ARTICLE: How Africa is Becoming the New Asia, By Jerry Guo, NEWSWEEK, Feb 19, 2010
The gist:
China and India get all the headlines for their economic prowess, but there's another global growth story that is easily overlooked: Africa. In 2007 and 2008, southern Africa, the Great Lakes region of Kenya, Tanzania, and Uganda, and even the drought-stricken Horn of Africa had GDP growth rates on par with Asia's two powerhouses. Last year, in the depths of global recession, the continent clocked almost 2 percent growth, roughly equal to the rates in the Middle East, and outperforming everywhere else but India and China. This year and in 2011, Africa will grow by 4.8 percent--the highest rate of growth outside Asia, and higher than even the oft-buzzed-about economies of Brazil, Russia, Mexico, and Eastern Europe, according to newly revised IMF estimates. In fact, on a per capita basis, Africans are already richer than Indians, and a dozen African states have higher gross national income per capita than China.
Of course, comparing the two sides is a bit misleading, because much of the current growth in Africa is due to the resource draw coming from India and China, so they're intimately linked.
But remember, the real power is demand, not Africa's supply of raw materials, and here's where we find the good, good stuff (to quote the B-52s in a rather racy song):
In the last four years, the surge in private consumption of goods and services has accounted for two thirds of Africa's GDP growth. The rapidly emerging African middle class could number as many as 300 million, out of a total population of 1 billion, according to development expert Vijay Majahan, author of the 2009 book Africa Rising. While few of them have the kind of disposable income found in Asia and the West, these accountants, teachers, maids, taxi drivers, even roadside street vendors, are driving up demand for goods and services like cell phones, bank accounts, upmarket foodstuffs, and real estate. In fact, in Africa's 10 largest economies, the service sector makes up 40 percent of GDP, not too far from India's 53 percent. "The new Africa story is consumption," says Graham Thomas, head of principal investment at Standard Bank Group, which operates in 17 African countries.
Then note the strong connectivity flavor to the enduring growth:
Much of the boom in this new consumer class can be attributed to outside forces: evolving trade patterns, particularly from increased demand coming out of China, and technological innovation abroad that spurs local productivity and growth like the multibillion-dollar fiber-optic lines that are being laid out between Africa and the developed world. Other changes are domestic and deliberate. Despite Africa's well-founded reputation for corruption and poor governance, a substantial chunk of the continent has quietly experienced this economic renaissance by dint of its virtually unprecedented political stability. Spurred by eager investors, governments have steadily deregulated industries and developed infrastructure. As a result, countries such as Kenya and Botswana now boast privately owned world-class hospitals, charter schools, and toll roads that are actually safe to drive on. A study by a World Bank program, the Africa Infrastructure Country Diagnostic, found that improvements in Africa's telecom infrastructure have contributed as much as 1 percent to per capita GDP growth, a bigger role than changes in monetary or fiscal policies. Shares of stocks in recently privatized local airlines, freight companies, and telecoms have skyrocketed.
This includes people connections:
Entrepreneurship has increased at the same time, powered in part by the influx of returning skilled workers. Just as waves of expats returned to China and India in the 1990s to start businesses that in turn attracted more outside talent and capital, there are now signs that an entrepreneurial African diaspora will help transform the continent.
Now I've basically excerpted the entire front half of the piece, except for the end. It's that good.
But there's more: intelligent projections to include . . .
Many experts believe Africa, with its expansive base of newly minted consumers, may very well be on the verge of becoming the next India, thanks to frenetic urbanization and the sort of big push in services and infrastructure that transformed the Asian subcontinent 15 years ago.
The ending shines as well, as it cites continuing obstacles and reminds us that this area is very "frontier":
Still, Africa remains at the very frontier of emerging markets. Despite its gains, the difficulty and cost of running a business there are the highest in the world, according to data from the International Monetary Fund. Couple that with pervasive corruption--Transparency International calls the problem "rampant" in 36 of 53 African states--and it's no wonder Africa is often regarded as a toxic place to operate. But World Bank president Robert Zoellick says that in the aftermath of the economic crisis, long-term investors have recognized that "developed markets have big risks too." Like China and India, Africa is exploiting that fact, and perhaps more than any other region it is illustrative of a new world order in which the poorest nations will still find ways to steam ahead.
This is why, after I show the Gap in the brief, I shrink it down rapidly in a series of animations that suggest Africa will be the center of global integration going forward.
De-globalization, my ass. We're just entering a point of inflection on globalization's expansion. That's why creating Africom was so smart. No part of the system will exhibit more play in coming years--both good and bad.
Sunday, March 21, 2010 at 11:39PM 
