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Marcelo Giugale

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Africa's Emergence -- Part II

Posted: 10/05/11 05:58 PM ET

A few weeks ago, this column argued that Africa is about to emerge -- and that you should think about investing there before it is too late. The reasons for the optimism go well beyond China's new role in the region, high commodity prices, and viral-expansion of cellular telephony -- that is, beyond "the three Cs". More profound and more powerful forces will, with a bit of luck, drive the continent's emergence. Here they are.

First, nobody knows how rich Africa actually is -- how much oil, gas, minerals and other resources lie beneath its surface. Less than half of the continent has been geologically surveyed. It would take about one billion dollars to fly planes with Magnetic Anomaly Detectors ("MADs") to map it all out. Accounting for this resource wealth would change things. Countries that know for sure what they have, can negotiate better extraction deals, get cheaper loans, and involve citizens in monitoring it all. Recent oil discoveries in Ghana are a good example of this.

Second, Africa has a lot to learn. There is a massive inventory of proven technologies that the region has not acquired, adopted and adapted. Imagine, for example, what African agriculture would look like if it upgraded its production methods -- say, like Brazil did forty years ago. Or if its transport system were faster, cheaper and safer. Or if it could harness more of its immense sources of energy. The technologies to do all that already exist. The good news is that the cost of transferring and protecting them is falling worldwide -- Africa has yet to tap this knowledge.

Third, the region barely trades with itself. Only ten cents of every dollar exported from an average African country goes to another African country -- in East Asia, half of every dollar exported is bound for an East Asian market. The opportunities for mutual benefit are huge. Energy is a good example. A few nations -- among them the Democratic Republic of Congo -- have enough hydro-power potential to provide electricity to the whole continent. Yet, they do not. Another example is services: African countries do not readily recognize each others' teachers, doctors or accountants, so professionals cannot move where they are most needed. And for all the images of malnourished children, Africa could feed itself if it allowed food to cross borders more easily -- the travails of women carrying vegetables sacks on foot and trying to clear customs have been the subject of many infuriating reports. This self-isolation is slowly beginning to change -- agreements to form "regional economic communities" within Africa have existed for decades.

Fourth, Africans are joining the middle-class (regional definition: those living on 2 to 20 dollars per day). By 2030, one in two of them -- some 600 million -- will be middle-classers. Today, less than one in three is. This will change consumption habits -- more TVs, cosmetics and cars will be demanded. More importantly, it will also change politics. Radicals will be less welcome. Drastic change in policy will be less frequent. And planning horizons will be longer.

Fifth, Africa's population is maturing. This should bring a "demographic dividend", that is, every worker will have fewer children and fewer elderly to support. As the odds that your child survives improve, you limit the number of your offspring. In fact, infant mortality has fallen fairly dramatically over the past twenty years. So African women are actually having fewer babies -- on average they still have more than five each, mind you. All this, of course, could be derailed by diseases like HIV/AIDS or malaria. And some countries, especially in West Africa, have yet to make progress in family planning. But the trend towards a more mature Africa is undeniable.

Sixth, agriculture will be transformed. International prices for food -- and all the social tension they cause -- are projected to stay high for at least a decade. The continent has some 200 million hectares of land that contain no forest, show good agro-ecological potential, house few people, and are reasonably close to a city. No other region can offer this. Yes, ownership of that land is in many cases unclear -- titles, when they exist, are hotly disputed. But, the combination of prices and possibilities will make the expansion of commercial-scale farming all but inevitable. Will this spell disaster for the poor smallholders that currently populate Africa's agriculture and provide most of the region's employment? No. If the links between big and small exist, both should be better off -- Brazil and Thailand have shown that to be possible. But there will be less farming jobs, which takes us back to China.

Seventh, China will soon start outsourcing low-skill manufacturing jobs -- perhaps as many as 85 million over the next ten years. This will give Africa a once-in-a-lifetime opportunity to jump start its industrial base. It stands a good chance of capturing some of that employment. It has a young and plentiful labor supply, and relative proximity to the U.S. and Europe (the main destination of Chinese products). This could not come at a better time -- some 17 million jobs have to be created every year just to keep African unemployment from rising.

Eighth, over the next decade, there will be wholesale generational change among African leaders. A younger crop will come to power. This is not just about biology -- although more than half of the region's presidents are 65 or older. It is about the two-thirds of the population who are currently under the age of 25, are more likely to be social-media connected, and are less likely to feel personally identified with the struggles of independence. The political discourse will change from past to future.

Ninth, whichever generation comes to power, it will be held accountable much more closely than before. Democracy is -- slowly -- bringing voice and participation to African societies. As information and connectivity reaches an ever-increasing number of voters, they will demand better service from their leaders. Decentralization of decision-making is already putting pressure on local authorities to perform. And Africans are beginning to use the tools for social accountability with gusto -- from access to information laws in Uganda to cell-phone-based systems for reporting on absent teachers in Tanzania. All this will translate into better governance. Still far from optimal, but better.

Finally, there will be more peace -- or, at least, less war. Many of the old African conflicts, whether over resources, race or religion, are still unresolved. But prevention, attention, and intervention are more common -- and faster. Look at the hope-filled birth of South Sudan, the lessons of Cote d'Ivoire, or the forward march of Rwanda. If anything, the real worry is to see a small core of countries left behind, entangled in never-ending conflicts.

Put it all together and Africa's recent shine begins to look more permanent. Of course, many things can still go wrong, from a rich-country debt crisis pulling the global economy into a protracted depression to a collapse in commodity prices triggered by a sudden cool-down of East Asian economies. But, if the world holds, this ought to be the African decade. And it is for Africans to make the most of it.

 

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