World Cup 2010
Africa Rising: A big day for football. A giant leap for a continent
With its vast resources and growing stability, Africa's moment may be about to come
Friday 11 June 2010
Not far from Soccer City, the stadium which will today house the opening ceremonies of the 2010 World Cup in South Africa, stands the Maponya shopping mall. There you can buy Versace sunglasses, eat sushi, smoke a £20 Havana cigar and even purchase a car from the resident Audi dealer. But this is no smart up-town white suburb of Johannesburg. This is black Soweto.
It is as potent a symbol of a changing African continent as the stadium itself, which was built in the apartheid era as a football venue for South Africa’s black population. This was where Nelson Mandela addressed 100,000 ecstatic supporters soon after his release from prison as apartheid crumbled. For the past three years it has stood empty as African workers refurbished it for today’s launch. But more than a football stadium is being reborn.
The image of Africa in many minds, elsewhere in the world, is of a Hopeless Continent. It is a place of disease, famine, poverty, corruption and war. There is some truth in all stereotypes but never the complete truth. A single story is a dangerous thing, as the Nigerian novelist Chimamanda Ngozi Adichie puts it. Life is composed of many overlapping stories which can be used to malign or dispossess but which can also empower and humanise. A story can demonise. Or it can repair a broken dignity.
So Africa is a tale of two continents. Or perhaps more. But the story that we in the West resist is the story of an Africa whose moment may be about to come.
Where, we might ask ourselves, does the future lie? Here in the old world of Europe, with its currency crises, national deficits, denuded natural resources, high expectations and ageing populations?
Or in Africa with its vast mineral and oil reserves, under-exploited agricultural expanses, huge potential to tap the sun, wind and water for renewable energies and biofuels – and a burgeoning population of young people eager to work for low wages and consume?
That is not mere fancy. Over the past few years economic growth in Africa has surged to more than double of that in the developed world – averaging a whopping six per cent between 2003 and 2008. Its inflation rates and budget deficits have declined. Its foreign exchange reserves have grown 30 per cent since the 1990s. And its national debts have sharply decreased.
Trade and foreign investment have quadrupled since 2000. Dictatorships have largely been replaced by democracies – there are 30 proper democracies today, compared to five at the end of the Cold War. Epitomising that was the peaceful transfer of power in Ghana, where the result could hardly have been closer.
No major new wars have begun in the last five years and, according to data from the OECD’s latest African Economic Outlook reported incidents of civil tension in sub-Saharan Africa decreased by a third between 2004 and 2008.
Political stability has increased. Telecommunications, banking, and retailing are flourishing. Construction is booming. And investment in infrastructure and education are paving the way for as many as 200 million Africans to be rich enough to enter the market for consumer goods market by 2015.
Africa is becoming the new economic frontier.
A number of factors were involved. There was, until the global financial meltdown, high demand for African resources and high prices for its commodities. Reforms by African governments have made their countries better places to do business. The debt relief agreed by the G8 at Gleneagles in 2005 has come on stream; instead of using their income to repay interest they are spending on schools, hospitals, power plants, gas pipelines, roads and teaching improved agricultural and marketing skills to small farmers.
They are also recovering from the economic crisis faster than the developed world with its reliance on financials services and industry. “The economic slowdown in sub-Saharan Africa looks set to be mercifully brief,” says the latest report by the IMF. “Recovery is now under way across the region.”
This is because, thanks to debt relief and increases in aid, African governments were able to keeping spending – “countercyclical macroeconomic policies” to use IMF jargon – so their economies did not slip into recession. And the fact that they were not deeply integrated into the world economy – normally a brake on development in Africa – insulated them from the worst effects of the global financial seizure, though it has also set back progress on the Millennium Development Goals to halve world poverty by 2015.
But what is most striking is that this great surge forward has not come chiefly on the back of the continent’s traditional economics. Africa boasts an abundance of riches: 10 percent of the world’s reserves of oil, 30 per cent of the world’s mineral reserves, 80 per cent of its chromium and platinum – and much of the coltan and uranium that may shape the world’s high-tech future. It holds the raw materials demanded by the world’s two biggest economies, the United States and China, with whom its trade has increased tenfold in the last decade. Demand for all these products is predicted to double by 2020.
Yet according to figures to be published next month by the McKinsey Global Institute all this accounts for only a third of Africa’s newfound growth.
The rest is in tourism, textiles, telecoms, construction and banking – and has been unleashed by reforms in African domestic economies. A survey by the World Bank found that 28 African countries had adopted 58 business-friendly measures last year: privatising state-owned enterprises, reducing barriers to trade, lowering corporate taxes, strengthening regulatory and legal systems, and providing key physical and social infrastructure. Nigeria privatised more than 116 enterprises in just seven years. The number of stock markets in sub-Saharan African has more than trebled. The world leader in private sector development reforms is Rwanda.
Africa has the highest fertility rates and the youngest population on the planet. The billionth African was born recently. But population, which is routinely portrayed as a burden, is a double-edged sword.
It means that Africa has many cities of one million and is now nearly as urbanised as China. That can mean the misery of massive slums, but it also spurs construction of buildings, roads and water systems, which creates jobs. Since 2000, Africa’s annual private investment in infrastructure has tripled, averaging $19 billion from 2006 to 2008. And big cities mean that companies achieve greater economies of scale by spreading their fixed costs over a larger customer base: Africa’s top 18 cities now have a combined spending power of $1.3 trillion.
In 2000, roughly 59 million African households broke through the $5,000 a year income barrier above which they start spending roughly half their earnings on non-food items. By 2014 that figure should reach 106 million. And Africa already has more middle-class households (with incomes of $20,000+) than India. Consumer spending has grown by 3 to 5 percent every year since 2000. The retail, telecom and banking sectors have burgeoned.
In 1998 just 2 million Africans had mobile phones; now the figure is 400 million today. They have transformed the economy. In Senegal fishermen at sea phone the various ports to find where they can get the best price for their catch. Rural folk phone clinics to find where the doctor is. Camera phones are used by human rights activists to hold police accountable.
And everywhere people bank by phone. It has created a virtual infrastructure which McKinsey estimates can lower previous costs by as much as 90 per cent. Africa has become a substantial player in emerging-market banking.
The other Africa has not gone away. There have been, thanks largely to Gleneagles, great strides forward on education and health. A decade ago, only 58 per cent of African children went to primary school; today nearly 75 per cent do. Spending on health increased in real terms in 20 of the 29 poorest countries in 2009, the IMF reports. Where in 2002 only 50,000 Africans at the epicentre of the AIDS pandemic could get antiretrovirals today 3.7 million people are on them without payment.
Africa’s poverty rate has been declining by 1 per cent annually since the 1990s. Yet that only means that the proportion of people living on less than £1 a day has fallen from 57 per cent to 51 per cent of the population. That figure should fall to 38 per cent by 2015, according to the UN’s Global Monitoring Report, but that still leaves a huge number of individuals who endure a grim hunger on a daily basis.
There is still a lot for Africa’s leaders – and for Western governments and activists indignant at obscene want in a world of plenty – to do. And the challenges of climate change will make things harder.
To say that, however, is to take nothing away from the miracle that is slowly transforming Africa. A continent once branded a basket case now has a collective GDP of $1.6 trillion – roughly the same as that of Russia. It is on the verge of joining the Bric nations – Brazil, Russia, India and China – as a destination for investment. It is already attracting more in direct foreign investment than it does in aid.
Next year its economies, which maintained two per cent growth while everywhere else was in recession, are projected to grow by 4.5 percent – faster than the United States, Europe, Latin America and Central Asia.
“Africa’s future is up to Africans,” said President Barack Obama in a speech in Accra, Ghana last year. They no longer need to be told so by outsiders.
The Financial Times recently reported on 500 African companies that have been growing at more than 8 per cent a year for over a decade. Nigeria is aiming to be among the world’s top 20 economies by 2020. after the Asian Tigers there may well come the African Lions.
“Africa is rich and its stock is rising,” said Kofi Annan, the former UN secretary-general, and an African, last month.
Africa Rising, now there’s another story altogether.
Paul Vallely was co-author of the 2005 report of the Commission for Africa
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