Development Challenges for Africa in 2012
The World Bank, International Monetary Fund and Africa Development Bank estimate that Africa's economy grow at the rate of between 5.5 and 6 percent in 2012, outpacing projected anemic growth rates in Europe and North America. Africa's middle class now accounts for 34 percent of the continent's population, the highest recorded rate in the last 50 years. Despite the projected positive growth, Africa will continue to face significant development challenges in 2012. Below is a review of 10 of those challenges.
Possible spread of Arab Spring uprisings to Sub-Sahara Africa
Libya, Egypt and Tunisia, three powerful countries in North Africa, are now managing the aftermath of a massive youth-inspired uprising that swept away autocratic governments. Algeria and Morocco remain at the crosshairs of a potential 2012 uprising, despite ongoing reform efforts. However, the big story in 2012 may the spread of youth-inspired revolutions to Sub-Sahara Africa. Virtually all countries in Sub-Sahara Africa have a youth-population bulge, with individuals under 30 years of age accounting for the largest age group. Many of these young African men and women are university educated; unemployed or underemployed; and cut off from the mainstream political, economic and cultural life of their societies. Like their counterparts in North Africa and the Middle East, these young men and women use social media to connect with each other. Countries awaiting game changing elections in 2012, such as Kenya and Zimbabwe, are particular ripe for demonstrations. Multiple African countries operating de facto one-party "democracies" are also exposed.
Diversification and integration into the global economy
Africa's projected economic growth in 2012 relies significantly on export of unprocessed or barely processed raw materials and minerals. This trend is unsustainable in the long term, as raw materials and unprocessed minerals remain at the mercy of global price fluctuations and economic cartels. A joint 2011 report on Africa's competitiveness by the Africa Development Bank and the World Bank concluded that, despite Africa weathering admirably the global financial crisis, the continent's economy remains largely dislocated from the global economy. Despite representing more than 10 percent of the global economy, African accounts for 2 percent of global economic output and less than 1 percent of global trade.
The Africa Development Bank estimates that about 100,000 Africans, less than 1 percent of the entire population, control 60 percent of the continent's GDP. Some countries in Africa have unsustainable numbers of their citizens living in poverty. Up to 100 million of a possible 160 million Nigerians live in poverty. Kenya, South Africa, Ethiopia and the Democratic Republic of Congo—countries with large populations—have similarly high numbers living in poverty. Comprehensive social-protection programs for citizens in need remain rare in Africa.
Feeding the people
Despite sitting on approximately 60 percent of global yet-to-be cultivated arable land, as noted by the McKinsey Global Institute, food prices are high in Africa. Poor families struggle to feed their children and dependants. Barriers to bumper agricultural harvest, distribution and export remain entrenched in the continent. These barriers include tepid support for small farmers by the public sector, constant changes in agricultural policies, shortage of storage facilities, inadequate distribution networks and poor export incentives.
Restricted movement of people, goods and services
The quest for an African renaissance will remain a mirage as long as African leaders tolerate a situation whereby it is easier for a citizen of the United Kingdom, France or the United States to move freely through Africa than for an African to move from one African country to another. African leaders at the next African Union meeting later this month need to take firm, enforceable decisions on freer movement of Africans, goods and services throughout the continent. Promoting trade between African nations and facilitating free movement of capital across national boundaries is critical to long-term business development. In the short and medium term, African leaders should work closely with African business leaders to expand opportunities for faster air, land, sea and inland-river travels in Africa.
African Union Commission
The 2011 Arab uprising and the electoral quagmire in the Ivory Coast, where two presidents co-existed in the same country for more than six months, exposed the inability of the African Union Commission to respond to the yearnings of ordinary Africans. The Commission remained essentially a bystander in some of the momentous political earthquakes in the continent in the last 50 years. This year is crucial for African leaders to comprehensively reform the African Union Commission to become a dynamic, flexible and people-oriented 21st-century organization.
Troika of African institutions
The African Union Commission (AUC), the African Development Bank (AfDB) and the United Nations Economic Commission for Africa (UNECA), despite operating a small coordinating unit, have yet to become a joint, well-oiled, indispensable policy-and-implementation vehicle for Africa's development. In the envisaged troika, the AUC provides political legitimacy; the AfDB comes to the table with a hefty financial and intellectual muscle; and the UNECA provides extensive expertise in policy development and partnership building.
African people continue to grapple with gyrating national economic policies, corruption and weak national institutions. Problems with the rule of law abound in the continent. Gender inequities persist in many countries. Dearth of infrastructure remains a major problem, even for basic essentials such as access to clean water and rudimentary sanitation. Good health remains at a premium. Education remains tenuous at primary, secondary and university levels due to poor funding, staff shortages and inadequate facilities. Regular electricity and durable road/air/sea transportation networks appear unattainable in parts of Africa. Tourism, a potentially huge foreign-exchange earner remains underutilized. The United Nations World Tourism Organization estimates that up to 50 million tourists will visit Africa in 2012. Tourism in 2010 may have earned Africa at least $44 billion, according to the Africa Travel Association. Also, Africa's slow response to global climate change issues is precluding the continent from taking advantage of the potentials of green jobs economic development.
The AfDB estimates that Africa's export to BRIC countries (Brazil, Russia, India and China) in 2009 accounted for 32.4 percent of all exports, up from 21.7 percent in 2000. China's investment in Africa in 2010 topped $100 billion, up from just over $700 million in 1992, according the Guardian. In 2010, India invested more than $40 billion in Africa. Brazil invested at least $10 billion in 2010. However, most of these incoming investments are focused on obtaining raw materials and minerals to fuel economic expansion at home. In addition, most of the exports from Africa are raw materials and minerals. African leaders need to work closely with the BRICs to establish strong collaborative economic arrangements that help Africa grow its manufacturing base, create more jobs in the continent, and provide technical academic and training opportunities for young Africans.
Contingency plan for malaise in the West
In the immediate future, Europe will be primarily focused on tackling its economic and political problems. The United States will be preoccupied with a stubborn economic malaise. Canada will seek to better manage its anemic economic growth. Foreign assistance from Western nations will decline in the next few years. The Africa Development Bank estimates that a GDP drop of 1 percent in Europe leads to a 10 percent decrease in export earnings for Africa. African leaders have yet to visibly plan accordingly. In particular, from the ashes of the ongoing problems in Europe and North America, new leaders will likely emerge in the next decade focused primarily on domestic issues for political survival. Slowly but steadily, the imperatives of international development assistance may change irreversibly as rich Western nations hunker down to deal with economic crises at home.
In addition to the significant challenges that Africa faces in 2012, African leaders also have unique opportunities to set the continent on course to long-term economic growth by addressing the building blocks of global competitiveness and economic growth. African leaders can also take advantage of the ongoing global financial crisis to work with old and new economic partners and lay the foundation of a stable, prosperous continent anchored on democracy, rule of law, and sound, people-oriented macroeconomic policies.
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