has occurred a huge loss to the continent due to capital flight in recent years. and Odhiambo (2019) validated the fact that poor governance causes political, economic and institutional malfunction leading to draining resources and capital flight. However, their research opens avenues for opportunities to leverage the young population and economic stability through investments in governance robustness, policy revamp and institutional development.

Economic development is dependent on the stability of governance. The report of World Bank (2019) on doing business discloses existing challenges that decelerate the economic growth in Africa. The major concerns raised by the report are lack of infrastructure and mismanagement of resource allocation. Though private investors find great opportunities in Africa for business development, but prolonged scarcity of infrastructure like electricity and transportation could further degrade the economic future of Africa.

In the near future, about a fifth of the African population is expected to be to Europe, Australia and America between 2018 to 2029. In a scenario where Europe is falling short of that still shows a constant decline from 2015 to 2100, the neighboring African nations could be a source of fresh working population as the trend there shows steep rise from 2015 to 2100. In a report to Europe in the coming decade as disclosed in a research by Loren B. Landau, Kihato, and Postel (2019) at Princeton University. The trio forecast about one fifth of the population in Africa will be Centre for Global Development, various options are analyzed and established for a cross-continental partnership among EU and Sub-Saharan Africa. Indeed the developed economies need the work force, it would be a driver of growth for underdeveloped economies in the neighborhood.

Africa is the center of attraction for renewable energy investments and nature tourism apart from agribusiness. World Bank has invested openly into energy generation in hydro power and solar. There are potential markets for geothermal, solar and wind power as per the report of International Renewable Energy Agency (2015), on the future of renewable energy by International Renewable Energy Agency.. The report also thoroughly discussed on the policy improvements to materialize the prospects.

According to the report of World Economic Forum (2019) on travel & tourism competitiveness, Africa encloses great opportunities in tourism. It has improved in the openness indicators, though friendly visa policies, but it has yet to ensure hospitality and hygiene. No doubt the natural riches of Africa can boost the economy as well as generate employment for the new generations.

Yet, there have evolved numerous factors which serves immense scope of socioeconomic growth of African nations. The need of the hour is to establish the rule of law in the land and review policies to support business and helping all sector productivity. With strong political will, Africa would absolutely be on the path of being great again!

 

References

Asongu, S.A., Odhiambo, N.M. (2019). Governance, capital flight and industrialisation in Africa. Journal of Economic Structures. 8(36),1-22. doi:10.1186/s40008-019-0170-2. Retrieved from https://journalofeconomicstructures.springeropen.com/track/pdf/10.1186/s40008-019-0170-2

Centre for Global Development (2019). Building an EU-Africa partnership of equals: A roadmap for the new European leadership. Washington DC: Centre for Global Development. Retrieved from https://www.cgdev.org/sites/default/files/EU-roadmap_0.pdf

International Renewable Energy Agency (2015). Africa 2030: Roadmap for a renewable energy future. Abu Dhabi: International Renewable Energy Agency. Retrieved from https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2015/IRENA_Africa_2030_REmap_2015_low-res.pdf

International Finance Corporation (2018). Shaping the future of Africa. World Bank.Retired from https://www.ifc.org/wps/wcm/connect/701a29a9-0740-400c-bb863d64e5d0a11a/Africa+CEO+Forum+Report_FIN3_WeblorespdfMOD=AJPERES&CVID=m9z19ct

Landau, L. B., Kihato, C. W., & Postel, H. (2019). The future of mobility and migration within and from Sub-Saharan Africa. Princeton: Princeton University. Retrieved from https://dataspace.princeton.edu/jspui/retrieve/130317/Migration_2019.pdf

United Nations. (2019). The sustainable development goals report 2019. New York: United Nations. Retrieved from https://unstats.un.org/sdgs/report/2019/The-Sustainable-Development-Goals-Report-2019.pdf

World Economic Forum (2019). The travel & tourism competitiveness report 2019: Travel and tourism at a tipping point. Geneva: World Economic Forum. Retrieved from http://www3.weforum.org/docs/WEF_TTCR_2019.pdf

World Bank. (2019). Doing business 2019: Training for reform. Washington DC: World Bank. Retrieved from https://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_web-version.pdf

 


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