Africa, over the past 20 years, has shown tremendous improvement and development. Looking at different parts of Africa such as Accra, Addis Ababa and Angola, the rise of the continent cannot be deniable. Shopping malls, high-rise buildings and an urban middle class are now familiar features of Africa’s cities. Following two decades of unprecedented economic growth, “Africa Can” and “Africa’s 21st Century” have become the defining narratives for the region.
To be quite certain of this growth, many of Africa’s 50+ individual economies face serious challenges such as poverty, disease and increased infant mortality. Despite these issues, the continents collective Gross Domestic Product (GDP) was recorded at $1,6 trillion in back in 2008 and is now sitting at above $2 trillion. This growth has now made the continent fit on the same scale as Brazil and Russia and Africa is described as one of the most rapidly growing economic regions. The reason for this incredible development on the continent can be attributed to the increase in prices for oil, minerals and other precious commodities that have helped increase the GDP since 2008. However, research conducted at the McKinsey Global Institute (MGI) shows that resources accounted for only about a third of the newfound growth. The rest resulted from internal structural changes that have spurred the broader domestic economy. Wars, natural disasters, or poor government policies could halt or even reverse these gains in any individual country. But in the long term, internal and external trends indicate that Africa’s economic prospects are strong. Furthermore, Africa’s growth story is due to natural resources as well as other government finances which have generated about 32% of Africa’s GDP growth. The other part of the development came from other sectors such as wholesale and retail, transportation, telecommunications including manufacturing.
Despite this progress, which has contributed to the levels of poverty decreasing from 57% to 43% - only 27 of the 54 countries had experienced this decrease. This then means that even though poverty has arguably decreased, there are many more poor people. In addition, inequality has also been increasing about the same number of countries in which it is falling. Another disturbing challenge constraining Africa from optimum success is low human development. For instance the levels of achievement remain low, and worrisomely, the rate of progress is levelling off -- especially the lack of progress in educational achievement which calls for serious attention. More than two out of five adults are still unable to read or write. For example, a percentage of sixth graders in Malawi and Zambia cannot read for meaning, providing just one example of the school quality challenge.
Global economic relations
Africa is now more than just a continent of resources. Due to the demand for commodities from the world’s fastest emerging economies like Asia and the Middle East, Africa now conducts half of its trade with developing economic regions (“South–South” exchanges). As a result of this geographic shift in relations has given rise to new forms in which governments strike multiple long-term deals at once. China, for example, has bid for access to ten million tons of copper and two million tons of cobalt in the Democratic Republic of the Congo in exchange for a $6 billion package of infrastructure investments including mine improvements, roads, rail, hospitals, and schools. India, Brazil, and Middle East economies are also forging new broad-based investment partnerships in Africa.
Economists have debated over the last decade that Africa’s long-term growth will reflect the interrelated social and demographic changes, creating new domestic engines of growth. Key among these will be urbanization, an expanding labour force, and the rise of the middle-class African consumer. Therefore this growing number in urbanisation has boosted productivity (which increases when workers move from agricultural work into urban jobs), demand, and investment. However at the same time, this urban expansion has the potential of breeding misery and conflict because of the slums that result from it.
The labour force on the other hand continues to expand – the continent has more than 500 million people who are able to work, research has thus estimated that by 2040 this number will exceed 1.1 billion people. This will surpass China and India, resulting in a higher GDP growth rate.