Bulls n Bears Entrepreneurship Zone :: Caroline Kende-Robb: These are the eight reasons why 2018 could be Africa’s year

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We are still near the start of 2018, and already it feels like tension and
disorder will be the year’s defining characteristics. From anti-immigration
policies in the United States to flaring geopolitical hotspots in the Middle
East and East Asia, disruption, upheaval, and uncertainty seem to be the
order of the day.

But at least one metric offers reason for cautious optimism: economic
growth. The International Monetary Fund estimates that global growth will
reach 3.7% this year, up from 3.6% in 2017. As Christine Lagarde, the fund’s
managing director, put it in a speech in December, “The sun is shining
through the clouds and helping most economies generate the strongest growth
since the financial crisis.”

It was fitting that Lagarde made that observation in Addis Ababa, because
it is in Africa where the rays of prosperity are shining brightest. In fact,
I predict that 2018 will be a breakout year for many – though not all –
African economies, owing to gains in eight key areas.

For starters, Africa is poised for a modest, if fragmented, growth
recovery. Following three years of weak economic performance, overall growth
is expected to accelerate to 3.5% this year, from 2.9% in 2017. This year’s
projected gains will come amid improved global conditions, increased oil
output, and the easing of drought conditions in the east and south.

To be sure, growth will be uneven. While nearly a third of African
economies will grow by around 5%, slowdowns are likely in at least a dozen
others. Sharp increases in public debt, which has reached 50% of GDP in
nearly half of sub-Saharan countries, are particularly worrying. But,
overall, Africa is positioned for a positive year.


<https://www.howwemadeitinafrica.com/caroline-kende-robb-eight-reasons-2018-
africas-year/61102/_7uf4daq5tgfv5or8o9tpuh_gf0fzlxspgmz517zqma/> 

10 fastest-growing African economies in 2018. Image: World Bank

Second, Africa’s political landscape is liberalising. Some of Africa’s
longest-serving presidents – including Zimbabwe’s Robert Mugabe, Angola’s
José Eduardo dos Santos, and the Gambia’s Yahya Jammeh – exited in 2017. In
South Africa, Jacob Zuma’s resignation allowed Cyril Ramaphosa to become
president. In January, Liberians witnessed their country’s first peaceful
transfer of power since 1944, when former soccer star George Weah was sworn
into office.

All of these gains will be tested, however, as voters in 18 countries go to
the polls this year. Adding to Africa’s story of divergence will be
continued political fragility in a number of states, including the Central
African Republic, Burundi, Nigeria, South Sudan, and Somalia.

A third source of optimism is Africa’s agricultural sector, where the
potential of smallholder farmers, the majority of whom are women, is finally
being realised. African agricultural output is forecast to reach US$1tn by
2030. This maturation could not have come at a more opportune time; roughly
two-thirds of Africans depend on agriculture to make ends meet. Large tracts
of uncultivated land, a youthful workforce, and the emergence of tech-savvy
“agropreneurs” – agricultural entrepreneurs – are lifting production and
transforming entire economies.

Fourth, Africans are benefiting from technological disruption. With more
than 995 million mobile subscribers, Africa’s increasing connectivity is
being used to power innovation. Key sectors like farming, health, education,
banking, and insurance are already being transformed, greatly enhancing the
region’s business landscape.

Fifth, African leaders are getting serious about curbing illicit financial
outflows from corrupt practices that rob African countries of some $50bn
annually, much of it in the oil and gas sector. While US lawmakers are
pushing to repeal portions of the 2010 Dodd-Frank financial reform
legislation – which contains a provision requiring oil, gas, and mining
companies to disclose payments they make to governments – the broader trend
is toward greater transparency and accountability.

For example, the Panama Papers and the Paradise Papers pulled back the
curtain on the murky system of tax havens and shell companies that shelter
billions of dollars from some of the world’s poorest countries, including
many in Africa. And with the G20 and the OECD working to stop tax avoidance,
Africa may soon benefit from global efforts to end shady accounting.

Sixth, Africa’s energy sector is set to thrive. While 621 million Africans
still lack reliable access to electricity, innovations like renewables,
mini-grids, and smart metering are bringing power to more people than ever
before. In South Africa, renewable energy has taken off; the price of wind
power is now competitive with coal. Ethiopia, Kenya, Morocco, and Rwanda are
also attracting large investments in renewable energy.

A seventh area showing signs of progress is education. To be sure, Africa’s
educational offerings remain dismal; more than 30 million children in
sub-Saharan Africa are not in school, and those who do attend are not
learning as much as they could. But many African leaders and publics have
recognised these deficiencies; in some countries, such as Ghana, education
has even become a deciding issue for voters.

As the Education Commission highlights, some countries are boosting
investments in education. This represents an opportunity to align learning
outcomes with future employment needs. But with over a billion young people
living in Africa by 2050, greater investment in education is urgently
needed. Finally, greater attention is being paid to developing a pan-African
identity, and African fashions, films, and foods are expanding to new
markets. As these cultural connections grow, Africa’s soft power will
continue to rise and extend far beyond the continent.

In many corners of the world, 2018 is shaping up to be yet another
disappointing year, as inequality and poverty continue to fuel anger and
populism. Africa will not be entirely immune from such developments.
Nonetheless, the continent’s inhabitants have at least eight good reasons –
far more than most people elsewhere – to be optimistic.—Howwemadeitinafrica 

 

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