Africa’s mid-term prospects – growth and climate change

“After decades of stagnation, Africa’s economies experienced a marked acceleration in growth during the past ten years. The magnitude of the continent’s development story is startling in its specifics and the opportunity it presents”. This is the start of a detailed package on the website of McKinsey Quarterly (www.mckinseyquarterly.com) outlining growth prospects sector by sector.
IN particular, the article “Fulfilling the promise of sub-Saharan Africa
argues “sub-Saharan Africa offers a better platform for profitable new investments than ever”, The author is Ngozi Okonjo-Iweala, a managing director at the World Bank and former Fiance and Foreign Minister of Nigeria. Since future growth will be in emerging markets and south-south expansion, she argues: “..there is an emerging side of the African story that speaks of successes often achieved below the radar screen. The region aspires to move past the image of extreme poverty and conflict with which it has long been associated and to show that it is not only open for business but also actually in business. Before the crisis, sub-Saharan Africa had been growing fast, with an average annual growth rate of 6 % between 2002 and 2008. The region, which is weathering the global downturn better than most other parts of the world, is projected to grow by 3.8 and 4.5% in 2010 and 2011, respectively—faster than Latin America, Europe, and Central Asia.”
She cites as causes of the success: better political and economic stability, more commitment to private sector growth and more investment in education and infrastructure. Reform continues despite difficult times and Rwanda was top reformer worldwide in the World Bank’s Doing Business 2010 report (http://www.doingbusiness.org). Botswana, Cape Verde, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, Seychelles, South Africa, Tanzania, Uganda, and Zambia are all listed as “frontier emerging economies with relatively developed financial markets”.
Education (average years of schooling) has climbed more than fivefold since 1960 and is catching up fast with the rest of the world. Infrastructure spending amounts to $45 billion a year, absorbing more than 5% of total GDP.
Natural resources will continue to be a source of growth, including renewable energy such as solar, hydro and biofuels. Appropriate investments in agricultural skills and infrastructure —for example, irrigation — could prompt a green revolution in sub-Saharan Africa. Local food demand is to reach $100 billion by 2015, double its level in 2000. “Global markets for nontraditional exports such as horticulture are expanding rapidly. Sub-Saharan Africa has many success stories, such as the production of cassava chips in Ghana, organic coffee in Tanzania, and cut flowers in Kenya, as well as aquaculture in Malawi”
The advances are also notable in IT, she says: become the fastest-growing region in the global cellular market, going from fewer than 2 million mobile phones in 1998 to more than 400 million today. More than 65% of the population now lives within reach of a wireless voice network, up from less than 1% ten years ago. Mobile phones have become the single-largest platform that can be used to deliver government services to the poor. Yet while great progress has been made in improving access to the information and communications infrastructure in many countries, much less effort has been made to exploit its potential to transform other sectors.”
However, the author also cautions “climate change makes the challenge of sustainable growth more complex”, particularly as rainfed agriculture makes up 30% of GDP and 70% of employment. She says Africa could turn the climate change problem into an opportunity, as it “has great potential for sustainable, intensive farming through investments in new technologies and the conservation of vegetation, soil, and water. These approaches provide a “triple dividend” supporting adaptation to climate variability and change, mitigating carbon emissions, and promoting food security. The financial resources generated through mitigation could be very substantial. In sub-Saharan Africa, the economic potential from agricultural soil carbon sequestration is estimated to be 150 million tons of greenhouse gases a year.”
The author is even optimistic that the fast-increasing population, which is also moving into towns, will offer resources for labour intensive industries in future. Reading between the lines of the article are the dangers if Africa does not get it right and manage to adapt to climate change, with resulting fall in agricultural productivity and growing city slums.
Congrats to McKinsey for once again organizing helpful and thoughtful coverage.

1 Response to “Africa’s mid-term prospects – growth and climate change”


  1. Qasim11876

    The author is even optimistic that the fast-increasing population, which is also moving into towns, will offer resources for labour intensive industries in future. Reading between the lines of the article are the dangers if Africa does not get it right and manage to adapt to climate change, with resulting fall in agricultural productivity and growing city slums.