Sub-Saharan Africa has attracted a growing wave of media attention over the last two years, and with this attention, an inaccurate narrative has formed that has influenced discourse.
Often, an ordinary description of recent events is as follows: Because of resource constraints, emerging economies are providing infrastructure to African nations in return for natural resources, which is driving the growth we currently see on the continent. This is leading to the re-establishment of neocolonialism in Africa, driven by China, as well as by other emerging economies and Western powers. In addition, because natural resources are often controlled by regional kleptocrats and strongmen, any growth that accumulates often never reaches the A
frican people, leading to an increase in social inequality. Some of these concerns will be briefly addressed.
Most importantly, what exists is a mistaken conception that most of African growth is being driven by bureaucrat-managed natural resource exports. According to a recent McKinsey Global Institute report, “natural resources directly accounted for just 24 percent of the continent’s GDP growth from 2000 through 2008.” Furthermore, this conception of African growth will likely become more inaccurate over the coming years.
In particular, Africa’s critical market, in the present and the future, is agriculture. The McKinsey report states that agriculture comprises $280 billion in African GDP today, and is predicted to grow to $500 billion by 2020, and $880 billion by 2030. Africa holds 60 percent of the world’s uncultivated arable land, encouraging investment in countries like Nigeria, a country that’s predicted to be the world’s leading producer of cocoa within 10 years, according to Yaw Osei-Owusu, executive director of the Conservation Alliance (CA). This development has lead to a slew of investment from the developed world in regional agriculture, and the U.N. has noticed, leading the organization to draft new regulations on land acquisitions earlier this month.
Asked whether high levels of growth for African nations with agriculture-centered economies was sustainable over the coming years, Henry Ma, a former senior economist with the International Monetary Fund and a current NYU development economics professor, stated,
I think six percent [growth] would be sustainable, even if it’s agriculture-led. Thailand, for instance, achieved healthy sustained growth during the 1950s and 1960s based on steadily increasing agricultural productivity. In fact, given Africa’s land-labor ratio and physical resources, its initial comparative advantage almost surely lies in the agricultural sector.
Discussions with a wide range of individuals at the African Development Bank specifically regarding booming Nigeria have revealed a similar opinion, expressed by stating that agriculture is not only an area where Nigeria has a comparative advantage, but also one that can help ease the level of unemployment in the country. Higher employment will lead to inclusive growth, which in turn can lead to greater economic development.
Growth also is coming in sectors such as financial services and the telecom industry in Kenya, where, according to The Economist, 68 percent of adults use mobile banking services. While this rate is the highest in the world, it is not uncommon in sub-Saharan Africa, where even Somalia, recently often referred to as a “failed state,” maintains a mobile banking service industry utilized by 34 percent of their adult population.
Finally, if current migration patterns to metropolitan centers such as Lagos and Nairobi continue, the expansion of urban employment in services and manufacturing, separate from extractable resource industries, will only accelerate in the future. A recent U.N. report states that Africa’s urban population will increase from the current 414 million to over 1.2 billion by 2050, with a large portion of that increase occurring in Nigeria. As this occurs, the door is opened to the emergence of every kind of industry in sub-Saharan Africa, making the role that extractable resources play in local economies much smaller by comparison in the future.
Opportunities in finance, retail, agriculture, and telecoms all play a massive role in why outside investment in Africa is growing, and many of these industries employ individuals who historically have had the least opportunity to succeed (leading to the well-established recent emergence of the continent’s “consumer class”). To state that recent successes are due to exploitation of natural resources, trade enacted by local officials that is unfair to the populace they serve, and neocolonialism, all oversimplifies a development trend that is far more complex than is credited, and paints what is occurring in a negative light when there is more need than ever for the belief in the ability of individuals in Africa to create solutions and solve problems. Nations such as China and India are providing support, but the real story that journalists and Western on-lookers should be focusing on is the self-empowerment of local individuals who are finding ways to contribute to the development of their own economies, and to the wider world, in so many more ways than just exporting minerals and oil.