While China’s economy continues to rapidly grow, during the first decade of the 2000s, most of the world’s fastest-growing economies were in sub-Saharan Africa and the IMF projects that this trend will continue over the next five years.
The Economist writes about this recent rapid growth:
Africa’s changing fortunes have largely been driven by China’s surging demand for raw materials and higher commodity prices, but other factors have also counted. Africa has benefited from big inflows of foreign direct investment, especially from China, as well as foreign aid and debt relief. Urbanisation and rising incomes have fuelled faster growth in domestic demand.
Economic management has improved, too. Government revenues have been bolstered in recent years by high commodity prices and rapid growth. But instead of going on a spending spree as in the past some governments, such as Tanzania’s and Mozambique’s, have put money aside, cushioning their economies in the recession.
Some ambled through the decade rather than sprinted. Africa’s biggest economy by far, South Africa, is one of its laggards: it posted average annual growth of only 3.5% over the past decade. Indeed, it may be overtaken in size by Nigeria within ten to 15 years if Nigeria’s bold banking reforms are extended to the power and the oil industries. But the big challenge for all mineral exporters will be providing jobs for a population expected to grow by 50% between 2010 and 2030.
Commodity-driven growth does not generate many jobs; and commodity prices could fall. So governments need to diversify their economies. There are some glimmers. Countries such as Uganda and Kenya that do not depend on mineral exports are also growing faster than before, partly because they have increased manufacturing exports. Standard Chartered thinks that Africa could become a significant manufacturing centre.