Every year for the past 9 years, compulsory reading for any economist has been the excellent ‘The World In’ series that is released in November annually predicting the upcoming year for economies, politics to new innovations in industry, and more often than not, they see what the future has in store. What they have predicted well has been the rate of growth of African economies that have hit double digits in many cases, with five African countries in the global Top 10 growers in 2009, and four expected in 2010.
In the 2009 fastest growing economies predictions, the five African countries were Angola in second place, expected to grow by 9.8%, Congo-Brazzaville in third to grow by 8.5%, Malawi in fourth with 8.3%, Madagascar in eight attaining 7.2% and Mozambique at ninth place with a rate of 7.1% expected. What is striking initially is that three of the five have begun to exploit their energy producing resources, Angola and Congo gaining high rates due to oil product expansion,whilst Malawi is producing uranium. Madagascar and Mozambique are driven by raw materials in nickel and steel respectively. Angola has actually fallen from the peak experienced in 2006 where they had just under 20% growth.
A by product of this growth, especially in Angola, has been the emergence of Luanda as the most expensive city in the world to live in, overtaking the likes of London and Tokyo. The 16 team 2010 Africa Cup of Nations football tournament is expected to bring in over 10 000 tourists, but hotel rooms are scarce and costing over US$400 per night, so this may hamper the prospective benefits to the city where in the country, around 60% of the people live on less than US$2 per day. Angola has begun to recover well from the 27 year civil war, and with an ever increasing global appetite for energy, they will continue to post impressive growth rates (and along with it, high inflation rates, discussed sometime in the future).
The 2010 fastest growers has been released by Economy Watch, a month before The Economist release their table, and Africa is again well represented. Botswana are second with 14.4% growth, Congo-Brazzaville in fourth with 11.9%, Angola in fifth with 9.3% and Liberia in seventh with 7.53% growth.
Botswana, one of the economic success stories of the continent, had a disastrous 2008-2009, contracting by 10.3% and being forced to obtain a US$1.5 billion loan from the African Development Bank, the first time in 17 years they have needed external assistance. This was caused by the slump in demand for diamonds, but with the global economy expected to be an improvement in 2010 compared to 2009, demand in diamonds will decide if they meet this lofty International Monetary Fund prediction. Congo-Brazzaville and Angola will continue to ride the oil prices in determining their growth rates. Relative new-comers Liberia will also start growing, as in the case of Angola, 11 years of war decimated much of the productive capacity of the country, and hence starting from a low base, they are able to post higher growth rates.
Liberia’s president, the first democratically elected female head of state in Africa, Ellen Johnson-Sirleaf, is a former World Bank employee, and her expertise is paying dividends thus far, with well negotiated deals with the World Bank and I.M.F, and added foreign direct investment mainly to resuscitate their productive sectors, such as the US$1.5 billion investment by world mogul Mittal Steel in iron ore production, and the US$100 million deal with tyre giants Firestone securing over 7 000 jobs. The obvious by product of this has to be the improvement in development of the country, a doubling of primary school enrolment in three years and the prolonging of peace.
So what do these recent results say about Africa’s economic prospects? Over the last 10 years, Africa has had among the highest bloc growth rates in the world, averaging around 6% growth per year. In comparison, the EU has been around 3%, Asia without Japan at 5% and South America around 3%. Even in the current global downturn, as a bloc, Africa will grow by 4.8% compared to 0.1% in Europe or -0.1% in North America, showing that the continent is resilient. The only severe bad apple in the 53 country bloc is Zimbabwe that has managed to foster a 9 year recession, where in each year they contracted (highlights in 2003 -10.3% and 2008 -14.1% contractions), however 2010 may bring about their first year of growth due to the new political settlement. That aside, as many predict, and with results like this, the decade 2010-2020 could be an ‘African decade’, with the likes of Ghana, Rwanda and Tanzania joining the party as the continent emerges from the global recession.