Tuesday, April 24, 2012

Celebratory News for Africa

Staff Writer

The World Bank and the International Monetary Fund (IMF) have presented some amazing news for Africa. According to a recently released report, Africa Pulse, Africa will experience a 5.4 percent growth rate this year, when you remove South Africa’s sluggish economy from the calculation. Reports of good percentage growth for Africa’s economy have been arriving for some time; this is neither the first time nor, hopefully, the last. But the report every African would appreciate seeing is how these strong growth rates translate into competent civil service; decent roads; factories that produce durable goods; increased access to drinking water; and African economies producing a wider array of value-added goods. It has become clear, over the numerous years that strong growth numbers have been reported for the continent, that they stubbornly do not translate into a noticeable change in the plight of everyday Africans. The report’s accompanying statement from Obiageli ‘Oby’ Ezekwesili, the World Bank’s vice president for Africa, and a former Nigerian minister of mineral resources, expresses this concern succinctly:

“In view of the turbulence that has beset the global economy in the last five years, many would be right to think that the prospects for Africa are terrible. But as this issue of Africa’s Pulse shows, African economies continue to show resilience and some of the fastest-growing economies in the world are now in Africa. The urgent agenda remains sustaining the macroeconomic reforms while accelerating the structural reforms that will deliver the right quality of growth that creates jobs and raises incomes on the continent.”

African economies are disproportionately reliant on natural resources—oil and raw materials, for the most part. Oil exporting sub-Saharan countries are projected to grow by 7.3% in 2012, buoyed by oil production in Angola. South Africa, the one exception, is experiencing a slower growth rate than the rest of the continent. It is because it is the only country in Africa that has a healthy percentage of its Gross Domestic Product (GDP) coming from value-added products meant for consumption by developed countries—mainly Europe—where demand has slumped due to the global financial meltdown. Europe accounts for one-third of South Africa’s manufactured goods market, which means the continent-wide economic slump has eaten into South Africa’s growth. The strong growth the report refers to comes from the recent high demand for the raw materials Africa has historically provided the global market.

These raw materials do not leave the continent in a value-added form, which would be the case if the continent had factories to manufacture the products. Investments in manufacturing—the necessary next step for Africa to realise sustainable growth and development—are not coming. The governments of countries who see their treasuries swell during periods of high-priced raw materials and crude oil do not invest in manufacturing that would turn those raw materials into the value-added products that are worth three to four times more on the global market. Eventually, the global prices for these raw materials fall—it is their nature to fluctuate since their prices are based on speculation—and Africa’s treasuries bottom out accordingly.

The pendulum has swung like this for some time now. It is certainly great news to hear that the global economic crisis has not left Africa a victim as many had feared. It should, however, not be taken lightly the immediate threats to this good news. Record droughts and crop failures have been register in recent months, and a few more are expected to bring grave realities on millions. This good news, and many like it to come in the future are opportunities to create lasting and sustainable results that better the lives of Africans. The continents people should not live at the mercy of speculative commodity markets. We have seen how detrimental this has been in the past.

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