As an ardent reader of The Economist, a must have publication every year is the excellent series, “The World In”, and having just received my 2010 edition, I’m eager to dig into it. Before pointing out what 2010 has in store for Africa, I’ll look and see what The Economist said and got right or wrong in the 2009 edition.
The World in 2009: Africa
“18 Sub-Saharan Countries would need additional budget support or additional balance of payments.” As with many other countries across the globe, many had their Current Account Balance to GDP ratios increase due to the global financial recession, and Africa had theirs increase from 3.3 in 2008 to -4.4 in 2009 and it is expected to improve to -4.1 in 2010. The oil exporting countries in Africa saw their ratios fall from 10.7 in 2008 to -3.5 in 2009, the oil importers have improved from -7.1 to -5.5 in that same period. In 2010, it should be around -2.4 and -6.4 respectively.
“Development is impeded by serious electricity shortages”. South Africa was a big casualty of this, erratic power supplies cost the countries production in mining, and the most recent casualty has been the head of the power utility company ESKOM, Jacob Maroga for the black outs experienced in 2007 and 2008. This is a recurring theme on the continent, underinvestment leading to more load shedding and increased costs to business and civilians who must use generators. The highly ambitious €400 million Desertec Project in North Africa to harness the sun for energy will probably secure energy supplies for North Africa (and 15% of Europe’s energy), but unless alternatives are found for Sub-Saharan Africa, the problem will be compounded further.
“The surge in Asian investment from China and India will continue……they take a long term view on investment.” China has made significant inroads in the African economy, investing in minerals, investing in infrastructure, and now investing in land for food production. Similarly, the first flash point between Asian investment in Africa was seen in the Daewoo deal in Madagascar that ultimately led to a coup d’état with the locals revolting against the deal.
“Much will depend on politics. Armed conflicts and political instability have become less frequent.” The buzzword in African politics is now GNU’s, Governmenets of National Unity, with a few formed in 2009, and a few more may follow in 2010. Kenya’s GNU has held up quite well between Raila Odinga and Mwai Kibaki, Guinea and Cote d’Ivoire may have GNU’s after impending elections, Madagascar has one between Andry Rajoelina and Marc Ravalomanana after the troubles this year. The GNU that will grab the headlines still is the Zimbabwe pact between Robert Mugabe and Morgan Tsvangirai, rather than put his opponents down, the ZANU-PF leader had been forced into the deal after disputed elections, and signs are that the veteran leader is still the man very much in charge with Tsvangirai seen as a face for the West.
“Nigerian Central Bank will have monitors at each of the leading banks to watch for excessive risk taking.” New NCB Governer Sanusi Lamido Sanusi has been labelled a dictator in his crackdown on the excessive nature of risk taking in the Nigerian banking sector. Since assuming office in mid 2009, he has sacked 5 heads of banks and recovered US$1.1 billion from bad debtors. His policies to re-capitalise the Nigerian banks can be seen to have saved not only Nigeria’s financial system, but those in the region such as Ghana that are closely linked to their neighbours.
The World in 2010: Africa.
” The World Cup will be a chance to showcase Africa, but can Africa handle the pressure? Despite high levels of violent crime, unhappy construction workers and a shaky economy, South Africa willprove the sceptics wrong…..for the first time, other Africans will see that South Africa is in many ways more closer to Australia or Argentina than to their ramshackle countries.” Indeed, the 2010 Fifa World Cup that will have 31 countries (5 of them African) descend on South Africa will be the sign that Africa is now moving forward and can host grand events. Whilst I don’t envisage it to be like the 2006 edition in Germany, granted the colourful ‘vuvuzela’ is not banned, it will be a memorable festival of football and African culture, and one that will knock down perceptions of the continent to many of the doom sayers.
“Somalia would be little noticed were it not for its fastest growing industry: piracy.” Somalia is still a country that is yet to move forward, piracy is on the up, although with more high profile cases, increased policing of the waters near Puntland will be a certainty. What will be of more concern, especially to the Western powers, the rise of radicalism, the rise and dominance of the 5 year old Al-Shabab movement in capital city Mogadishu (even the legitimately elected government is not safe to stay in Mogadishu because of Al-Shabab) could see Al-Qaeda set up base in Somalia. The chilling announcement of the Al Quds Brigade to attack Israel and all their interests in Africa is a sign of things to come if they are not reigned in soon.
“Unlike other countries that have had to implement stimulus packages, South Africa’s public investment programme predates the economic crisis. Money is not being spent on bailing out banks or badly run private enterprises, but on building roads and schools.” Whilst South Africa has made many brave strides forward since the fall of apartheid, he time to deliever is now, and 2010, apart from the FIFA World Cup, may see some tensions erupt and put newly elected president Jacob Zuma under increasing pressure. More social unrest that has manifested itself in xenophobic attacks on Zimbabweans and North-East Africans in the townships will increase if the high unemployment rate of 25% is not reduced immediately. Compounding this will be trade unions lobbying for higher salaries, especially as the residue of the food crisis in 2007 is still affecting the poorest of the population. This could also be they year that rich South Africans begin to really invest in other countries on the continent, especially as regional integration will help their businesses.