By Lauri Elliott : People may acknowledge that Africa has certainly made great strides in its most recent history. However, the bigger question is whether these changes will continue. This piece looks at likely scenarios for Africa into the future based on existing and emerging patterns.
Thank goodness as I was getting ready to co-write this book, I ran across a monograph being done by the Institute for Security Studies¹ in South Africa called African Futures 2050.
I had the distinct pleasure of interviewing Dr. Barry Hughes, Director of the Pardee Center of International Futures at the University of Denver in the United States and a partner on the ISS project. This sub-section reflects our discussion.²
It has already been established that Africa has the fastest growing population. This boom will cause Africa to surpass both China’s and India’s population in 2025, less than 15 years away. The combined populations of Asia, including China and India, will still exceed Africa’s, however.
If we look out to the year 2100, one in three people will be of African descent globally, even with the likelihood that fertility rates will continue to decrease. Lower rates of mortality and increasing life span also contribute to the growing population on the continent.
Within the continent, the populations of East, West, and Central Africa will grow much faster than North and Southern Africa. In 2050, the populations of East and West Africa are expected to exceed 650 million each.
Large population booms have both advantages and disadvantages, as noted by Dr. Hughes. However, from the business perspective, we should see the opportunity in large, growing consumer markets. Unfortunately, the dialogue on population in Africa still remains on the negatives of poverty and disease instead of innovative solutions that will solve these problems, uplifting people and creating strong local economies as discussed in the article, The Business Proposition of Africa’s Population Boom: Problem or Potential?³
In fact, Dr. Hughes notes that the “demographic dividend” is starting to pay off for Africa. The demographic dividend is the portion of people in the labor force of a country. Historically, Africa has been disadvantaged because most of its people were under the age of 15 years. For example, the number of people in the workforce in Africa currently is around 55% compared to about 70% in China, creating a drag on countries.
This is changing as these young populations are maturing. By the middle of the century, 62%-65% of Africa’s population will be in the workforce while the percentage of China’s population in the workforce will fall well below that as its population ages, according to Dr. Hughes.
This potential workforce will give Africa a distinct advantage globally, but also requires governments and private sector to proactively address the need for jobs sufficiently to provide sustainable livelihoods. Like many countries globally, this issue is already being felt by African nations requiring new innovative solutions to this growing need.
These demographic dynamics also help us to understand other trends for Africa.
As Africa’s population grows, it will also have an impact on cities. Currently, only about 40% of Africa’s population resides in urban centers compared to Western regions where the percentages go above 60%. However, the urbanization growth rate in Africa will grow rapidly. This will be a key dynamic to Africa’s economic transformation, according to Dr. Hughes. It is also one trend which we consider to be major and to which we dedicate a chapter (Chapter 5: Urban Centers) in this book.
As the populations in urban centers grow, more densely populated consumer markets appear, driving more business to the cities and increasing economic activity. These urban agglomerations tend to drive more economic growth than rural areas within nations.
Literacy and Health
Africa will likely not reach its primary education goals by 2015 as outlined in the Millennium Development Goals (MDGs). However, the MDGs have created an impetus for governments to focus attention on this area so that while the literacy rate for the entire continent is somewhere around 68% this should rise to over 90% by 2050
It’s interesting to note that Africa’s current literacy rate is comparable to India’s, which is considered one of the BRIC emerging markets. So, while literacy is important to a well-trained workforce, participation in the information age, and long-term economic growth, in the immediate future the lack of literacy does not necessarily eliminate economic growth. As Dr. Hughes suggested, people do not necessarily need to be literate to purchase.
On the health front, the key issues are HIV/AIDs and communicable diseases like malaria at this point. It looks like there has been a positive turning point with the number of people dying from or contracting the HIV/AIDs virus going down. However, there is still a lot of uncertainty in this area.
With communicable diseases, there also seems to be progress in terms of the rate in cases of communicable disease, although when looking at just the actual number of cases of communicable disease this may not be reflected. It appears that communicable diseases are rising because of the rapid rise in population.
However, when dividing the number of cases against the larger populations, the rate of new cases of communicable diseases has slowed. Improvements in water and sanitation, as well as malaria nets and other solutions, seem to be producing results.
As these issues become contained, there will be a shift to, or rise in, chronic diseases like diabetes, heart, and cancer. By 2025, the number of deaths from chronic diseases should exceed that of communicable diseases, particularly as the population ages. This will be a dramatic shift in the health care market in Africa. This trend is seen even in South Africa now, for example, with the rise in the rate of obesity and diabetes as the people move up the socioeconomic scale.
It’s important to look at the diversity of economies when forecasting economic growth. Historically, and even currently, most African economies are reliant upon primary sectors involving commodities, e.g., agriculture, oil.
The Lions on the Move: The Progress and Potential of African Economies&sup4; report, by the McKinsey Global Institute, notes the dynamics of African countries where they have been able to diversify into manufacturing and services and where these sectors exceed 60% of GDP. South Africa and Mauritius are among these countries. Dr. Hughes says that this has allowed countries to enhance exports, but notes that oil exporter countries, e.g., Nigeria, Angola, will likely find this transformation difficult.
Diversification is also important in the creation of jobs, particularly for oil exporting countries, as the oil industry does not necessarily create broad opportunities for new jobs itself. Ghana, a new oil producer, is fortunate that its economy is already relatively diversified.
According to Dr. Hughes by 2050, more countries, e.g., Kenya, Nigeria, and Ethiopia, are expected to diversify in excess of 60%. While the process for diversification will have irregular patterns across the continent, it is something that countries will have to reach. So, this is a key economic trend to watch.
Another trend is that economic growth has accelerated across Africa in the last decade with growth rates between 5%-5.5%, exceeding population rates. If Africa keeps this pace, per capita income will increase moving forward.
Regionally, North and Southern Africa’s GDP will remain significantly higher than East, West, and Central Africa into 2050. This also is the case for diversification.
Agriculture and Infrastructure
Africa’s productivity in agriculture has not made much progress in the last few decades. Production has risen but as a result of more land being used for cultivation rather than higher yields. This is in sharp contrast to developed and developing regions like South America and Asia. So, there is still a big question mark as to what will happen with agriculture.
Dr. Hughes mentioned that there will, however in all likelihood, be an impetus to reverse this trend. We can see evidence of this in the commitment of African countries in the African Union to set aside 10% of their budgets for agriculture, as well as successful agricultural programs in Malawi and Zambia.
Also, Africa is getting assistance from countries, which have been successful in this arena, like Brazil. A report&sup5; in The Economist documents the success of agricultural programs in Brazil over the last few decades in a region with land characteristics similar to Africa. This success is being passed along through programs like the Africa-Brazil Agriculture Innovation Marketplace.&sup6;
On the infrastructure side, this has been lacking and has hindered growth with the exception of Information Communication Technologies (ICT). Dr. Hughes indicated that the energy capacity in Africa is well below that seen in other developing regions, but we can anticipate a strong push to resolve.
Governance and Conflicts
There has been an increase on the emphasis on elections with more free and fair elections and peaceful transitions in Africa. This excludes the recent examples of Cote d’Ivoire (Ivory Coast) and Libya.
Interestingly enough, Dr. Hughes noted that the exception to the transition to more democratic governments was the North Africa region. He anticipated that as leaders in the region got older and people moved up the socioeconomic scale that there would be a greater push, hopefully peaceful, for reform.
And finally, there are fewer conflicts which will facilitate both improvement in governance and economic growth. In fact, all three feed each other. Because of improvements in all dimensions, there is a virtuous cycle which will propel the continent forward.
To read more you can download a sample of the book, Redefining Business in the New Africa at www.redefining-business-in-the-new-africa.com.
2.Listen to the interview at http://www.afribiz.net/content/the-future-of-africa-in-2050.
3.Elliott, L. (December 13, 2009). The Business Proposition of Africa’s Population Boom: Problem or Potential. Afribiz.info. Located online at http://www.afribiz.info/content/the-business-proposition-of-africas-population-boom-a-problem-or-potential.
4.McKinsey Global Institute. (2010). Lions on the Move: The Progress and Potential of African Economies. Accessed online at http://www.mckinsey.com/mgi/publications/progress_and_potential_of_african_economies/pdfs/MGI_african_economies_full_report.pdf (January 11, 2011).
Author: By Lauri Elliott