Structural Change

Skeptics Should Rethink Africa’s Potential

(140530) -- NGEZI (Zimbabwe), May 30 () -- A mine worker gets out of an underground mine at Zimplats in Ngezi, Zimbabwe, May 30, 2014. Zimbabwe's biggest platinum producer Zimplats announced Friday that it will invest 100 million U.S. dollars to set up a refinery and boost output to 270,000 ounces per year. (/Stringer) [ Rechtehinweis: Keine Verwendung in China, Taiwan, Macao und Hongkong, No usage in China, Taiwan, Macao and Hongkong ]
A mine worker at Zimplats in Ngezi, Zimbabwe.
  • Why it matters

    Why it matters

    Assumptions about Africa’s dependence on raw materials and China are wrong and could be blinding many to the great opportunities that exist there as structural economic changes lead to what could be a sustainable upturn on the continent.

  • Facts

    Facts

    • The GDP across Africa has increased by 3.7 percent according to the latest African Economic Outlook, published by the OECD and the African Development Bank.
    • An economic restructuring is taking place in many African countries. The share of manufactured goods in total exports from Africa increased from 2000 to 2010 from 10 percent to 23 percent.
    • A World Bank analysis shows that a significant slowdown in the Chinese economy would hit Africa less hard than the world economy as a whole.
  • Audio

    Audio

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The fall in commodity prices between mid-2014 and early 2016 hit the economies of many countries hard. The HWWI commodity price index plummeted by more than half during this period. The associated decrease in export revenues didn’t just push relatively small countries like Azerbaijan and Venezuela into a recession, but also BRIC countries like Russia and Brazil. But a look at the latest African Economic Outlook shows that the gross domestic product of the supposedly commodity-dependent Africa has increased by 3.7 percent, despite this drop in prices in the past year.

The OECD and the African Development Bank, which publish the Outlook, expect this growth rate to repeat itself in 2016 and then to increase to 4.5 percent in 2017. This would put it back close to the average annual growth rate since the beginning of the new millennium, which had been 5 percent.

Although the continent of Africa, with its 54 countries, is a much more heterogeneous place than India or China, one thing emerges: The skeptics who gave the commodity price boom all the credit in Africa’s upturn were obviously wrong.

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