The first years of this century have produced Africa’s best decade of economic expansion since the end of the colonial era, with many countries showing growth rates of 5 percent or more since the year 2000. Prospects are good that growth will remain at this level for the next few years.
This surge in growth was due in part to increased commodity prices fueled by Chinese demand. It also reflects improved systems of African governance, underpinned by the spread of democracy continent-wide.
Translating growth into development — and jobs — requires other steps. For one, African countries will have to diversify their dependence on exporting raw materials, which is good for state treasuries but does little for local jobs. With one-quarter of the world’s people under 25 projected to be in sub-Saharan Africa by 2015, ensuring the conditions to create employment is an imperative. Today, 8 in every 10 Africans are self-employed.
To ensure a new future with both jobs and development, African governments will have to embark on a path down which few have so far ventured. They will need, at the outset, to develop a “growth ideology.” Many governments will need to drop their animus to business, which often had its origins in racial exclusion or perceptions of rivalry. This demands that governments recognize that the state has a key role in helping private enterprise by working to establish the infrastructure necessary for economic development, especially on a continent dealing with the binding constraints of inadequate transport and electricity production.
Sub-Saharan Africa’s electricity production is equivalent to that of Spain, even though it has nearly 20 times as many people. And more than half of that is produced by just one country, South Africa.
African countries also must, finally, develop educational systems that not only allow as many children as possible to attend school but also produce a more highly qualified work force that will attract investors. Right now, too few African children are in schools and many are hardly taught at all. If this problem is not addressed, such constraints will curtail growth or, in some cases, stop development dead in its tracks. Successful investment in infrastructure and education will pay very high dividends over a long period of time.
Some governments believe that they can “pick winners” to encourage investment, but their success rates are not encouraging. While incentives such as the establishment of Special Economic Zones can encourage investment — not least by serving to insulate companies from official corruption and political instability — these are at best temporary fixes. It is much more important for governments to set an overall economic environment in which the private sector can pick its own winners.
If Africa’s first liberation was from colonial and racist government, and its second stage involved freeing itself from the tyranny and misrule of many of the liberators, the third stage must involve a change in focus in politics itself. This will require concentrating on economic development to the exclusion of racial, tribal and religious issues that have plagued much of the continent in the past.
Africa’s third liberation will, for the first time, offer its citizens across the continent the opportunity to set their own agendas. It will render aid from Western countries less important. Although Western aid agencies may not yet realize it, the ever-changing development agenda and the significant number of celebrities who have associated themselves with foreign assistance are no longer critical to how the Africans in many countries set their priorities.
Those countries nimble enough to exploit the real market advantages open to them have the opportunity to lead the rest of the continent to prosperity.
Jeffrey Herbst and Greg Mills are the authors of Africa’s Third Liberation — The New Search for Prosperity and Jobs.