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Africa  rising

Despite the climate, disease, illiteracy, ethnic strife, inept and corrupt government and a forecast from the IMF of spikes in global food and fuel prices, things in Africa are looking up. Seriously. Africa’s 48 sub-Saharan countries have been growing for the past five years at an overall annual rate of 5% or so. And Africa is relatively inured from the current financial turmoil in the West.  

The biggest cause of the upward mobility has been the mobile-phone revolution, which has had the greatest impact for the rural poor and traders. Banking systems are also modernising and mortgages are more readily offered to an emerging middle-class; the creation of national savings funds and the issuing of individual land titles are helping this sector grow. 

Natural resources have underpinned much of the success. Oil has been the backbone of a six-year economic boom in Angola and Nigeria, the latest country to join OPEC. Nigeria’s vast offshore reserves have lured billions in foreign investment from Western firms and state-run companies from China and others in the developing world.  

According to the IMF, while the recent global finance turbulence has reduced growth and demand for sub-Saharan Africa’s exports somewhat, interest in investing on the continent appears to continue, in part because rates of return in the region are high relative to those in mature markets, and because sub-Saharan Africa offers unique diversification opportunities. In particular, foreign direct investment (FDI) has continued to grow, increasingly benefiting non-oil producers. FDI is attracted, in part, by high non-oil commodity prices and opportunities to invest in services like telecommunications.  

In its 2008 world annual investment report, United Nations Conference on Trade and Development (Unctad) said FDI into developing countries reached their highest percentage ever, hitting 21%, or €395bn, last year. Investment in sub-Saharan Africa saw robust growth accounting for €42bn of total investment flows. A substantial and growing part of FDI inflows come from China, and increasingly also the Gulf countries.  

Meanwhile, exports are rising, partly due to the US dropping tariffs in 2000, while the Extractive Industries Transparency Initiative, a voluntary code that 20 African countries have adopted, has helped engender transparency regarding mineral exports from the continent.  

Even though the horrors of Robert Mugabe’s Zimbabwe and fighting in the Congo are fresh in our minds, political freedom is actually growing (unlike in Africa’s benefactors China and the Gulf States). Two-thirds of African countries now limit presidential terms – consequently at least 14 leaders have stepped down – and the notion of political accountability and choice is more widely accepted. The internet has helped engender democratic ideals and improve media  

Several economists are now murmuring that Africa’s latest upturn is not just another blip because of commodity prices, but the start of something real and sustainable.