From a low level, but clearly visible, the first islands of development are rising in Africa, and they are spreading. The greatest challenges lie in the areas of education and infrastructure to increase productivity. Private solutions have long since overtaken central governments: a growing middle class relies on digital technologies.
The phase of stabilisation and consolidation of many African countries around the turn of the millennium was followed by the emergence of flourishing markets, construction projects. The calm from outside interference enabled the rise of a middle class that today already dwarfs that of India in terms of numbers.Yet no common ground can be identified as a model for success: whether Rwanda and Uganda in the east, English-speaking Ghana and Francophone Cote D’Ivoire, economic development seems to have ignited in many centres at the same time.Ethiopia, which has been completely independent in its history, even achieved the highest growth rates in the world between 2010 and 2019.But how sustainable is this economic growth?
Can Africa match the success of the Asian tiger economies or will it fall back into old patterns after a commodity and investment boom? More and more people are escaping poverty and investing annual incomes of 2,000 US dollars and more. A new technology gives them access to health, education, insurance and mobility: the mobile phone. This means a massive shift away from the previous growth drivers of raw materials and their export. Start-up clusters for fintech, healthtech, transport and logistics are sprouting up in many urban centres.
Even governments embraced these new opportunities. With almost a thousand reforms, the continent is the scene of the most ambitious reforms in the world. In particular, mobile communications infrastructure has been built from the ground up to help progress take hold. Currently, the world’s largest submarine cable project, the 45,000-kilometre-long 2Africa cable, is being implemented and has already been completed along Africa’s east coast to South Africa. The stock of foreign investment, not only in the form of raw material mines, but also production facilities from Europe, China and the USA, has increased rapidly. The continent is a raw material depository for important resources of the energy transition and digitalisation – and institutional developments mean that much broader sections of the population could participate than before. Even agriculture could one day make Africa the breadbasket of the world.
But there is still a long way to go and the start is from a low level. One of the most pressing problems facing many African societies is that the education of most young people is not in line with the skills they need. Lack of credit and financial markets continue to make it difficult for African companies to expand beyond the bare minimum. Productivity is still low. But the world situation with rising protectionism and the conflict between East and West could also hinder Africa’s rise. Add to this the difficult financing situation under high interest rates for government budgets. How can Africa overcome its problems and become a lion similar to the Asian tiger states?
Read more in Africa’s Century – Is the Grip on Prosperity Working?