Human capital development holds key to Africa’s progress: AfDB report
While the report paints a sunny picture for Africa’s future, it cautions that economic growth is conditional on the continent improving equitable access to health systems, articulating right education policies, and creating employment opportunities. (Image: Report)
Europe and Africa don’t have much in common – or do they? Apparently yes! Africa has 52 cities with populations of 1 million or higher, the same number as for Europe, according to a recent report by the African Development Bank (AfDB).
What’s more, this urbanization trend is only growing, with as many as 50% of Africans expected to be city dwellers in 2050 compared to 39% in 2011, highlights the report, titled Tracking Africa’s Progress in Figures.
Also, a growing middle class – defined as those earning between USD 2 to USD 20 per day – is fuelling consumption on the back of their more affluent lifestyle, and spurring production to keep pace with rising consumption.
Consumer spending in Africa, primarily by the middle class, has reached an estimated USD 1.3 trillion in 2010 (60% of Africa’s GDP) and is projected to double by 2030.
The report also dwells on human capital development as one of the ‘megatrends’ which will hold the key to Africa’s growth story.
The report notes that, with a large population, Africa can harness and build on the expanded workforce to spur economic growth. Incidentally, Africa will lead population growth over the next 50 years, having exceeded the 1 billion mark in 2011 and expected to notch up a rise in population to at least 2.4 billion by 2050.
On improving business environment, the report notes that since 2005, 20 countries in Africa are among the top 50 most-improved world economies in business regulatory efficiency. Among these economies, Rwanda improved the most over the past 7 years.
What’s more, in recent years, Africa has made great strides in developing its private sector. Since 2000, foreign direct investment has increased fivefold, to $50 billion last year, nearly a sixth of which went to top recipient, Nigeria.
While developed countries still dominate African trade, recent trends indicate that developing economic regions are driving the growth in Africa trade and will continue to do so over the next 50 years.
But while the report paints a sunny picture for Africa’s future, it also cautions that the economic growth is conditional on the continent improving equitable access to health systems, articulating right education policies, and creating employment opportunities.
Infrastructure in particular continues to be the Achilles heel of the African economy.
Electricity supply is intermittent and underpenetrated. Household electriﬁcation rate in Africa stands at just 43%, leaving 600 million people without access to electricity.
And, while roads are the main mode of transport, carrying at least 80% of goods and 90% of passengers, 53% of the roads are unpaved, isolating people from basic education, health services, transport corridors, trade hubs, and economic opportunities.
The report also highlights that railway, aviation and port facilities are underdeveloped. In particular, it notes that, with only 64 ports, of which many are poorly equipped and uneconomically operated, African can benefit greatly from enhancing port infrastructures. Well-developed ports can substantially reduce the cost of production for companies and contribute to economic growth in Africa.
Finally, the report paints a bright picture of the continent on the ICT front. Africa is now the fastest growing and second largest mobile phone market in the world. More than eight in ten Africans have a mobile phone, amounting to 760 million mobile subscriptions, and progress will continue over the next 5 years, with the number of subscriptions projected to cross the 1 billion mark by 2016.
All in all, the report notes that the Internet’s contribution to Africa’s overall GDP is low, but is projected to grow to at least 5 to 6%, the same level as Sweden, Taiwan, and the United Kingdom, by 2025.