BOSTON – The global commodity slump and China’s economic slowdown have pummeled several African economies, making clear that the continent’s “rise” was a myth. Now is the time to re-examine the basis of Africa’s recent “boom” and move from feel-good rhetoric to action that will drive genuine economic transformation.
Commodity exporters such as Angola, Ghana, Nigeria, South Africa, and Zambia are reeling, with their currencies crashing since the prices of commodities such as oil and copper began falling sharply. Moreover, fiscal and monetary policies are in disarray, with the risk of social unrest rising if the trend is not reversed in the near to medium term.
The heart of the matter is this: African countries mistook a commodity supercycle-fed boom for a sustainable economic transformation. But a boom connotes transient good fortune – enjoy it while it lasts, or save the proceeds for a rainy day. Most African governments opted for the former.
To be sure, Africa benefited from higher GDP growth and expanded opportunity over the last decade. But hundreds of millions of Africans have yet to be lifted out of poverty in the manner China has accomplished – a path that other Asian countries, such as India and Vietnam, are following as well.