Africa on the road to recovery, says World Bank

Africa is on the road to economic recovery because of a growing and dynamic labour force in the cities, an improving technology base and a diversifying agricultural sector according to the World Bank.

Vice president Obiageli Ezekwesili told the inaugural Africa Singapore Business Forum held in Singapore on July 14 that “Africa is turning the corner... it is on the path of an economic rebound.”

But, Ms Ezekwesili said, “I believe that the continent is perhaps at about the same point now as where India was 20 years ago and where China was 30 years ago, just before their economic booms set in.”

Largest investor

Singapore was chosen for the conference as it is, among all Asean countries, the largest investor in Africa (in terms of cumulative FDI) with $3.5 billion invested across a broad range of industries.

The key reasons for Africa’s growth are urbanisation, an expanding labour force, and the rise of the middle-class consumer, the World Bank says.

In 1980, just 28 per cent of Africans lived in cities.

Today, 40 per cent of the continent’s one billion people do — a proportion roughly comparable to China’s and larger than India’s.

By 2030, that share is projected to rise to 50 per cent, and Africa’s top 18 cities will have a combined spending power of $1.3 trillion.

Meanwhile, Africa’s labour force is expanding, in contrast to what’s happening in much of the rest of the world.

The continent has more than 500 million people of working age.

By 2040, their number is projected to exceed 1.1 billion — more than in China or India — lifting GDP growth.

Second, the advent of ICT has been critical to the development of the economies in Africa and has become the source of more than $60 billion in private investments between 1998 and 2008.

This has not only helped to bridge the knowledge gap between Africa and rest of the world, but has also offered transformational opportunities by enabling access to finance; and enhancing the dynamism and efficiency of the markets.

Kenya’s case

The World Bank says that Kenya’s M-Pesa mobile phone network is one of the most successful examples, with $1.96 million transferred through M-Pesa each day.

Thirdly, the continent accounts for more than one-quarter of the world’s arable land.

And the fact that it only currently generates only 10 per cent of global agricultural output implies that there is huge potential for growth in a sector now expanding only moderately, at a rate of 2 to 5 percent a year.

Finally, we have tourism, which travel companies hope will boom as a result of this year’s World Cup.

This Business Forum, organised by International Enterprise Singapore and the Singapore Business Federation, comes at a time when there is increasing interest from Asian countries, beyond just China, in the myriad of opportunities opening up in Africa.

“Africa is the future of the global economy,” Ms Ezekwesili said.

Having reached $7.49 billion last year, Singapore-Africa trade still only represents 1.45 per cent of Singapore’s total trade volume. According to participants at the event, much work is needed to increase awareness of the huge potential that exists in many countries in Africa and to facilitate greater interaction between the regions.