What is up with Africa?

by John Brian Shannon

Yesterday, the UNDP opined on Twitter that “Africa is on the move.”

Today, on Project Syndicate David Fine wrote “Inside Africa’s Consumer Revolution” where he pointed out some interesting facts about that continent.

“Nowadays, Africa’s economic potential – and the business opportunities that go with it – is widely acknowledged. Poverty and unemployment are still more widespread than in other emerging markets, but accelerating growth since 2000 has made Africa the world’s second-fastest-growing region (after emerging Asia and equal to the Middle East).”

CAR101212B-1 Steady pace of African growth 2012 and 2013

The above chart is from the IMF which is noted for it’s careful and qualified assessments of developing nations and regions. Here is a small excerpt from their authoritative October report:

Regional Economic Outlook: Sub-Saharan Africa Maintaining Growth in an Uncertain World

”Economic conditions in sub-Saharan Africa have remained generally robust despite a sluggish global economy. The near-term outlook for the region remains broadly positive, and growth is projected at 5¼ percent a year in 2012–13. Most low-income countries are projected to continue to grow strongly, supported by domestic demand, including from investment. The outlook is less favorable for many of the middle-income countries, especially South Africa, that are more closely linked to European markets and thus experience a more noticeable drag from the external environment. The main risks to the outlook are an intensification of financial stresses in the euro zone and a sharp fiscal adjustment in the US–the so called fiscal cliff.”

Mind you, not everything is trending upwards — some things are going downhill there too. Way down. Here is a nice chart to underscore that trend.

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Figure 1: African Debt and Debt Service Source: International Monetary Fund, World Economic Outlook Database, October 2009.

The World Bank agrees with the optimistic view of things and has noted this progress in their twice-yearly report on Africa — Africa’s Pulse. Here is a short excerpt from that report:

In its wide-ranging analysis of new developments in Africa, the new report notes that after ten years of high growth, an increasing number of countries are moving into ‘middle- income’ status, defined by the World Bank as those countries achieving more than $1,000 per capita income.

Of Africa’s 48 countries, 22 states with a combined population of 400 million people have officially achieved middle-income status; while another 10 countries representing another 200 million people today would reach middle-income status by 2025 if current growth trends continue or with some modest growth and stabilization.

On October 15, 2012 Jean-Michel Severino and Emilie Debled wrote about Africa’s huge growth opportunity in their great Project Syndicate piece, “Africa’s Big Boom

“Africa is undergoing a period of unprecedented economic growth. According to The Economist, six of the ten fastest-growing countries in 2011 were in Africa. Average external debt on the continent has fallen from 63% of GDP in 2000 to 22.2% this year, while average inflation now stands at 8%, down from 15% in 2000. This positive trend is likely to persist, given that it is based on structural geographic and demographic factors, such as rising exports, improved trade conditions, and steadily increasing domestic consumption.”

The continent we call Africa, once an economic backwater is rapidly-transforming into an important partner of the world’s major economies, by providing much-needed raw resources and increasingly, agriculture is playing an important role there.

A major UN paper dated June 2011 remarked on the recent optimism felt by many world leaders, “The African Moment: On the Brink of a Development Breakthrough

In the words of UN Secretary General Ban ki-Moon (2011:1) at the Summit of the African Union in January 2011: ‘Africa is on the move. The new narrative for Africa is a story of growth.’ And as Donald Kaberuka (2010:4), President of the African Development Bank, noted at the opening of the 2010 African Economic Conference, there is now ‘broad agreement that an unusually strong momentum has built up in the African economies over the last decade’. This change in perception does not mean that the immense challenges faced by the continent  are being glossed over, but the Afro-pessimism of the 1990’s has clearly been replaced by a much more realistic and confident outlook. African people seem to share this view.

The answer to the question What’s up with Africa? Everything you want in a growing continent.

Please take the time to read the seminal articles that I have cited in this post. They will enrich your understanding of this coming-of-age continent.

JOHN BRIAN SHANNON

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Greek and French Voters Overturn Austerity

By John Brian Shannon

Greek and French voters have overturned austerity in Europe, but voters have really overturned a change to sustainable economic policies.

The structural changes there have caused some level of financial problems for individuals and families.

But the alternative was to let the outrageous, drunken-sailor spending continue until there was nothing left of the economies in question. Eventually that would have caused a real pan-European depression  – instead of five years of austerity in only those countries foolish enough to have overspent themselves for decades.

It is the obscene deficits which have run year after year (and have piled up into unaffordable debt) that are responsible for the lowered credit ratings in those countries and the poor economic performances found only in those particular European countries, it must be said. I note that the rest of Europe is doing quite well – even accounting for the combined drag and multi-billion euro bailouts of Greece, Portugal and Spain.

Blaming austerity, is like blaming the doctor who is now fixing your broken arm for the original accident — as you drunkenly stumbled out of the casino! The Greek economy was a basket-case long before austerity ever arrived and it will be a basket-case now that austerity is leaving Greece.

Greek and French citizens have voted for the former glory days of unrestrained spending with lots of toys and goodies from their governments – and to hell with paying for it!

“Let the EU bail us out forever, for tonight, we drink like drunken sailors!” And, if you think that isn’t being hollered at full volume at many thousands of cantina’s and spilling out on to the streets of Greece tonight, you’ve never been there!

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