Africa: predictions and reality

This weeks issue of The Economist has a blog article by ‘Schumpeter’ that asks if business is transforming Africa for the better? His conclusion, is a clear yes. Here three excerpts that invite thoughts about the value of predictions, and the ability to mobilize resources in the face of hardship.

Schumpeter: Uncaging the lions | The Economist: “Ten years ago The Economist dubbed Africa ‘the hopeless continent’. Since then its progress has been remarkably hopeful. In 2000-08 Africa’s annual output grew by 4.9% (adjusted for purchasing-power parity), twice as fast as in the 1980s and 1990s and faster than the global average of 3.8%. Foreign direct investment increased from $10 billion to $88 billion—more than India ($42 billion) and, even more remarkably, catching up with China ($108 billion). The Boston Consulting Group notes that, since 1998, the revenues of Africa’s 500 largest companies (excluding banks) have grown at an average of 8.3% a year. “

“But is this growth sustainable? Or is the current fad for Africa just another bubble? The pessimists have always had three strong arguments. One is that African politics is dysfunctional. Warring strongmen can undo the progress of decades in weeks. A second is that the African economy is unduly dependent on the resource sector. A third is that Africa’s growth does too little to benefit the poor. But over the past decade, all these objections have weakened.”

“Africa is also seeing the benefits of ‘frugal innovation’—inventions that are designed to serve the poor. Mobile-phone companies, which have done more than anybody to improve the lives of poor Africans, are continuing to innovate. Kenya’s Safaricom and its rivals are pioneering money-transfer by mobile phone (see article); mobile savings and agricultural-insurance schemes are next. Companies from other emerging markets are also expanding into Africa. Bharti Airtel, which completed its $10.7 billion acquisition of Zain Africa, is a world-leader in improving services while reducing costs. “

xposted to African Technology Development Forum