Africa, the Business Deal of the Century
Improving intermediation between Africa and the world’s advanced economies would benefit everyone, by fueling growth, employment, and consumption. The key is to target Africa’s most competitive, labor-intensive industries, supporting them not just with money, but also through institution-building.
ABIDJAN – As experts speculate about global growth in 2018 and beyond, few pay much attention to Africa. Those who do often stress that the continent remains home to the highest proportion of poor people in the world, or that large numbers of young people are fleeing their countries in search of security and opportunity. Even the more optimistic economic forecasters tend to refer to Africa in negative terms, advocating a latter-day Marshall Plan, not as a catalyst for business partnerships and growth, but as a new form of humanitarianism.
To be sure, Africa’s GDP per capita stands at only $2,000 per year, and the region has the lowest proportion of wage earners (around 20%) in the world. Persistent poverty, together with climate change, are aggravating high rates of unemployment and underemployment. Most of the labor force is still trapped in low-productivity, subsistence activities, with the fiscal capabilities of many states depending heavily on declining commodity prices.
While structural transformation is taking place, it is happening very slowly. Africa accounts for just 1.9% of global value-added in manufacturing – a share that hasn’t risen in decades. Moreover, Africa’s population of 1.2 billion is growing fast, at 2.6% per year, with the youth bulge – 70% of Africa’s population is under the age of 30 – putting pressure on governments suffering from weak planning and managerial capacity.