JOHANNESBURG – Is the honeymoon over for African economies? Less than a decade ago, it seemed that the continent’s economic dreams were beginning to come true, with many countries experiencing impressive GDP growth and development. Now, as the harsh reality of the continent’s vulnerability to challenging external conditions has set in, sustaining that growth has proved difficult.
Encumbered by slowing growth in China, a collapse in commodity prices, and adverse spillover from numerous security crises, Africa’s overall annual GDP growth averaged just 3.3% in 2010-2015, barely keeping up with population growth – and down sharply from the 4.9% recorded from 2000 to 2008.
But a deeper look suggests that things may not be as bad as they seem, for two key reasons. First, though average growth has declined, some African economies have thrived in recent years. Indeed, aggregate GDP has been dragged down since 2010 by faltering growth among oil exporters and security-related crises in the Sahel and North Africa; but in the rest of Africa, GDP growth has accelerated, from 4.1% in 2000-2010 to 4.4% in 2010-2015.
Second, Africa is undergoing a profound long-term transformation, characterized by rapid digitization, urbanization, and growth in the working-age population, which will outnumber the labor force of China and India by 2034. That demographic trend could unlock future growth by advancing economic diversification, spurring domestic consumption, and supporting industrialization.