The McKinsey Global Institute recently published a study entitled “Lions on the Move: The Progress and Potential of African Economies” which brought some interesting facts and predictions for the future of economic development across the continent. The report’s findings were generally positive but noted that economic development is diverse throughout the continent and serious challenges pose significant threats to potential growth. Overall, the report explained that real GDP has risen by 4.9 percent per year between 2000 and 2008, more than twice the pace in the previous two decades and at one of the most rapid rates in the world.
The report argued that Africa’s accelerated grown was not solely a result of a resource boom, but rather “improved political and macroeconomic stability and microeconomic reforms.” The occurrence of violent conflicts has decreased overall, while stability has increased, creating better business climates and greater opportunity. Many African governments have also adopted progressive fiscal policies, lowering inflation, foreign debt and budget deficits, and thereby stimulating markets.
The future predictions of the report were generally positive, citing encouraging external and internal trends for the continent. Externally, the report cites “the global race for commodities, Africa’s increased access to international capital, and its ability to forge new types of economic partnerships with foreign investors” as the most promising developments. Internally, Africa’s labor force, urban populations and number of middle-class consumers are all on the rise. This leads for expectations that increased internal stability and demographic trends will place economic development on the continent in an upwards trajectory.
The report ends by asserting Africa’s increased importance in the global economy. More specifically, the sectors with the greatest growth potential are agriculture, natural resources, infrastructure and those that are consumer-facing. The report concludes with a word of advice: “Global executives and investors cannot afford to ignore the continent’s immense potential.”
MORE INFORMATION
The Full McKinsey Global Institute Report: http://www.mckinsey.com/mgi/publications/progress_and_potential_of_african_economies/pdfs/MGI_african_economies_full_report.pdf
McKinsey PodCast - Foreseeing the Potential Rise of Africa's Economic Lions: http://www.mckinsey.com/mgi/publications/assets/progress_and_potential_of_african_economies/index.asp
Overseas Development Institute Blog (many posts on African economies): http://blogs.odi.org.uk/blogs/main/default.aspx
New York Times Article “Report Optimistic on Africa Economies”: http://www.nytimes.com/2010/06/24/world/africa/24africa.html?_r=1
African Buisness News Video about the Role of the Private Sector in African Economic Development: http://www.youtube.com/watch?v=ejkG3JuE4s8
UNECA’s Economic Report on Africa 2010: http://www.uneca.org/era2010/
DISCUSSION QUESTIONS
1. Is African economic development inevitable? Or is it something that requires deliberate engineering?
2. Can Africa’s economic development be profitable, sustainable and responsible for all involved actors? How can African/American governments, people, and business work towards this?
3. What should the American government, businesses and individuals do to aid in the economic development of Africa? What should they be cautious of?
