Africa growing faster than Asia?

Sixteen of the fastest growing countries in the world are in Africa. No you didn’t get it wrong. Seven are in South East Asia followed by three in Central Asia. So has Africa’s time finally come and the continent will now forge ahead?

Ethiopia is predicted to grow at least 8% per annum for the next few years. If so, it will be as normal for Eleni Gabre-Madhin, CEO of the Ethiopia Commodity Exchange, to take center stage globally as for her Western and Asian counterparts.

According to the IMF we will see more African countries with massive growth during the next few years. They also forecast that many African economies will outpace Asian countries, even China and India.

The shoe is on the other foot

Angola is now lending money to it’s former colonial master Portugal struggling in the Euro crisis. Not so long ago nobody would have thought such a development possible.

Many of us have worked extensively to further the interests of Africa and hence hope real progress has now started. But somehow can’t help wondering what will go wrong this time because something usually does. Really hope it is correct that Africa as a whole will grow 7% on a yearly basis over the next two decades?

Surging demand for raw materials and foreign investment driving progres

The continents changing fortunes seems to be, at least partly, based on China’s demand for raw materials, higher commodities prices and increased inflow of foreign investment. Africa’s rising middle class have also fuelled growth in domestic demand. There is global interdependence in respect of production and demand. Africa offers producers around the world a vast and growing market that will keep on expanding.

African governments improving

Government is improving in Africa and corruption is less than it used to be. Seems the NEPAD peer review mechanism have made a difference when it comes to implementing true democracy, good corporate governance, transparency and eradicate corruption. Nowhere else in the world has such a process ever taken place and its uniqueness was well illustrated by former President Bush’s remark, “We don’t do that in America”. More and more governments are being responsible and putting money aside to cushion their economies. Know-how is also improving. As a result of statisticians improving their data in Ghana their GDP was revised up by as much as 75%.

Trade not aid

Africa, the poorest continent, according to many analysts, bares the brunt of the continued rigging of trade rules in the WTO. And in order to prosper the continent needs to trade out of poverty, as opposed to relying on aid. According to the UN, just one percent of increase in exports from Africa is worth a staggering five times the amount it receives in aid and debt relief.

Africans recognises their responsibility to wipe out the gap between the continent and the rest of the world. Africa wants to improve its role in the world economy. Its contribution to world trade is hopelessly small. They want to get its house in order, but the rest of the world needs to play its part as well. For example, Africa is told it may not subsidise its agriculture, so the Western world shouldn’t be doing so either, but as we know both the EU and US does. Jean Chretien put it very well when he stated “we must realize that little progress will be made with investments and trade if Africans continue to be refused access to our markets”.

African media has a role to play

Can’t help thinking about what President Chissano told me in 2004. According to him a major obstacle to improving the image of Africa is that the African press, like it’s Western counterparts, focus on scandals to grab headlines. Naturally a free press is essential, but the down side of that is that far too many negative stories come out of Africa, deter foreign investors and hence have a detrimental affect on the progress of the continent. Maybe it would be a good idea for African media to also show case African success stories? That Angola is growing faster than China would be a start.

The world’s new manufacturing centre?

Unfortunately commodity driven growth doesn’t generate enough jobs. However, now with salaries increasing in Asia  Africa could become the new manufacturing centre. Kenya and Uganda have already increased their export sector. To make this reality the WTO need to facilitate market access for products made in Africa on the world market. If not, Africa may continue to be a scar on the the conscience of the West.

There are many obstacles to Africa continuing to progress. Political instability, weak rule of law, corruption, bad infrastructure as well as poor health and education. So without the political will to reform, the current growth rate will be difficult to sustain. However, for outside companies looking for new markets a whole continent almost sounds too good to be true. But that’s what a developing Africa, with a gradually burgeoning middle class and numbers of skilled workers constantly increasing would constitute. A vast and growing market for the world’s manufactured products, intermediate goods and services. Add to that UN figures showing that investments in Africa provide higher rates of return than anywhere else in the world. It has been said for more than a decade that Africa’s time has come. But maybe now with the changed world order due to the recent global crisis, will Africa finally be able to progress? What do you believe? Will Africa now be able to forge ahead or will the gap between Africa and the rest of the world remain as wide as it is?

(Photo copyright World Economic Forum (www.weforum.org)/Photo by Zahur Ramji / Mediapix)

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45 Responses to “Africa growing faster than Asia?”

  1. Guy Says:

    Catarina – I really hope you're right, but I suspect that it will take somewhat longer than either of us would like. Africa's governments are the biggest single stumbling block to sustainable growth and an improving standard of living. For example, since 1994 the number of people in South Africa living below the official poverty line has actually increased by 25%, rather than decreased – the new elite are entirely focused on their own short-term wealth gains. And as for Zimbabwe – formerly "the bread basket of Africa" it is now a country entirely reliant on outside aid just to feed itself…

    Corruption, nepotism and general crime need to be rooted out before things can seriously improve.

  2. catarinaalexon Says:

    Unfortunately that may be correct Guy. However, do take into account that South Africa is not one of the countries with high growth rates. In fact it's lagging behind other African countries. And Zimbabwe is another story. But that doesn't change the fact that several African countries are growing faster than Asia. Would be a good idea for South Africa to learn from those countries.

  3. Guy Says:

    Part of the reason for South Africa's growth rate being lower is simply the size of that economy and its relative sophistication. Countries like Angola have extremely high growth rates as they're effectively coming off a zero-base after 30 years of civil war, and now oil/gas finds. Most of the Asian economies are significantly larger than those of African countries and so their growth rates will be lower as it's much harder to grow quickly from a large base than a small one.

  4. catarinaalexon Says:

    Another major reason for South Africa lagging behind is the reverse apartheid. Not from their leaders but the common man.

    Was a target of that once when I was flying for a leadership seminar in Victorial Falls via Jo-burg. The Air France flight from Paris was delayed resulting in passengers with connecting flights having to spend the night in South Africa. The customs people targeted all "white" people and we were all searched. The woman going through my bag with the clothes I needed for the seminar started accusing me of smuggling my clothes into South Africa to sell them despite being told that I was only entering SA because of my flight being late.

    Had to get Air France to explain to tell her I was entering SA by default. It should be noted that no Africans were searched.

    If I had been a foreign investor I would have booked a flight out of the country right there and then. Told Thabo Mbeki about it since that kind of attitude I have never come across anywhere else in Africa. Mozambique, for instance, has a high growth rate and that kind of mentality you don't notice there.

    Considering apartheid it's understandable that low level people act like that. But it is definitely having a negative impact on South Africa's economy.

  5. keyuri joshi Says:

    In reading your post, the concept of leadership keeps coming to mind. Africa's continued success is hinged on leaders whose work ethic is productive for the country and more important corruption free. I recall the days when the world did so much to minimize the impact of the famines only to learn that their donations went to the wrong hands. Your comment on regarding media leadership is a great one. When I coach my parent clientele, I recommend that they sandwich negative comments to theire children with two positive ones whenever possible. This should not be misconstrued as falsely building one's spirits… a child's or a nations, but we do need to focus on things that we work hard to "do right".

  6. catarinaalexon Says:

    True Keyuri, however leadership in Africa is improving. But we only hear the bad stories. Glad you agree with me on the problem with media focused on scandals. A free press is essential but currently detrimental to Africa forging ahead.

  7. catarinaalexon Says:

    As you know that's what I'm thinking as well Dennis. The Tunisian revolution has resulted in people setting themselves on fire in Egypt and Algeria. If that becomes a phenomena in North Africa it will have a detrimental affect on the whole of the continents, despite that fact that it's Arabs and not "Africans" trying to change the regimes in their countries. Let's see what happens.

  8. Susan Oakes Says:

    Catarina, is one reason they are growing fastest because they are coming off a small base, versus China for example?

  9. catarinaalexon Says:

    Definitely Susan. But despite that the fact that they are progressing is important since Africa really needs to be fully incorporated into the world economy. Every little step is a move in the right direction.

  10. Catherine Lockey Says:

    Thank you Catarina for taking the time to write about Africa and it's potential. I believe anyone – any county, any continent can "close the gap" if that's what it's people want. I imagine people struggling to meet their basic needs aren't aware of what they want outside of food, water, and shelter. Yet, once these needs are met it is education which changes everything. Have you ever read Pedagogy of the Oppressed by Paulo Freire? I think you would appreciate it.

  11. catarinaalexon Says:

    Yes Catherine they can, let's hope the African people step up to the plate. Unfortunately in some of the countries you have trade unions demanding high salaries. And if they succeed Africa will unfortunately not become the next manufacturing centre in the world.

  12. Gary johnston-Webber Says:

    Hi Catarina
    I choose your blog to answer the question you asked me being: "Is reverse apartheid still a huge problem in South Africa? Not from the leaders but the common man."

    I think the normal LinkedIn comments have enough –

    To answer the question the answer is a qualified No –
    The leaders have virtually admitted now that the AA and BEE plans have failed and basically through greed since only a favoured few have become wealthy but the masses not.

    For the common man in the street there are of course two sides the blacks and the whites, but saying that, there are an increasing amount of blacks who also want this to end as they now recognise that the old white man has the skills and it would be better to get them back and get the country on a good footing again while they understudy these people who are only too willing to pass on their skills.

    As far as living cheek by jowl there is no problem and I do believe that the respect for each other grows daily and the friendships gather strength and there are many whites who are doing all possible to assist and train the upcoming black people and pass on their skills to them.

    The main problem seems to be in the minds of the general uneducated blacks as the government right back to 1994 had a manifesto that promised these people houses and cars and all thing nice and well paid easy jobs and of course this never happened, but it caused an expectation that all these people had to do was wait a while and all would be given to them free. Well you and I know this cannot happen and there is a strong developing mass of blacks that have realised this and so are actively seeking to better themselves, just a pity that the financial crisis came along.

    It would appear, that the powers that be, would rather have a huge illiterate mass of their people and especially the youth so they will listen to these false promises so to give that party the mass of votes.

    Just yesterday the Western Province, ruled not by the ANC but the DA, got a completely unqualified auditor's report, never happened before. This has of course showed up all the other provinces governed by the ruling party where there is no accountability and also much discontent in service delivery. In the Western Province an independent survey found that well over the 50% mark of people in the Western Province towns and even villages are very happy and satisfied with services delivery and I do believe that this attitude is spreading fast as the numbers grow daily where the question is asked as to why the DA gets it right but no province under the ruling party can do this, and these questions will lead to different view points of the common man in the street.

    There is zero tolerance to corruption in the WP and the audit proved this as every cent was properly accounted for hence the unqualified report. This is unlike the other provinces where it is rife.

    So in short I think that finally this apartheid thing is going to get to RIP and I agree with you that in the future Africa will indeed be a manufacturing center in the world and also I believe the old bread basket that it used to be will return.

    Best regards

    Gary

  13. catarinaalexon Says:

    Glad to hear that things are changing Gary. As for low level people expecting money for nothing, you have that all over the world. Not least in the West. Seems you have that category of people everywhere because they believe what politicians tell them to get elected.

    Really hope we are right about Africa becoming the new manufacturing center so that your continent can finally play a proper part in the world economy.

  14. Gary Johnston-Webber Says:

    Catarina, it is but a matter of time and culture.
    You have probably heard this cultural truth of the black African who grew up in the old ways where they did not understand nor appreciate money but their wealth was in live stock and a man's cattle his worth. So the herd boys taking the cattle out to graze, were the creation of the saying " You do not walk faster than the cattle as there is no point" and this encompasses the slow walking gait of most Africans. It is in bred and you cannot change this mindset over night. It is us westerners that rush around and have heart attacks due to our haste, and in that, sometimes I think the African to be correct in mindset and the peace they have within, but since the world shrinks unfortunately they cannot stay in that paradigm as change is happening.
    They are having to take on a new set of values the first one being that money rules the people on this earth in a practical manner, and this is difficult and the reasons are for another discussion.

    I agree with you that you get this all over the world the difference being that those around the world are mostly a minority and their value system is western, while here in beautiful Africa it is the majority and the value system changes, but ever so slowly.

    However the changes I have seen in my life time are mega steps considering the time and it would not be a bad thing for Africa to emerge as a great and productive land which can fuse some of their older mindsets with the western one. I do believe such a merge or fusion could bring some awesome stability.

    There was a plane crash a long time ago on an island and the people were European but for one African gentleman. The others got angry with him, since they were rushing around trying to find things to built a raft or some such thing to try and get off the island which was actually not viable, but he just sat on his hunches in the shade of a palm tree and gazed out to sea and remained like that for hours. The others shouted at him as to what he thinks he is doing, and he calmly said, whilst you rush around to no avail I can sit here and enter in my mind and I was walking in my beautiful African bushland and enjoying the nature and drinking from the cool mountain streams and all is good and I was at great peace until you started shouting. Please leave me in that peaceful place which you have lost the ability to enter.
    What great and wise words in those circumstances, and so you can see why I say a fusion of these abilities would be good for our world.
    That is why I am confident that Africa with be the leading continent one day.

    Sorry for the many words but I wanted you to see the picture.

    Best regards

    Gary

  15. catarinaalexon Says:

    Correct Gary. I have worked with all governments in Africa and am very aware of the mentality. Members of some tribes don't even think for themselves but rely on the chief to think for them. A minister in one country told me it takes a secretary two days to write a letter. Whenever I have worked with Africa I have had to adapt to the fact that things take longer.

    Agree with you that from a private point of view the African mindset is the right one. However, the market is now irrevocably global and the African mindset will hence change. You see that with both educated and upstart Africans, for better and for worse. It will take time but eventually the African mindset will change and become global, I will not call it Western since the Chinese and Indians work even harder and they represent 40% of the world's population.

    So Africans will gradually change their peace of mind for prosperity. The African man you describe illustates the down side of that. But the multitude of poor people suffering from poverty will gain as a result.

  16. keepupweb Says:

    Africa may become the new manufacturing center? That absolutely amazes me Catarina. Thanks for writing about their potential. I had not heard this before.

  17. catarinaalexon Says:

    There's a first time for everything, isn't there Sherryl. Let's see if Africa steps up to the plate and becomes the "new Asia"?

  18. catarinaalexon Says:

    Thanks Slim. Haven't put any advertisements on my blog since the Swedish tax authorities take 65-70% :)

  19. StevenAdler Says:

    Africa is, of course, not a country. It is a continent larger than the United States and most of the EU combined. And the conditions from country to country are so varied and complex. Colonialism, tribalism, failed western development programs, and decades of poor governance and corruption hold these nations back. But still there is success. There is a growing middle class across Africa with access to information technology and ideas. They are engineers and teachers, civil servants, bankers, and IT professionals. They are educated, travel, and want a modern life. And there are micro-loan successes across the continent that are helping to lift up a generation of small business owners.

    The hope of Africa is broader than one nation and the policy goal of the West should be to accelerate the growth of the middle class.

  20. Jeannette Paladino Says:

    Catarina – very insightful analysis of the African continent. I have to admit I know little of the investment environment there. But Africa seems ripe for investment and hopefully the poor in the countries there will reap some of the benefit.
    My recent post How to Network, Build Relationships & Find a Job on LinkedIn

  21. K.G.Rajamohan Says:

    One cannot generalize the situation in Africa because only few countries in Africa awakened the situation of growing but still mind set of politicians must change towards sustainable development…..unless all charity funds are totally withdrawn and country could sustain its growth by utilizing its' own rich natural resources and human resources,one cannot predict and be happy over any sustainable development! People are aware of development through intervention of technology but how long it would take to change the mind set of politicians.

  22. catarinaalexon Says:

    Thank you Jeannette. Hopefully Africa's time has now come.

  23. catarinaalexon Says:

    K.G. let's hope Africa will now forge ahead and start taking its place in the world economy. It's in the interst of the whole world.

  24. @patweber Says:

    Well I did explore this further Catarina and even The Economist supports much of what you have analyzed. But from what I can gather, while there growth will continue, likely in my lifetime, they won't be the next China. Still, they are producing BILLIONAIRES and that of course, helps the overall economy.

  25. Geek Girl Says:

    I don't know or understand enough about this subject. What I can say is that I hope everyone comes out on top after this financial mess we are in, including Africa.

  26. catarinaalexon Says:

    Yeap, Cheryl;-)

  27. catarinaalexon Says:

    Glad you agree with me Pat. Africa may become the next center for cheap manufacturing however, so they may be the next China in that sense:-)

  28. Lubna Says:

    You are bang on. The gap will narrow and narrow quickly. Many Indian companies and companies from across the world, across a vast spectrum of industries such as telecom are setting shop in Africa, bringing employment to this region and of course they in turn get a good consumer base.
    My recent post A Sealed Fate

  29. catarinaalexon Says:

    Glad you agree with me Lubna. What's interesting that there have always been a lot of Indians in Africa. Remember when Idi Amin threw them out of Uganda? Most likely Indian companies setting up shop there will now reverse tha movet:-)

  30. Slim Says:

    Thank you, Catarina. If I remember correctly, what first drew me to your writing was your article about population shift to the cities. Slim
    My recent post Misunderstanding China Again

  31. catarinaalexon Says:

    My pleasure Slim.

  32. findingourwaynow Says:

    Everything has it's time. African countries will have theirs. Whether it will rival or out pace China remains to be seen. The shear size of China makes it hard to fathom whether that is possible. Whether they will be avoid the usual problems will be interesting to watch. Human nature seems to prevail in these instances… LOL
    My recent post 1st Day From My Kitchen – Susan”s Easy Free Form Rustic Apple Pear Tart: Recipe

  33. Edward Reid Says:

    Not really surprising when you think about the resources found throughout the continent of Africa. If you look throughout history, Africa has always been a leader in trade and shipping. If political leaders understand what they have and how to deal with the rest of the world, Africa will flourish financially.
    My recent post Just plain Nicki?

  34. catarinaalexon Says:

    Seems like Africa will take over from China as the center of manufacturing since they can offer cheap labour. Chinese workers are demanding more money. So the factories are moving.

  35. catarinaalexon Says:

    Africa's resourses have been exploited for a long time without the benefits going to the continent, Edward. It will most likely become the new center for cheap manufacturing after China and Asia and that is bound to make a huge difference.

  36. JeriWB Says:

    This isn't a topic I can make an informed statement about, but I do thank you for writing such posts as they do make me more aware of what's going on in the world.
    My recent post Book Review: Where Men Win Glory by Jon Krakauer

  37. catarinaalexon Says:

    My pleasure Jeri.

  38. Leora Says:

    Catarina, glad to read Africa is moving in the right direction economically. It's true I do have an impression of African governments as being corrupt. I can see why changing that impression and getting off aid would be important goals to tackle for future improvements. I'll pay more attention when I see what is currently in the news about African countries and trade.
    My recent post Rant on Guest Post Submissions

  39. catarinaalexon Says:

    Glad you are positive Leora. Have you noticed that all countries with strong leaders that are almost seen as father figures are corrupt? Trade not aid would make a huge difference but until world trade rules cease to be rigged in favour of the US and Europe Africa will be fighting an uphill struggle. And it all ties together. The longer it takes to get fair trade rules the longer corruption will last:-)

  40. becc03 Says:

    I was not aware of this at all. Thank you again making me aware.
    I do hope the corruption can be stamped out and the economic situation does improve dramatically and quickly.
    My recent post Please Santa

  41. catarinaalexon Says:

    Yes Becc, let's hope Africa's time has now come.

  42. harry Says:

    well, why not? However, we were there before. Somewhere in the sixties, the seventies and so forth always Africa was the continent to look at. And always it turned out to be not as good as expected.
    Signs are good now but not everywhere. And mind you the strongest and most promising economy in Africa (South Africa) is not on an upward trend. And the one who should have been Africa's economic motor for a long time (Nigeria) neither. I would not stake my money on Africa yet, but there are undoubtedly some success stories which we should embrace and then hope for the best.

  43. catarinaalexon Says:

    Thank you for letting us know your opinion Harry. Let's hope there is progress in Africa.

  44. contact Says:

    Gone are the days where Sudan is termed as the ”Cry of Africa “ as now Africa is definitely growing faster than America and the studies has proved that their growth is very fast. Hatts off to the African Government

  45. catarinaalexon Says:

    Yep, The Economist believes South Sudan will be the fastest growing economy this year.

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