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Five Fundamental Changes Are Boosting Growth in Africa

Mobile telephones in Johannesburg, South Africa: health, agriculture, banking are moving to mobile platforms in Africa (photo: Stephane de Sakutin/AFP)

EMERGING AFRICA

Five Fundamental Changes Are Boosting Growth in Africa

IMF Survey online

November 16, 2010

  • Growing group of African countries posting steady growth, falling poverty
  • Spread of democracy, more accountability improve economic policymaking
  • New technology, new generation of leaders bode well for Africa’s future

Seventeen emerging African countries are putting behind them the conflict, stagnation and dictatorships of the past, according to a new book by Steve Radelet.

Instead of treating the region as a monolith, the former Center for Global Development senior fellow stressed the differences between Africa’s emerging countries. He said that since the mid-1990s, a group of 17 emerging countries had broken away from the rest of the region and achieved steady economic growth, deepening democracy, stronger leadership, and falling poverty.

“The biggest trend in sub-Saharan Africa over the last 15 years is divergence,” Radelet told a November 11 book forum at IMF headquarters in Washington D.C. “The story that people claim—that after all the efforts and the aid flows there has been no change in Africa—is garbage.”

Radelet said there had been three big phases of varied growth in the sub-Saharan African region since 1960. There had been a period of modest growth up to the mid-1970s, which coincided with moves toward independence establishing new countries on the continent.

This period of initial postindependence growth had then ground to a halt in the mid-1970s, under pressure from the oil price shocks and global growth slowdowns of the period. The adverse impact of global events had been complemented by moves toward autocracy among some postindependence African governments.

Clear economic decline

There followed a period of about 20 years of clear economic decline, in which the region could be treated as an economic monolith because nearly all its countries were caught up in the decline.

The seventeen

Radelet’s book groups 17 emerging sub-Saharan African countries that posted per capita economic growth of more than 2 percent for the period 1996-2008.

Botswana
Burkina Faso
Cape Verde
Ethiopia
Ghana
Lesotho
Mali
Mauritius
Mozambique
Namibia
Rwanda
Sao Tome and Principe
Seychelles
South Africa
Tanzania
Uganda
Zambia

“That is the image that most people still have in mind for most of sub-Saharan Africa,” Radelet declared. “But the fact is that things changed pretty clearly in the mid-1990s. Most people miss that this was the real turning point.”

Dividing sub-Saharan Africa’s countries into three groups—oil exporters, emerging countries, and other countries—Radelet said the group of 17 emerging countries was distinct in having posted per capita economic growth of more than 2 percent in the period 1996–2008 (see box).

Radelet stressed that nearly all of the 17 steadily growing emerging countries he had grouped together are democracies. Most of the countries in the oil exporters and other countries groups are not democracies, he noted.

Separate group

Radelet cited five fundamental changes in sub-Saharan Africa since the mid-1990s that had separated the group of 17 emerging countries from the others in the region.

The rise of democracy and improved governance. In 1989 there were only three democracies in Africa. Today there are 22. “This the first time in the history of the world that so many poor countries have become democracies at the same time,” Radelet declared.

Stronger economic policies. There are few remaining state-owned banks, sidewalk foreign exchange vendors, and agricultural control boards. The cost of starting a business is coming down.

The end of the debt crisis. “We have reached the end of a long period in which debt dictated economic policy in Africa,” Radelet said. Twenty years ago, donors conditioned aid on whether countries had policy programs supported by the IMF. Today aid is dependent on countries’ own poverty reduction strategies.

New technologies—mainly mobile telephones, but also including intercontinental broadband cabling. Health, agriculture, and banking are increasingly moving to mobile or online platforms, and internet use is spreading.

A new generation of leaders. The autocratic regimes of the immediate postindependence era are largely past. “The new generation of young, smart, and energetic leaders are sick and tired of constantly hearing that Africa is a basket case,” Radelet said. “They are savvy and open to accountable governance.”

“I believe that something very deep and important is under way in Africa, and we need to recognize what it is,” Radelet stated.

Emerging Africa: How 17 Countries Are leading the Way, by Steven Radelet, Brookings Institution Press, 2010, 125 pp., $18.95.