Saturday, February 02, 2019 08:45 PM / By Africa Growth Initiative, Brookings Institution
As 2019 begins, reasons for optimism about Africa’s ability to capitalize on the progress achieved in recent years and to advance the region’s economic potential abound. The 2014 terms of trade shock from the commodities slump that hit many countries in the region hard has largely dissipated. Across the continent, economic growth is projected to expand at the fastest pace in five years. Nearly half of the world’s fastest growing economies this year will be African. Business environments are improving, thanks to widespread reform efforts, and Africa’s leadership and institutions are more assertive in advancing the continent’s agenda.
Under the leadership of the African Union, regional integration is advancing, specifically through the African Continental Free Trade Agreement (AfCFTA) and through policies in support of the free movement of Africans across the continent, bucking global protectionist trends. Unprecedented dynamism across the continent is creating trade and investment opportunities and is drawing interest from an increasingly diverse group of external partners. Democracy is consolidating, although the prevalence of tensions and, in some countries, violence during elections point to areas for improvement. The demographic tidal wave looms closer, and job creation has not yet been able to catch up. Finally, despite continued progress on governance, more efforts are needed to eradicate corruption and to elevate the voice of women and young people in decision making.
I am hopeful that Africa will rise to these challenges in 2019 through renewed determination and a great sense of urgency. Foresight Africa 2019 highlights the triumphs of the past years as well as strategies from our experts to tackle the remaining obstacles.
In Chapter 1, authors examine how good governance, elections, and institutions of democracy are advancing across countries. Much of Africa’s economic development depends on governance that serves the interest of ordinary citizens, advances democratic values, and quashes corruption. The wide age gap between leaders and populations, and the underrepresentation of women and young people underscore the need for inclusivity. In 2019, good governance with these goals in mind offers a path forward. Upcoming elections in countries like Nigeria and South Africa could strengthen democracy and governance systems, but only if inclusive and supported by civil society and the rule of law.
These elections could pave the way for reforms to revive Africa’s two largest economies. In Chapter 2, the leadership of South Africa and Nigeria share their respective approaches to achieving this feat. One key risk threatening the regional outlook is what many fear is a looming debt crisis. To sustain growth, many governments must balance between mobilizing financial resources for economic development and controlling indebtedness. The authors implore governments to update debt management frameworks and strategies accordingly and strengthen governance around tax revenue collection.
Africa’s working age population is growing rapidly, with estimations that the number of young people entering the region’s workforce will exceed that of the rest of the world by 2050. While this youth bulge is a potential economic boon, a stagnant industrial sector and the increasing adoption of labor-saving technologies in production present a massive hurdle to overcome before dividends can be realized. In Chapter 3, authors offer strategies for countries to secure large-scale employment opportunities for youth and for realizing the demographic dividend.
Although economic growth prospects bring hope, extreme poverty and state fragility prevails in parts of Africa. This year, the World Data Lab estimates that 70percent of the world’s poor will live in Africa—mostly in Nigeria and the Democratic Republic of Congo. By 2030, 13 African countries will see an increase in the number of those living in extreme poverty. Based on these forecasts, poverty will continue to strain government institutions and threaten stability. Climate change will exacerbate the challenge, with disproportionate effects on the Sahel and other unstable areas. In Chapter 4, authors argue for institutional changes and new approaches to eliminate poverty and fragility so no country is left behind. One recurring recommendation is for solutions anchored in private sector development.
Though progress toward ending poverty remains frustratingly slow, massive opportunities exist for the private sector in African markets, and if seized wisely, could help many climb the income ladder toward greater prosperity. The middle class is expanding, with businesses jumping at the chance to meet their consumption needs. Africa’s population is young, fast growing, and increasingly urbanized, with rapid technology adoption making the continent fertile for innovation. Economic dynamism in many parts of the region is generating business opportunities in infrastructure, housing, health, financial services, and other areas. In Chapter 5, authors document why Africa is the world’s next big growth market and recommend strategies for successfully navigating the region’s business landscape.
On the trade and investment front, the AfCFTA stands to knock down barriers to intra-continental trade and investment, thus accelerating industrialization, and facilitating economic diversification and inclusion. Globally, Africa continues to attract interest from the likes of the U.S. and China. In Chapter 6, authors assess the potential of the AfCFTA and look at the implications of the new free trade agreement.
This edition of Foresight Africa illuminates the priorities of the continent in the coming year, with recommendations for tackling the challenges that lie ahead. Africa is brimming with promise, and, in some places, peril. With its array of contributions, this year’s edition reflects both the diversity of the continent and the common threads that bind it together. With that aim, we set out to promote and inform a dialogue that will generate sound practical strategies for achieving shared prosperity across the continent.
This compendium is the culmination of the in-depth, quality work we strive to provide to African, international, and U.S. policy communities throughout the year.
We look forward to further exploring Africa’s priorities through high-profile events at Brookings and across the continent, informed by our research, commentary, engagement, and action.
Many thanks to you, our donors, and the leadership of the Brookings Institution for the continued support and commitment to the Africa Growth Initiative.