Was Ghana's extended-time victory over the U.S. in the World Cup elimination round on June 26 a precursor of what is to come in the broader global economy?
Almost unnoticed, signs of economic life have begun to stir in that most unlikely of places—Africa. Despite its riches in natural resources and geographic proximity to Europe, Africa has been a perennial laggard on the global economic scene. Mention the phrase "emerging economies," and most people rightly think of Asia and Latin America. Few look to Africa as an economy of the future.
That view might be changing. As then U.N. Secretary General Kofi Annan declared in 1999, "Africa's profitability is one of the best-kept secrets in today's world economy."
To be clear, Africa faces many daunting political and economic challenges. Parts of the continent continue to struggle with an AIDS epidemic or sectarian strife. But in the same way that we easily distinguish between Germany and Greece when we think of the European market, we must also understand that Africa is a vast continent with numerous religious, ethnic, and cultural differences. Those differences often divide the continent and restrict economic cooperation, but some of those differences can also be the basis for dynamic economic development.
A quick look at some statistics might be surprising. According to a report by consulting firm McKinsey, Africa had a compound annual economic growth rate of 4.9 percent from 2000 to 2008. While that's not as robust as the 8.3 percent pace in emerging Asia during the period, it actually exceeded the growth of both Latin America and Central and Eastern Europe. Even Sub-Saharan Africa, the poorest region of the poorest continent, had average GDP growth of 4.8 percent between 2004 and 2008. While the global economy shrank in 2008, the African economy still managed to grow another 2 percent, and growth rates this year are almost back to 5 percent.
The Boston Consulting Group has coined the term "African Lions", to refer to Africa's strongest economies: Algeria, Botswana, Egypt, Libya, Mauritius, Morocco, South Africa, and Tunisia. What is most stunning about the African Lions is that their average per capita GDP of $10,000 actually exceeds the combined per capita GDP of the so-called BRIC nations—Brazil, Russia, India, and China—of $8,000. While averages such as these mask many anomalies, and certainly the African Lions are far behind the BRIC nations on almost all broad indices, the number is nevertheless startling and encouraging.
One might guess that rising prices of commodities, particularly petroleum, account for much of the recent increase in African economic growth. While commodities are an important contributing factor, the McKinsey report indicates that their price increases account for only about a quarter of this decade's economic growth in Africa.
While we in the U.S. and Western Europe might be surprised by the economic development in Africa, it probably comes as no surprise to business and political leaders in China and India, which are rapidly developing countries themselves. Looking for oil and other natural resources, both China and India took a keen interest in Africa as far back as the late 1980s. With 16 billion metric tons of proven oil reserves and 500 trillion cubic feet of gas reserves, Africa can be energy self-sufficient while it exports energy to fund further growth. Unburdened by a colonialist past in the region, China and India have found a warm welcome for their investments.
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