Africa is Climbing the Prosperity Ladder but Some Rungs are Broken

Africa is a continent with six of the world’s ten fastest-growing economies, but can it overcome its major challenges?

Parked trucks wait in a 10km queue, to cross the Kenyan-Ugandan border from the town of Busia, Kenya November 14, 2020. Picture taken November 14, 2020. Baz Ratner/Reuters.

The narrative has been around for a little more than a decade: Africa is rising—and is still rising. The second-largest continent has some of the fastest-growing economies, a trend which began—and continues—long before the global financial crisis hit major economies. 

Africa weathered the storm of the 2008/09 global financial crisis, which debilitated even the most powerful economies. In 2011, two years after the crisis, figures showed six of the world’s ten fastest-growing economies were in Sub-Saharan Africa, with Angola leading the pack. China (in second position), Myanmar, Kazakhstan and Cambodia were the non-African countries on the list. All six Sub-Saharan countries had posted growth rates of around 8% over 10 years. At the time, forecasts from the International Monetary Fund (IMF) suggested Sub-Saharan Africa would grab seven of the top 10 places between 2011 and 2015.

That came to pass, and as recently as 2019, Sub-Saharan Africa still had the fastest-growing economies in the world. The coronavirus pandemic, which struck in December 2019 and is still wreaking havoc, will see growth slowing down, but statistics still suggest Sub-Saharan economies will continue to grow at an impressive rate. Though still battered by the pandemic—some countries are being bailed out by the IMF and the World Bank—the star performers remain Benin, Burkina Faso, Côte d’Ivoire, Ethiopia, Kenya, Mozambique, Niger, Rwanda, Senegal, South Sudan and Uganda. 

African economies can continue to outpace their non-African counterparts, and they have done so for years, which is why some people are saying that Africa is rising. But then you have conflict, poverty (which the fastest-growing economies have done little to eradicate), poor infrastructure, etc. These are the broken rungs on the prosperity ladder, which Africa is trying to climb.

The Natural Resources Advantage

The region’s impressive economic growth is coupled with tremendous potential. Sub-Saharan Africa is home to more than 30% of the world’s mineral reserves. The Democratic Republic of Congo (DRC) alone is estimated to possess $24 trillion of mineral resources. That is 10 times more than the GDP of Sub-Saharan countries combined. 

From Uganda to Nigeria to Angola to South Sudan, the geological lottery called oil has been won. Oil exports have provided billions of dollars in revenue for at least seven countries, although some are choking on debt to China, a key buyer of African oil, and multilateral lending institutions.

Then there is the demographic dividend. Africa is the youngest continent in the world. By 2040, says the IMF, it is projected to have the largest labour force—1 billion workers strong—more than China and India combined. The 1 billion-plus people, half of whom will be under 25 years old by 2050, according to the World Bank, speak to a diverse continent capable of providing the human and natural resources required to foster inclusive growth and eradicate poverty.

Free Trade Area

On January 1, 2021, Africa unveiled the African Continental Free Trade Area (AfCFTA), the continent’s most ambitious integration initiative and the blueprint for intra-Africa trade. 

An integral part of Agenda 2063, the African Union’s master plan for transforming Africa, the AfCFTA will not only set the stage for a market for goods and services but will also foster free movement of people and investments. 

It has been signed by 54 nations and ratified by 31—and promises to create one of the world’s biggest free-trade areas with a 1.2-billion-person market. 

The potential benefits will be amazing. Consider this: Nigeria imports flowers from Europe yet the leading flower exporter in Africa is Kenya. A functioning AfCFTA would see Nigeria buying flowers from Kenya and spending less as it seeks to eliminate tariffs and non-tariff barriers. Tariffs on 90% of goods will have to go within 10 years. More for the remaining 10% will be eliminated, but the phased implementation means real benefits will not be seen until 2035.

What is more, consumers will see prices reducing significantly. Tariffs have kept prices for a range of commodities much higher than they should be. A South African farmer, for example, exporting oranges to Kenya pays a 25% tariff, according to the African Trade Observatory. If Kenya removes the tariff, the price of those oranges can go down.

Democratic Rule

Away from trade, there has been commendable progress in governance where, for decades, Sub-Saharan Africa was the laughing stock, often falling victim to coup d’etats and other violent and unconstitutional changes of government. Sub-Saharan Africa has seen its number of democracies increase significantly over the years. 

In 2019, South Africa held its sixth election since 1994. In the same year, Malawi also held its sixth presidential election since it became a multiparty democracy in 1994. In Southern Africa, 15 of the 16 countries that form the regional bloc Southern African Development Community (SADC) hold regular elections and have changed leaders. (The exception is Swaziland, an absolute monarchy which changed its name to eSwatini in 2018.) 

Elections do not necessarily mean good governance, but many countries have set their governance on a firm democratic footing.

Central, East and West Africa are not any different. Out of 44 countries in Sub-Saharan Africa, only Eritrea, South Sudan and Sudan have not held proper elections.

The Challenge of Conflict and Political Instability

Some independent observers say that now is the take-off stage for the continent. It has got its feet firmly on the bottom rungs of the prosperity ladder and has started to climb. Sadly, there are still major challenges. In fact, sceptics would say that some rungs of the prosperity ladder are broken. Are they right?

To see how the road to prosperity is littered with hurdles, one must take a long and deep look at conflict in Africa. In East Africa and the Horn of Africa, for example, several countries are mired in conflict and have strained relations with each other. The DRC, despite its vast potential, has not seen peace since the overthrow of Mobutu Sese Seko, who seized power in 1965 and presided over a kleptocracy until his ouster in 1997. 

For decades, the country’s east has been a flashpoint, with a myriad of armed groups, some with foreign fighters, operating in South and North Kivu provinces, all vying for power and control of natural resources. Civilians have borne the brunt of the violence. But sometimes the victims are individuals working for foreign governments or international organisations.

In February 2020, the Italian ambassador to the DRC, Luca Attanasio, was shot dead by armed groups in the east. UN peacekeepers have also been killed, including experts investigating violence and sources of weapons used by groups involved in the conflict. The DRC is home to the United Nations’ largest peacekeeping operation, which began life in 1998, but the mission has not succeeded in restoring peace and security in the country. Africa accounts for the largest proportion of UN peacekeeping operations.

In the late 1990s, the conflict sucked in armies of six African countries, namely Angola, Burundi, Namibia, Rwanda, Uganda and Zimbabwe. Although troops from all six countries left decades ago, the DRC, 89 times bigger than Rwanda, is still being used as a base by armed groups seeking to attack neighbouring countries, such as Rwanda and Uganda.

Rwanda, the victim of the 1994 genocide, which saw the majority Hutus butchering the minority Tutsis, killing up to 800,000 people, has had to enter the DRC to flush out remnants of the FDLR, the Hutu militia it blames for the genocide. But the UN has also accused Rwanda of backing some of the rebel groups operating in the east. Rwanda has also battled armed groups in the DRC with links to Rwandan dissidents. 

A 2018 report by the UN Group of Experts on the DRC confirmed the presence of an armed group in the eastern Fizi and Uvira territories linked to Rwandan dissidents. It added that Burundi, Rwanda’s neighbour to the south, was arming the group named P5, also linked to Rwandan dissidents. Consequently, relations between Rwanda and Burundi, currently under EU sanctions over the 2015 deadly crackdown on protests, have been frosty.

Although efforts have been made to mend ties, Rwanda still provides sanctuary to individuals who tried to overthrow the Burundian government in 2015 and has been reluctant to hand them over to Burundi, insisting they should be relocated to foreign countries.

Rwanda is also at loggerheads with its northern neighbour, Uganda, which it accuses of arming groups bent on destabilising it. The border between the two countries, both members of the East African Community, a regional bloc, remains closed. And Paul Kagame, the Rwandan president, was the only head of state in East Africa who did not attend his Ugandan counterpart Yoweri Museveni’s inauguration in May.

Regional political instability has seen Uganda becoming home to more than 1.4 million refugees, mainly from South Sudan, which erupted in violence in 2013 and remains unstable; Burundi, which was rocked by violence in 2015 when former President Pierre Nkurunziza sidestepped term limits to extend his rule, sparking deadly riots; and the DRC, a playground of (foreign) armed groups.

 The DRC shares a border with the Central African Republic (CAR), which is grappling with a major conflict and has troops from the UN and its former colonial master, France, on its soil trying to restore peace and security with limited success.

To the CAR’s east is South Sudan, which has been trying, in a series of talks, to end the conflict to no avail. A power-sharing deal was signed in 2018, but insecurity in the south has persisted and has seen Ugandans getting killed by South Sudanese soldiers.

In November 2020, Ethiopia, South Sudan’s neighbour to the east, launched an offensive on the Tigray People’s Liberation Front (TPLF) in the country’s north, sparking a conflict that has not only killed thousands but has also sucked in neighbouring Eritrea and led to the imposition of sanctions by the US. The conflict started when Ethiopia’s Prime Minister, Abiy Ahmed, was already embroiled in a high-profile standoff with Sudan and Egypt over a hydro power dam his country is building on the Blue Nile.

Turn to Somalia, Ethiopia’s eastern neighbour, and you will see a country still far from being peaceful even though Burundi, Ethiopia, Kenya, Djibouti and Uganda have provided peacekeeping troops for the African Union Mission in Somalia (AMISOM), which has been working since 2007 to rein in the militant group Al-Shabab and restore peace and security.

To the north of the CAR lies Chad, which along with Niger, Mali, Mauritania and Burkina Faso (all share borders), forms a part of Africa called the Sahel—currently a by-word for an Islamist insurgency that has stymied a multinational effort to stamp it out. There has been deadly violence in Burkina Faso and Mali, which has seen at least three coups since 2012, two of which in the past nine months. French President Emmanuel Macroni has threatened to withdraw his country’s 5100-strong force if the coup plotters gang up with the Islamic State and al-Qaeda.

Given the seriousness of conflict and political instability, it is hard to see how the AfCFTA will come to fruition. Countries such as Burkina Faso, Ethiopia and South Sudan may have some of the fastest-growing economies, but how can they make the most of this trade deal when they and their neighbours are reeling from violence?

Poverty and Infrastructure 

Sub-Saharan African nations have additional daunting challenges. The most pressing challenge here is that poverty is still rampant. Thirty-three out of 48 least developed countries are found in Africa. By 2030, the World Bank says, nearly nine of every 10 people in extreme poverty will be living in Sub-Saharan Africa. Seven of the 10 most unequal countries in the world, the bank says, are in Africa, most of them in Southern Africa.

Infrastructure remains woefully inadequate. According to the IMF, over the past three decades, per capita output of electricity in Sub-Saharan Africa remained virtually flat. In cities such as Kampala, Lagos (the commercial capital of Africa’s largest economy, Nigeria) and Nairobi (the capital of East Africa’s largest economy, Kenya), power outages lasting for hours are common. Only 16% of all roads in Sub-Saharan Africa are paved, compared with 58% in South Asia. These shortfalls, says the IMF, represent huge costs to businesses—and to people.

For Africa to fix these problems—and increase, for example, its proportion of global trade from the dismal 2.6% to something decent—it is going to need to work tremendously hard. The optimism and narrative that it is rising (among Africans themselves) will continue, but Africa needs to put an end to conflict and political instability to pave the way for the AfCFTA initiative to succeed.