Quo Vadis Africa?*

09/03/2012 15:24 | Updated 08 May 2012

Many today seek to "fix" Africa - economists, experts, politicians, gurus, cognoscenti and glitterati. But the continent conceals multiple secrets, including the Holy Grail: explanations of its economic saga over the previous centuries, especially its poor growth rates until the recent past "golden decade", raising the key question: can this upside trajectory be sustained for the next 30-40 years?

Africa's Future tells the tale of the continent's economic evolution, one of hard-fought triumph over the lasting influences of nature and multiple political tragedies. It explains why from Roman times to 1500 CE Africa went backwards, evolving only slowly, growing later, improving recently, and how modern and many fragmented or archaic economies coexist uneasily today.

While "modern Africa" created diverse pathways to betterment, survivalist economies litter the landscape. Its paradox of "subsistence with many faces" coexists amidst the tiny middle class, growing rich, and many more poor expected in the future.

Those with under the $1/day baseline in 1970 were 40%, while Africa saw this proportion rise over 1980-2000, then start to fall - back to about the same distributive income profile today as in 1970. Over 70% of people still survive on under $2/day, and while more will cross this barrier in future, the sheer numbers below this datum line will grow significantly, given the inevitable doubling of population from one billion now to two billion by 2050.

The modern illusion of the booming "middle class" in Africa has been misunderstood, and refers to those of in-country "middle-income" groups with $4-20/daily income, hardly on any par with the global middle class.

The struggle for over 30 years to dent Africa's poverty has brought some success, but only slowly. The poor long-run GDP/capita growth rate is largely to blame. In 2010 those on income below $10/day capita amounted to 81.5% of Africa's total population. Those with incomes over $20/day ($600/month), not exactly all in the "rich class", counted only 4.48% of the continent.

With increased incomes and falling product prices for many local consumer items (though often second-hand or of poor quality), more of Africa's households have acquired the trappings of modernist consumer culture - apparel, radios and televisions, mobile phones, fridges, electrical goods, motor cycles and vehicles. Yet this still leaves Africa a long way from any general or even predominant modernity. Indeed, the overwhelming condition of Africa is one with large swathes of households reliant on subsistence economies, some survivalist appendages, surrounded by rising modes of scattered modernity.

Images of the "rising middle class" mesmerise some in the corporate world and distort economic visions on the future, some seeking hope for sufficient growth in latecomer technology diffusion across Africa. The idea that mobile telephony could, as many suggest, "transform the continent" is akin to the "economics of wishful thinking", amounting to distraction from more fundamental matters like unlocking natural capital and enhancing productive wealth accumulation. It is akin to placing the commercial cart ahead of the economic horse.

Enhanced income above subsistence certainly allows for the purchase of more discretionary items in the consumer basket, but growth derives ultimately from the construction and exploitation of the productive base: there is no "money tree". At current levels today, Africa's middle income categories might about approximate to the working class poor of Europe one century and more ago, a salutary reminder of the century-plus long task ahead.
Yet there will be a larger middle class future in Africa, but one emerging from today's modest base. Consumerism has attracted more to the cities and lifestyles of the rich and famous, the celebrity culture as strong in Africa as anywhere else.

The managerial models of understanding Africa from "commercial think tanks" (one advocate speaking of the "African Phoenix", another of 7% real GDP growth on trend for forty years), make serious play of this consumer-driven image of the continent "on the move", even as a recipe for its future economic strategy: yet this amounts to nothing like the required economic advancement built around an actual or dominant "middle class" milieu as so commonly and wrongly suggested.

Africa's burgeoning demography will also challenge this future model, as the subsistence economies remain its anchors, and the alleged "demographic dividend", that some blithely portray as the key "driver", transforms into one of rising unemployment translated into growing informalisation. Pundits pushing the virtues of a "demographic dividend" in Africa's future, as more enter the labour force, have not accounted for the weak employment growth record of almost all African economies. The result will be vast increases in informalisation, with a significant shift into slums and urban survival modes of existence as the rural heartlands deplete.

Subsistence economies with swathes of survivalist pockets of existence continue to be Africa's bedrock, and will remain the continent's overriding economic reality well beyond 2050.
The official cheerleaders pushing views about high secular growth rate expectations in Africa to 2050 - claiming 5% real GDP growth over the coming 40 years, some even more - have discounted the historic track record, ignored the contours of economic cycles, under-estimated global competition, and presumed that the infrastructure in-place could accommodate this growth utopia.

Even so, this is a continent of unlocked potential which has witnessed many false dawns. Not "poor" but poorly managed, Africa holds greater promise, its destiny revealed by its history.

*Africa's Future: Darkness to Destiny, Profile Books, London, 2012