CAPE TOWN: Six years ago when the McKinsey Global Institute first looked in detail at Africa’s diverse economies, almost all of them were experiencing accelerating growth. The picture today is more mixed. MGI’s new report — Lions on the move II: Realising the potential of Africa’s economies finds that Africa’s economies’ growth paths have diverged.
Growth in the 11 economies accounting for 60 percent of African Gross Domestic Product — the continent’s oil exporters and the three countries involved in the Arab Spring (Egypt, Libya, and Tunisia) — slowed sharply. But the remaining economies generating 40 percent of African GDP accelerated their annual growth rate from 4,1 percent in 2000-10 to 4,4 percent in 2010-15. The overall outlook is positive, with the IMF projecting that Africa will be the world’s second-fastest-growing region in the period to 2020.
Four fundamentals are likely to underpin Africa’s economic growth. The fastest urbanisation rate in the world. Over the next ten years, 187 million more Africans will live in cities — equivalent to half the US population today.
The biggest working — age population in the world of 1.1 billion in 2034 — larger than in either China or India. The largest reserves in the world of many key natural resources (eg, 60 percent of the world’s unutilised but potentially available cropland, and the largest global reserves of vanadium, manganese, and many others).
The chance to leapfrog old technologies using mobile and digital (eg, penetration of smartphones expected to hit 50 percent in 2020 vs 18 percent in 2015). Big opportunities lie ahead as consumer and business spending continue to grow. The new report identifies opportunities for growth in African economies. Spending by consumers and businesses in Africa today totals $4 trillion. By 2025, the total could be $5,6 trillion.
