An African growth analysis: it’s necessary a more inclusive development model
The African continent, according to data provided by the World Bank, is the only continent that has maintained a growth rate solidly positive in recent years and for which we exclude a turnaround in 2015. The growth in sub Saharan Africa amounted to 4.9% this year. Excluding South Africa, which has a more moderate growth, the rest of the continent improves quickly; some countries such as Ethiopia and Zambia have growth rates of 7%, among the highest in the world. According to the World Bank, seven of the ten best performing economies are African and the prospects of the next Outlook are very positive: Africa will continue to grow at 5.5% in 2015.
It should be emphasized that in recent years have been discovered important deposits of natural gas and oil in Mozambique and Tanzania were discovered gas reserves in Kenya and Uganda oil. On the African continent has been implemented a monetary policy to support growth and control inflation, which combines increased investment and that of consumption. A virtuous circle, thanks to local investments and greater confidence, has led to rising incomes.
The World Bank has compiled a list of countries that will record economic growth increased between 2013 and 2015. The presence of many African states (in the World Bank list) is a signal about the involvement of the entire continent in the growth process.
In the ranking ranks second Iraq (despite the instability that reigns after the end of the conflict, it is estimated that the flow of foreign investments along the exploitation of resources, will grow this country of 12.23% between 2013-2015); fourth Sierra Leone (mainly agricultural, but also rich in minerals, especially diamonds. It is expected an increase of 9.54%).
Mozambique and Ghana are in sixth and seventh place. In fact, despite the huge gap between the few rich and many poor, Mozambique especially rich deposits of aluminium, is likely to grow dell’8, 73%, while for Ghana is expected to grow 8.15% thanks oil, gold and cocoa as producer.
Followed in ninth place with a +8, 08% Angola (economy strong and consolidated that attracts even immigrants mainly from the former mother country Portugal and Cuba); tenth Ethiopia (one of the poorest countries in Africa but constant growth of GDP in 2012 and will continue to the extent of 7.96%); to ‘eleventh is the Democratic Republic of the Congo, despite political instability in the Central African country will record economic growth 7.92%.
Although Rwanda is among the poorest countries but which have high economic growth. It is believed to have a growth in GDP of 7.88%, and then, in the list compiled by the World Bank is in twelfth place, followed by Gambia benefiting mainly emigrants’ remittances and the growing tourism development and is expected to grow 7 , 85%.
Zambia, after the privatization of the copper mines in the 90, this African country has grown steadily, even if it has to come to terms with the changes in the price of the metal on the market. It is believed that between 2013-2015 Zambia grow by 7.46% and is in seventeenth place in the rankings of the World Bank. The number eighteen is Tanzania: another country by enviable performance but still one of the poorest countries (in terms of the level of income per capita). However, Tanzania has huge reserve of gold, diamonds and iron. Therefore it is believed that Tanzania will grow by 7.43%.
Finally in twentieth place there Uganda: possesses reserves of oil and minerals, and is likely to grow 7.29%.
The explanation of the African growth, therefore, lies in the combination of several factors, such as the discovery of new deposits of raw materials (supported by the global demand for them), the demographic dynamism and an expanding middle class.
However, there are some gaps in the undoubted growth model that is experiencing the African continent. Africa, in fact, would need to grow stronger, inclusive and sustainable.
Most African economies, despite starts from very low income levels, progressing with a growth rate lower than the 10% recorded by China in the last three decades. The savings rates are far lower than those of the Asian countries at the time of their economic take-off and many local economies still depend greatly from external financial flows.
According to data provided by the World Bank, the countries with the fastest growth are also those with the least inclusive growth. Kenya, Ghana, Tanzania and Ethiopia are celebrated as examples of the new economic miracle, but growth less inclusive of all.
Furthermore, the growth of Africa does not generate a sufficient number of jobs. On the eve of the Tunisian revolution of January 2011, all economic indicators were positive and no observer had sensed the frustration of a people yearning for freedom and especially young graduates without work, excluded from growth. Across the continent, fewer than 10% of young people have a dignified job, while others feed the so-called informal sector, or work without pay in the family.
Even the African Union said that the current growth is not enough: “Africa needs an economic and social transformation. This will not arise automatically by the current economic growth. You will need to implement strategies and public policies to stimulate economic diversification, strengthen competitiveness and promote activities that create jobs and value in the area. Governments are progressively implementing these strategies, within which the vast natural resources of the continent will have to play an essential role. ”
In addition, Africa invests too little in the exploration of mineral resources. The exploitation of these resources and the profits it generates should be particularly difficult because of the small size and fragmentation of the internal markets of many countries of the continent.
Africa continues to be primarily a supplier of raw materials, which are to be valued in Asia or in the OECD countries, but in spite of the increase in trade (more than quadrupled in ten years) African participation in world trade of intermediate goods (indicator of the ability of a country to perceive the benefits of international trade and global value chains) is slightly more than 2%.
Finally, the emerging economic wealth is not directly proportionate to the growth of the welfare of the population. Problematic and long is, in fact, the creation of stable and effective institutions capable of guaranteeing peace and prosperity. The supply of public services (including health, education, security, justice) is clearly insufficient, as demonstrated by the inability of the countries affected by the health crisis to cope Ebola.
Africa must make huge investments in infrastructure, which also cover the rural areas, where poverty is more concentrated, invest in quality education (able to create a middle class) and diversify their investments in order to create an economy more stable and less tied to fluctuations in commodity prices.
It would be a mistake attributed these shortcomings to the effects of poor governance and embezzlement. Taxes collected by the African states, to finance the public services, very often come mainly from royalties paid by multinational companies operating in the energy, mining and commercial agriculture. As for the tax treatment of local companies, it tends too often to penalize PME regular. While too high a number of large transactions “informal” engage in tax evasion. All these factors are not a sound basis for the social contract between state and citizens. The economic transformation has to contribute to the wealth of businesses, workers and consumers in Africa to enable them to become, thanks to a fair taxation and incisive public policies, the first actors of their welfare.
However, the prospects are not so bleak: the African Development Bank predicts that by 2030 the cost of the middle class of the continent will be 2200 billion dollars (today is $ 680 billion). According to McKinsey and Co., Africa already has a middle class numerically superior to India, which is also the most populous. To a similar conclusion comes the report “Africa Turn”, prepared by the investment bank Goldman Sachs.