For the longest time, Africa took a back seat in the world economy. Albeit for various reasons, some beyond the continent’s control, Africa was not recognized as an active economic participant by developed countries. However, there has been a paradigm shift in the past few decades as Africa has begun to forge its destiny and implement policies that benefit its economic status in the world. Africa has been recognized as the world’s second-fastest-growing regional economy with anticipated annual growth of about 3.9% by 2022.
Africa’s economic drivers
The continent has many factors working in its favor in asserting its position in economic dominance. These include an abundance of mineral resources, arable land, favorable climatic conditions, a young population and improved domestic and foreign policies by the governments. Whilst foreign direct investment on the continent was previously a result of extractive industries, the trend is evolving as Africa has more to offer to the world.
Africa as a rising leader in food security
One of the biggest future challenges that need solutions is that of global food security. Global warming and an ever-growing world population are some of the factors affecting the availability of adequate food for everyone. While Africa is not exempt from this challenge, the continent is steadily growing in the agricultural sector. As more African farmers move from subsistence to commercial farming, Africa’s production output is increasing, and availing more products for the export market.
According to statistics, two-thirds of Africa’s working population is employed in the agricultural sector, and agriculture contributes between 20% – 60% of each country’s GDP. Africa cannot only feed itself but also the world. With continuous investment in agricultural technologies, Africa is positioned to become an agricultural powerhouse. In the words of the African Development Bank’s President, the future billionaires in Africa will be in agriculture.
Mineral and extractive resources
It is no secret that the continent is blessed with abundant mineral resources. The list is extensive and includes gold, diamonds, platinum, uranium, aluminum, and lithium and oil deposits. These minerals have been plundered by the developed countries and sold to the continent as processed goods. The returned goods fetch a multiplied price as compared to the raw form that it left the continent in.
As a result of improved governance and changes in economic policies, African countries are steadily investing in value–addition technologies, which means more and more, the continent is exporting processed goods instead of just raw materials.
A younger population
Africa has a younger population in comparison to other continents. It is estimated that by 2035, the working population in Sub-Saharan Africa will surpass that of the rest of the world. While the developed world is at a conundrum in trying to resolve economic problems resultant from the age gap, Africa has a competitive advantage for economic growth and development through young, creative and innovative minds.
A younger population demographic also secures a ready market for manufactured products and increases a country’s revenue base through the collection of taxes.
Human capital movement
We are living in a globalized world, where not only the movement of goods but that of people has become easier. As the continent has faced countless economic challenges, it has resulted in many skilled workers leaving Africa in search of better opportunities that are financially rewarding.
Although this has resulted somewhat in the phenomenon of “brain drain” for the continent, these skilled workers have proved valuable in the countries where they have settled and been employed. In this indirect manner, Africa has stimulated economic growth for other developed economies through the provision of skilled labour.
While some uninformed populations may label Africa as a dark continent that is not privy to technological developments, the continent has made remarkable technological developments in recent years. A major contributing factor is the existence of a young population that is adaptive to new developments and is, therefore, tech-savvy. With the emerging tech hubs across the continent, many solutions to African problems are being created in these technological spheres where minds come together to create innovative and relevant technologies.
Africa is steadily contributing to the digital global economy in different ways, such as availing goods and services online. Many African entrepreneurs are actively participating in digital outsourcing, which has become a growing income earner for many people.
One stand-out success story on the continent in creating African solutions to African problems is the advent and growth of the use of mobile money. For example M-Pesa was a pioneer in creating a mobile banking system for many who were unbanked in Kenya, making day–to–day transactions easier for consumers. Other African countries have successfully followed suit, which has promoted growth in various sectors through the ease of transacting.
This sector is a primary contributor to economic growth and employment creation in the global economy. In 2019, the tourism industry contributed 10.4% towards the global GDP. In all this, Africa is not left behind. Endowed with natural wonders, cultural diversity, teeming wildlife and generally good climate, the continent has enjoyed a steady income as a result of the tourism industry.
Owing to infrastructural development, easing traveling conditions and the creation of business-friendly environments, Africa has economically benefited from tourist visits. If the continent continues to implement its Tourism Action Plan, more revenue will be realized from the tourism industry.
Protecting the environment is paramount in realizing sustainable economic growth and development. Like the rest of the world, Africa has not been spared the challenges associated with climate change and environmental degradation through resource extraction and bad farming practices. However, the continent is taking positive steps in implementing green solutions that will ensure continued economic growth.
This includes investment in renewable energy sources such as solar, hydro and biogas energy systems and recycling. One recycling initiative that stands out is a Rwandan project which uses banana waste to make affordable and environmentally friendly sanitary wear for the community. With such disruptive thinking, the continent will continue playing an integral part in the world economy.
Since the days of the ancient Egyptian civilization, Africa has been a pioneer of innovation and business and is steadily asserting its dominance economically. If the continent maintains its momentum in the years to come, and mobilizes its resources in the correct fashion, it will see a significant economic shift that will result in Africa’s dominance in the global economy.