|03 July, 2019

Africa growth outlook puts democrats on back foot

A look at the continent’s three leading economies, Nigeria, South Africa and Egypt, is instructive

Image used for illustrative purpose. Business people reviewing pie chart data on digital tablet in conference room meeting

Image used for illustrative purpose. Business people reviewing pie chart data on digital tablet in conference room meeting

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LONDON - After beating a steady retreat since the end of the Cold War, the African strongman is on the comeback trail. Worryingly, dismal growth data in major democracies like South Africa and Nigeria are bolstering his cause.

Of the myriad reasons for the continent shifting up a gear from 2% annual growth in the 1990s to nearly 6% in the 15 years thereafter, four stand out: technology, debt forgiveness, high commodity prices and better governance – most often attributed to the gradual spread of democracy and the accountability that theoretically flows in its wake. Yet of these, only the first – the uplifting power of mobile phones and SMS banking – remains a potent economic force. From Cape Town to Cairo public debt is soaring, commodity prices are half their pre-2008 “super cycle” levels – and may fall further if a global slowdown hits later this year – and Africa’s democrats are having a tough time.

A look at the continent’s three leading economies, Nigeria, South Africa and Egypt, is instructive. Africa has more than 1.3 billion people, a figure set to double by the middle of the century, according to the United Nations’ Population Division. With 46% of regional GDP between them, all three must be firing on all cylinders if the region is to get close to the 11 million new jobs the Brookings Institution reckons it needs each year. In this regard, over the last five years, the two big democracies – Nigeria and South Africa – have failed, with their economies consistently undershooting their respective 2.6% and 1.3% population growth rates. In short, the average Nigerian and South African is now worse off than in 2015. Conversely Egypt, under military strongman Abdel Fattah al-Sisi since 2014, has consistently achieved economic growth double its 2.1% population expansion.

This hardly means autocracy is the way forward. The likes of Sisi, Rwanda’s Paul Kagame or Uganda’s Yoweri Museveni may claim to be pillars of stability, but this year’s chaotic defenestrations of Abdelaziz Bouteflika in Algeria and Omar al-Bashir in Sudan show what happens when a strongman’s power fades. Yet if leading democracies are also struggling – whether it be through the alleged venality of former South African President Jacob Zuma or the decrepitude of Nigeria’s Muhammadu Buhari – pluralism becomes harder to sell as a better alternative. And, as in Europe and the United States, underperformance and inequality open the door to populists on left and right. South Africa’s red-beret-wearing Economic Freedom Fighters – opposition rabble-rousers who idolise Venezuela’s late Hugo Chavez – or Tanzania’s hard left John Magufuli, who revels in his “Bulldozer” moniker, are two cases in point.

A booming population has its upsides. High birth rates mean the volume of working Africans will expand 14% every five years until 2050, according to Brookings. By contrast, Europe’s is already shrinking, and Asia’s soon will be. Under this “demographic dividend” scenario, legions of working-age Africans will power growth and development by manning the factories of the 21st century, just as Chinese workers did in the late 20th.

But there three reasons to see many more people as a threat rather than opportunity. One is the sheer pace of expansion, especially when set against the relatively slow pace of decision-making in democracies. In Niger, a woman has on average 7.1 children, the most in the world. At that rate, the Saharan nation’s population will grow from 23 million this year to more than 70 million by the middle of the century. By then, neighbouring Nigeria, with 400 million people, will be behind only India and China.

Another is the massive investment needed to make the next generation of Africans more productive. Without decent roads, ports, railways and fibre-optic cables, dreams of African manufacturing dominance will remain just that. A 2018 assessment by the African Development Bank makes troubling reading: of the $170 billion needed in infrastructure outlay each year, the continent may be spending less than half.

And finally there is the rise of the robot, a factor that Deng Xiaoping did not have to worry about when China took its first steps from an agrarian to an industrial economy. Countries like Ethiopia – population 100 million – are keen to follow in China’s footsteps, but may have barely a decade before machines remove the need for large volumes of workers. Without alternative jobs or opportunities at home, millions of Africans could head north – and make Europe’s recent migrant crisis look like a stroll in the park.


- Africa has the world’s highest regional population growth rate, according to the United Nations Population Fund, with its 1.3 billion population likely to double by the middle of the century.

- Since 2015, African annual economic growth has more than halved from the nearly 6% it achieved from 2000 to 2015, according to the International Monetary Fund.

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(Editing by George Hay and Bob Cervi. Graphic by Vincent Flasseur.) ((ed.cropley@thomsonreuters.com; Reuters Messaging: ed.cropley.thomsonreuters.com@reuters.net))