Will it regain its economic footing?

Executive Summary

Sub-Saharan Africa remains a region of enormous economic potential, boasting abundant natural resources and a large and youthful population of 800 million. Yet the end of the global commodity price boom has devastated much of the region, interrupting nearly two decades of robust growth. Some smaller economies less reliant on resources have continued to flourish, resulting in “multispeed” growth in the region. In addition to external factors, domestic problems are also holding back growth: a lack of economic diversification and necessary infrastructure; corruption and poor governance; and conflict and political fragility. Still, the region offers opportunity for corporations and investors: Average per capita GDP should exceed $4,400 by 2020, and household consumption is expected to keep growing.

Some key takeaways:

  • GDP growth for sub-Saharan Africa fell to 1.4 percent in 2016 but is expected to rebound to 2.6 percent this year, a rate that just keeps pace with population growth; analysts predict 3.5 percent growth in 2018.

  • An expanding population and urbanization, if harnessed, are trends that could be major opportunities; if not, they will present difficult challenges.

  • China has emerged as the region’s most important trading partner and a major investor.

Resources for Further Study

Bibliography

Books

Meredith, Martin, “The Fortunes of Africa: A 5000-Year History of Wealth, Greed, and Endeavor,” Simon & Schuster UK, 2014. A historian and journalist looks at the long narrative of African history, from the Egyptian pharaohs to the 21st century.

Meredith, Martin, “The Fate of Africa: A History of the Continent Since Independence,” PublicAffairs, 2011. Meredith takes a closer look at the events in Africa, from the beginnings of the independence movements in the mid-20th century through the recent global recession.

Reid, Richard J., “A History of Modern Africa,” Second Edition, John Wiley & Sons Limited, 2012. A historian at the University of London’s School of Oriental and African Studies offers insights into what African history from 1800 to the present means for the continent’s future.

Articles

“Why We Need to Close the Infrastructure Gap in Sub-Saharan Africa,” The World Bank, April 2017, http://tinyurl.com/ktouwox. The bank analyzes trends in infrastructure quantity, quality and access in sub-Saharan Africa and explores the relationship between infrastructure growth and economic growth in the region.

Arosanyin, Kemi, “2017: Economic Outlook for Sub-Saharan Africa,” Global Trade, Jan. 25, 2017, http://tinyurl.com/ydxjqk6b. A trade development specialist looks at measures African governments are taking to keep global investors interested in the region.

Larmer, Brook, “Is China the World’s New Colonial Power,” The New York Times Magazine, May 2, 2017, http://tinyurl.com/kt7ngt3. A journalist outlines China’s adoption of a unique and powerful approach to creating trade relationships with emerging market nations.

Reports and Studies

“Afri-can or Afri-can’t? 10 Myths to debunk on Africa,” Euler Hermes Economic Research, Oct. 20, 2016, http://tinyurl.com/k4kcxta. A French investment firm explains the shortcomings of some conventional thinking about Africa.

“Attractiveness Report: Africa, Connectivity redefined,” Ernst & Young, May 2017, http://tinyurl.com/l95u5af. The international professional services firm examines recent setbacks affecting sub-Saharan economies, with a special focus on foreign direct investment.

“From Crisis to Sustainable Growth – Sub-Saharan Africa: A Long-Term Perspective Study,” The World Bank, 1989, http://tinyurl.com/mko4x9g. In this report, the World Bank says democracy and economic liberalization are crucial to helping Africa achieve economic prosperity.

“Global Economic Prospects: Sub-Saharan Africa,” The World Bank, January 2017, http://tinyurl.com/mmp6dat. The bank issues its latest report on sub-Saharan Africa.

“Regional Economic Outlook: Sub Saharan Africa, Restarting the Growth Engine,” International Monetary Fund, May 2017, http://tinyurl.com/l89mobx. The IMF’s latest report on sub-Saharan Africa, with analysis of developments and trends, and recommendations for reviving the region’s economy.

“Transforming African Development: Partnerships and Risk Mitigation to Mobilize Private Investment on a New Scale,” International Finance Corporation, 2016, http://tinyurl.com/jwqqh25. A global development institution looks at issues and opportunities in Africa.

Bughin, Jacques, et al., “Lions on the Move II: Realizing the Potential of Africa’s Economies,” McKinsey Global Institute, September 2016, http://tinyurl.com/kn9f8yj. The think tank looks at Africa’s economic fundamentals and what it would take to improve them.

Toben, Christian, “What is the future for FDI to Sub Saharan Africa?” Banker Africa, Issue 40, pp. 34-36, 2016, http://tinyurl.com/mg3g45t. A Commerzbank analyst looks at falling investment in Africa and opportunities to revive it.

The Next Step

Economic Performance

“Sub-Saharan Africa economic growth to recover slightly in 2017: IMF,” Reuters, May 9, 2017, http://tinyurl.com/y9bzc2ay. Economic growth in sub-Saharan Africa should bounce back slightly to 2.6 percent in 2017 after hitting a decades-low point in 2016, the International Monetary Fund predicted.

“U.S. budget proposal cuts climate funding, international aid,” Africa Times, May 23, 2017, http://tinyurl.com/yb7x86uy. The Trump administration proposes spending $434.4 million for development programs in sub-Saharan Africa to fight rising extremism there, with $292.2 million slated for regional health programs.

Amlot, Matthew, “Moody’s: Sub-Saharan Africa’s recovery from foreign currency shortages to take time,” CPI Financial, May 24, 2017, http://tinyurl.com/yd66mwvh. Falling commodity prices have triggered foreign currency shortages in sub-Saharan Africa, but “any recovery will depend on continued higher prices and could take some time,” according to a Moody’s Investors Service report.

Health Issues

Harris, Gardiner, “Cuts to AIDS Treatment Programs Could Cost a Million Lives,” The New York Times, May 23, 2017, http://tinyurl.com/m3fq8xl. Global health researchers warn that more than 1 million people in sub-Saharan Africa could die if a proposed 20 percent cut in U.S. funding to HIV programs goes into effect.

Hofman, Karen, and Charles Parry, “The global alcohol business is expanding in Africa and that’s bad news for health,” Quartz, May 25, 2017, http://tinyurl.com/yb5vt4fw. The alcohol industry sees sub-Saharan Africa as an underdeveloped market to exploit, and experts warn that expansion could increase alcohol-related health problems in the region.

Wadekar, Neha, “Kenyan medics say U.S. health aid cuts will mean more abortions,” Reuters, May 23, 2017, http://tinyurl.com/yd24ghcv. A Kenyan women’s health program expects to lose all of its U.S. funding, or more than half of its budget, because the United States reinstated its “Mexico City Policy”; the policy bars foreign health organizations receiving U.S. funding from providing abortion services.

Infrastructure Developments

Coleman, Gary, “Africa’s Infrastructure ‘Problems’ Are Actually A Leapfrogging Opportunity,” The Huffington Post, May 5, 2017, http://tinyurl.com/yatxupcl. Shortcomings in sub-Saharan Africa’s infrastructure could provide the region with major opportunities to use technology and innovative approaches to bolster the economy and stimulate infrastructure growth, a global adviser for the consulting firm Deloitte said.

Ombok, Eric, “Volvo Expands Truck Building Into Fast-Growing East Africa,” Bloomberg, May 19, 2017, http://tinyurl.com/ycvlyvdz. East Africa’s economic growth, which exceeds the sub-Saharan average, is leading Volvo’s trucks division to expand in the region.

Rosen, Jonathan W., “As the World Cuts Back on Coal, a Growing Appetite in Africa,” National Geographic, May 10, 2017, http://tinyurl.com/lwtqs7g. Kenyan company Amu Power is preparing to build a $2 billion coal-fired plant on Lamu Island, which would help power more sub-Saharan households – but, according to critics, could harm the island’s fishing and tourism industries.

Technology Shifts

“Tech entrepreneurs in Ghana talk innovation with Facebook exec,” Africa Times, March 2, 2017, http://tinyurl.com/y7mmcxze. Facebook’s chief product officer met with participants in a tech startup incubator program in Ghana and talked with entrepreneurs about how sub-Saharan innovators are using the social platform.

Adegoke, Yinka, “Africa’s early mobile money success is finally set to go global,” Quartz, May 29, 2017, http://tinyurl.com/yc6xz8qp. Kenyan mobile money system M-Pesa has continued to increase its revenue, and improvements in “interoperability” will allow its customers to send money to another app.

Du Venage, Gavin, “Tech majors bridge Africa’s rising online connectivity,” The National, May 15, 2017, http://tinyurl.com/y94xhudm. Facebook’s Free Basics initiative brings the internet to more people in sub-Saharan Africa, but critics say users have access to only a limited number of websites.

Organizations

African Development Bank
Avenue Joseph Anoma, 01 BP 1387 Abidjan 01, Ivory Coast
+225 2026 3900
www.afdb.org
A financial institution created in 1964 to foster economic development and social progress in Africa.

The African Union
P.O. Box 3243, Roosevelt St., W21K19, Addis Ababa, Ethiopia
+251 11 551 77 00
www.au.int
A group of 55 African nations working for the continent’s political and socio-economic integration.

Euler Hermes
Tour First 1, Place des Saisons – 92048, La Défense Paris, France
+ 33 1 8411 5000
www.eulerhermes.com
An international credit insurance company that conducts research in Africa.

Focus Economics
Gran Via 657, E-08010, Barcelona, Spain
+34 93 265 10 40
www.focus-economics.com/
An economic forecasting firm with a practice focused on sub-Saharan Africa and other emerging-market economies.

The Free Africa Foundation
910 17th St., N.W., suite 419, Washington, DC 20006
1-202-296-7081
https://freeafrica.org/
An organization headed by Ghanaian economist George Ayittey that seeks to empower Africans to take charge of their own destiny and find Africa-based solutions to the continent’s problems.

International Monetary Fund
700 19th St., N.W., Washington, DC 20431
1-202-623-7000
www.imf.org
An institution established by the 1944 Bretton Woods conference that works for global monetary cooperation, financial stability and global trade.

The World Bank
1818 H St., N.W., Washington, DC 20433
1-202-473-1000
www.worldbank.org
An international financial and lending institution working to help sub-Saharan Africa and other emerging regions develop economically.

DOI: 10.1177/237455680317.n1