Six of the world’s fastest growing economies are in sub-Saharan Africa among them Uganda and Ethiopia, according to UK-based economic experts Ernst & Young.
According to a new report by the consultancy, growth in sub-Saharan Africa from 2003-2010 averaged 5.7 percent and is expected to have been over five per cent in 2010 and 2011.
This makes Africa the second fastest-growing region in the world after Asia.
The report says that while economic growth has failed to address the gap between rich and poor in Africa, with only one in four people having access to electricity, there are indications that things are changing.
“Africa’s long standing problems are still evident in many countries — food shortages, high inflation, poverty, corruption and autocracy,” the report says.
“But democracy is making strides across the continent and there has been a steady improvement in economic policies.
“Many African countries have also passed significant economic and legislative reforms, making them much more business-friendly in order to attract foreign direct investment.”
There is also a growing middle class in Africa estimated at around 313 million people in 2010, 34 per cent of the continent’s population, according to the African Development Bank.
Consultants Merrill Lynch and Capgemini say there are now more than 100,000 Africans with at least $1 million to invest.
“This period of growth is almost unprecedented for Africa,” the Ernst & Young report says.
However, it also notes that sub-Saharan Africa “has continued to suffer from some of its traditional problems, including food shortages resulting from adverse weather conditions in a number of countries and high inflation, driven by higher food and fuel prices.”
There are also concerns at the lack of intra-Africa trade — which still only makes up 10 per cent of total exports — and adequate investment in education and health.
“Investment in education has been patchy at best and, with a few exceptions, education and skill levels remain low,” the report says.
“This will deter investors that need a skilled local labour force. In addition, many African countries need to improve the ease of doing business.”
However, the report does acknowledge that many African countries have also passed “significant economic and legislative reforms, making them much more business-friendly,” a theme that was taken up by former UK prime minister, Tony Blair in a speech in London recently.
“There is a new generation of leaders in politics, business and civic society (in Africa),” Blair said.
“(These people) don’t simply have a new competence about how they approach their tasks, but a new attitude, a new way of thinking, a new way of looking at their own situation.”
Blair was also critical of the way in which people in the West have criticised China for its involvement in the continent.
“The fact is that China has both the capital and the capacity to get things done. This is especially true in infrastructure,” he said.
Nevertheless, a report in TheGuardian newspaper expressed concern that there was a danger of Africa “becoming too dependent on exporting mineral resources and not investing in manufacturing.”
The African Development Bank is however confident that the continent is starting to diversify, pointing to Nigeria as a case study.
The Guardian also however cautioned that Africa remains the world’s poorest continent and said many were concerned that economic growth may deepen, rather than reduce the gap between rich and poor.