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Is Africa’s economic growth unsustainable?

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Posted July 17, 2014
Picture: Marketplace in Lagos, Nigeria. Source: Zouzou Wizman/Flickr, CC BY 2.0

Picture: Marketplace in Lagos, Nigeria. Source: Zouzou Wizman/Flickr, CC BY 2.0

Several popular journals such as The Economist reported about rapid economic growth and bright future perspectives of African countries recently. Nonetheless, the situation is not so good as pictured by the enthusiastic journalists, Robert Kappel thinks. Kappel, who works as a professor at Hamburg and Leipzig universities, critically evaluates arguments supporting claims about Africa’s rise. 

The average GDP of sub-Saharan countries has been constantly rising over the last decade. However, Kappel argues that averages do not account for significant variations among different countries. “Sustainable growth can be established for some countries; however, this sustainability cannot be applied to the fragile states and the low-income states, meaning only about half of the countries in sub-Saharan Africa are actually demonstrating accelerated growth,” German economist writes.

On the one hand, exports to other growing markets, such as China or India, increased. On the other hand, foreign countries mostly purchase natural resources and agricultural production. Moreover, industrialization of the Black Continent has failed and manufactured goods occupy only small fraction of the exports. “Agriculture, the informal sector and natural resources continue to dominate the economies of Africa, essentially leading to growth without development,” the scientist says. Some of the countries, such as Botswana, managed to diversify their economies. However, such cases are rare and most of the countries are in a resource trap.

Statistics reveal that the proportion of poor people declines and middle class emerges. But, it should not be forgotten that 7 out of 10 inhabitants earn less than 2 dollars per day. In addition, it is hard to estimate who belongs to the middle class unambiguously. “According to the African Development Bank, anyone earning over 2 USD per day is categorized as belonging to the middle class,” Kappel notes.

Africa is often called the future continent, because its proportion of young people is the largest in the world. However, most of them are unemployed and there is no guarantee that they will be able to find a job easily. “African countries will need to generate about eight million jobs annually to adapt to the high rate of population growth,” the economist estimates. However, there are serious doubts that needed number of workplaces will be created as natural resource and agricultural sectors do not create many additional jobs each year.

Research article: Kappel, Robert ; GIGA German Institute of Global and Area Studies – Leibniz-Institut für Globale und Regionale Studien (Ed.): Africa: Neither Hopeless Nor Rising. Hamburg, 2014 (GIGA Focus International Edition No. 1). URN: https://nbn-resolving.de/urn:nbn:de:0168-ssoar-373632, source link.

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