Who Is Benefitting From Africa’s Economic Boom?

Who Is Benefitting From Africa’s Economic Boom?

Rachael AkidiEditor, BBC Focus on Africa radio
(Huffingtonpost) What do Ethiopia, Mozambique and Angola have in common?

Well just under two decades ago, the stories that emerged from these three countries pretty much summed up the state of most of the African continent at the time.

From Mozambique, images of young men with guns strapped across their shoulders.

From Angola, we saw women, men and children receiving treatment in Red Cross shelters, after being maimed by landmines.

And who can forget the images of starving children with flies around their faces in Ethiopia?

Two decades later, the same countries are not only in the news, but on every economic analyst’s list.

This time however, the images of war, hunger and despair have been replaced by visuals of high-rise buildings, construction sites and modern shopping malls.

Ethiopia, Mozambique and Angola have once again come to symbolise the continent’s new story of hope and optimism. They are just three of the continent’s fast rising economies.

Gone are the days when Africa was viewed as just a basket case.

As Donald Kaberuka, the President of the African Development Bank, said in a recent BBC interview, “Nowadays rich countries don’t have to ask how they can help Africa, but how they can do business with and work with Africa!”

It’s perhaps not surprising therefore that when US President Obama visits Africa later this month, he will be travelling with a plane-load of businessmen looking for investment opportunities in the continent.

While European and American economies have stagnated, the message to investors from economists is ‘head to Africa – the new frontier for investors’.

According to the World Bank, Africa is home to six of the world’s fastest growing economies. Amongst the other countries they are asking us to watch are Nigeria, Ghana, Kenya, Zambia, Tanzania and the DRCongo.

Growing at an average of 5% over the last decade, the economic boom is said to be fuelled by, among others: a natural resource boom, growth in the service industry, telecoms and construction sectors, and consumption of goods and services.

The African Development Bank (AfDB) projects that most of Africa will attain lower- and middle-class majorities by 2030. They say consumer spending on the continent is also at an all-time high.

However despite these glowing statistics and the changing ‘Africa Rising’ narrative, there are still some significant contradictions in this ‘new chapter’ in Africa’s story.

The AfDB defines the African middle class as those spending between US$2 and US$20 a day. Some economists argue that this sum is too low, when compared with other continents.

In addition, more than half of the continent’s population still lives below the poverty line – on less than US$2 a day.

Nowhere is this contradiction more apparent than in Mozambique. The country is not only one of the world’s fastest growing economies, but also one of the world’s poorest.

How do you explain to the mother of five in Angola’s capital Luanda, who queues for hours daily to fetch water from a communal pump, that she lives in one of the world’s most expensive cities; and that some people living just a few hundred metres from her get to spend US$35 on a hamburger?

During a trip to the DRC capital, I was alarmed when I was charged US$28 for a day’s breakfast in my hotel; because I’d earlier learnt that a policeman earned $25 a month!

Let’s look at Africa’s most populous nation, Nigeria. It is predicted that the oil-rich country may overtake South Africa as Sub-Saharan Africa’s largest economy.

But Nigeria, like many countries in Africa, is heavily dependent on the extractive industry – which drives growth but rarely creates substantial employment for local people.

The official unemployment rate is nearly one in four, but many more Nigerians are under-employed, working in irregular and poorly paid jobs in the informal sector. Nearly 85% of Nigerians still live on under US$2 per day.

Lack of reliable access to water and electricity is a daily frustration for many, including the burgeoning middle class. Yet there has been consistent economic growth in the country for the past decade – growing, on average, by 7.4% per year according to the most recent African Economic Outlook report.

So who is benefiting from Africa’s economic boom?

How much taxes do the investors pay? How much of their revenues remain in the countries?

According to Oxford University Professor Paul Collier, “many international companies in Africa are skipping from tax holiday to tax holiday, never paying tax.”

“Sorting out tax and transparency is vital for African countries, otherwise their natural assets will be depleted, and they won’t have anything to show for it,” he said ahead of the G8 summit that is expected to address the issue.

Over the next two weeks, BBC Africa will be exploring the ‘Africa rising’ narrative. It will look at the winners and losers of this growth and ask how economic development on the continent can be turned into a wider, more inclusive development which improves the lives of ordinary people.

Who exactly is rising in Africa?

‘Africa Rising: Who benefits?’ on BBC Africa will be examining this narrative through the experiences of a cross-section of people from around the continent.

The season will also host two special debates from Lagos and Accra on Friday 21 June and Friday 28 June 2013.

The debates will also explore the impact of the African middle class – on economies and on governance.

Categories: Africa

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