Africa: A growing economy with no money

It’s a known fact that Africa’s economy is growing in leaps and bounds but that growth is yet to have an impact on the ordinary person walking on the streets of say, Nairobi, Accra, or Lagos.

For the first time, Africa’s per capita GDP crossed the $1000 barrier and major cities across the continent are booming with high rise buildings and skyscrapers.

The GDP numbers are looking good but it is a fact that these remain only in the books as the real economic transformation is yet to come – no jobs for graduate youth, unreliable electricity and poverty.

The continent’s economy grew at 6.6% in 2012, according to the African Development Bank’s report, the 2013 African Economic Outlook (AEO). But the rate of growth is still lower than the 7% which, according to the Bank, is needed and which must be sustained for probably two decades.

It is on record that at least five African countries were among the world’s top ten fastest growing economies in 2012.

“It is true that our economies are growing, but so is our population,” AfDB President Dr Donald Kaberuka said at the opening of the 2013 AfDB Annual Meetings.

Kaberuka explained that between 10 and 12 million young people in Africa enter the labour market each year.

“We have booming cities, skyscrapers, but also millions of destitute people, eking out a living in teeming slums and shanty towns,” he said.

“We have hundreds of young, energetic, diaspora returning home, but also fleeing migrants in rickety boats making the often merciless journey across the Mediterranean Sea”.

“We have entrepreneurs and creative artists displaying their talents, but also desperate unemployed young people who are educated but who have little prospect of a decent job”.

“We have a growing middle class, but also peasants still farming with the back-breaking hoe, much as their grandparents did,” he added.

“Those are the challenges we must face squarely,” he intoned.

According to him, the way to begin to respond to and solve the problems is to listen to what ordinary people are asking. “Yes,” they say, “the economies are growing, but where is the money in my pocket?,” Said Kaberuka.

He continued “The jobless young undergraduate who can’t find a job. The small businessperson, bankrupted by unreliable electricity. The farmer whose livelihood is crippled by the unpredictable weather.”

He said, to all these people – the technical answers about demographics, ‘the low starting base’, ‘the narrow range of growth drivers’… are not answers they find convincing and especially when they see opulence and growing inequalities all around.

“They need answers,” Kaberuka said adding “answers on how Africa’s current strong economic performance is translated into jobs, opportunities for all and a reduction on the reliance on a narrow range of commodities.”

Kaberuka made an interesting story on mobile phones in the continent. He said sub-Saharan Africa has more cell phones than North America and Europe but none of the components of those mobile phones are made in Africa.

Rwandan President Paul Kagame, reckoned that African economies have been growing at a consistently high rate for the last decade but “poverty remains a challenge, and unacceptably high”.

Indeed, the African continent suffered an economic loss up to $1.4 trillion in a 30-year period from 1980 to 2009 in net resource transfers through licit and illicit ways, according to a new report titled “Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009″. It was published May 29, 2013.

If calculations are done, the continent lost almost $50 billion each year and that is equal to the foreign direct investments (FDIs) the continent gets yearly, AfDB Chief Economist Prof. Mthuli Ncube noted during a press briefing.

“It must be urgently addressed, and there is proof in different parts of our continent, that this is possible and within our reach to make that difference required,” Kagame said.

Going forward, Kagame urged the continent’s leaders to scale up and spread the benefits of the prevailing growth to all the citizens and sustain it. “The task ahead for African countries is to shape this link between growth and socio-economic transformation of our societies,” he added.

According to the East African country leader, policy-makers in Africa must therefore leverage this opportunity to build a stronger foundation for broad and inclusive growth to improve the livelihoods of our people.

Kaberuka ended the Annual Meetings saying that Africa’s economies are at a turning point but infrastructure deficit remains a major binding constraint.

By Ekow Quandzie back from Marrakech, Morocco