Friday, 11 January 2013

Africa Rising: fact or fiction?

 CRITICS OF AFRICA's growing prosperity ask whether it is real arguing that it is exaggerated. Some critics say that the boom is a bubble that can burst at the slightest prick. African commentators on the other hand argue that Africa’s prosperity is understated, arguing that the impact of the informal sector, a key employment generator in Africa is underrated.

The critics point at the low level of industrialization as a pointer to under-development of Africa. There are some truths in the critics’ arguments. But their dissent seems to arise from the usual confusion between economic development and economic growth. No wonder they are used interchangeably because the both mean transition from one stage to another. The two terms sometimes generate the Chicken-egg sort of debate-which came first.

An hydro plant under construction in Uganda
However, the subject matter here is about Africa’s long economic boom. The truth is Africa is on the second decade of persistent economic growth, averaging 5.6 per cent a year. Experts, such as the World Bank project that in the next five years, the continent will be the fastest growing region in the world.  And according to the UN Economic Commission or Africa, UNECA, the continent is a potential economic growth pole of the world.

 A growth pole is a region whose economic growth causes other parts of the world to grow too.  Businessmen in Europe have bought this view and are positioning themselves to get a slice of the African action before the Chinese and other easterners take it all. Gotohttp://eaers.blogspot.com/2013/01/the-second-scramble-for-africa.html

So Africa has transformed itself from a “hopeless Case” to a potential growth pole.  Much of the  growth is Africa’s own doing supported by favorable commodity prices with the following positive results: per capita domestic revenue mobilization has risen to U$441 compared to Aid which has shrunk to $41 per capita. The continent is lifting an estimated 15 million people out of poverty a year. This means that so far an estimated 90 million have been lifted out of poverty. At this rate of growth, an estimated 120 million people will join the middle class by 2017.

But the critics are right in one respect-and this is a view shared by African experts. The continent right now depends on basic commodities to drive economic growth. That simply is not sustainable. Africa must diversify her economic base away from export of raw materials to exports of processed products. In addition it must delve into heavy and hi-Tec industries in order to produce most of her capital goods.
 
The newly found wealth is being invested in removing bottlenecks to industrialization- physical infrastructure, ICT and markets.  Every country in the continent has invested in   infrastructure- Roads, railways, Sea ports, electricity generation sources. In addition, the continent is breaking down the barriers of the past such as borders which frustrated growth in the continent.

A highway in Africa
Consequently, Africa is dotted with new highways connecting regions within countries and also connecting countries. It is ringed by 64,000KM of undersea fibre optic cables system and dots some 615,000KM of national backbones-all put in place in less than 10 years.
Investment in power generating sources such as hydro, wind and geothermal sources coupled with the frequent Oil and LNG discoveries in a variety of Africa countries will make the continent, energy secure and hence make it an manufacturing hub.

Keen African watchers aver that some Projects that were thought to be mere fantasies are now beginning to ok real. Among these projects is the proposed Equator Bridge, a high speed railway line linking the Port of Lamu on the Indian Ocean coast to Douala in the Pacific Coast. In between the project will include a segment called Lapsset linking the Port of Lamu in Kenya to Juba in South Sudan and Ethiopia.

Proposed Techno city in Kenya: Such project were
deemed pipe dreams just a few years back
The creation of trading blocks, have resulted in increase in intra - Africa trade which has risen from Nine per cent in 2008 to 11 per cent in 2011, says the UN economic report for Africa 2012.And these are exports of manufactured consumer goods. So vibrant is this market that Europe now ranks third as the leading export destination for African produce.  For example, inn east Africa, Uganda is the leading importer of Kenyan exports, having surpassed Europe and USA combined.
  Go to:http://eaers.blogspot.com/2012/05/uganda-is-kenyas-top-export-market-in.html

Buoyed by these results continent is working towards further integration in a bid to create even larger markets for African manufactures. For starters, the Common Market for East and Southern Africa, COMESA, and three other trading blocs will merge into one by 2017 creating a huge trading block of 650 million people. COMESA is a very large block bringing together some 15 countries in eastern and Northern Africa. This integration will lead into even further industrialization as demand for manufactured goods from the larger Free-market grows.

So is Africa rising? Yes because economic growth means that the continent is creating new wealth each year and when compounded, the effect is a good life for the society. Does Africa need to diversify? Yes. And it’s already on step towards that goal.

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