The era of pessimism is over in Africa. In eight of the last 10 years, the African "lion" economies have grown faster than even the Asian "tigers," and certainly more than most economies in the West. But if this growth is not invested in human capital and diversifying economies, there is a risk that Africa will once again be known as the lost continent.
Unlike a decade ago when the Economist depicted a child soldier under the disheartening heading: "The hopeless continent," today you will find a new cover page, one of a young African boy running with a rainbow-colored kite in the shape of the continent with a new message: "Africa Rising."
Of the 10 fastest growing economies globally, the IMF expects that seven of them will be African. With an expected annual growth of 5% in 2012-2013, sub-Saharan Africa continues its transformative journey from a developing continent to a hub of global growth. This journey was the focus of the 23rd World Economic Forum on Africa in Cape Town, South Africa, which provided an important platform for regional and global leaders -- from business, government and civil society -- to deepen the continent's integration agenda and renew commitment to a sustainable path of growth and development.
African leaders have demonstrated a high degree of macroeconomic sobriety, especially as inflation has traditionally been a major problem. In the 1990s, Africa experienced on average 22% inflation; it is now at 8%. African countries have also reduced foreign debt share of GDP from 82% to 59%; the budget deficit is well below European levels.
Maintaining the pace of progress in Africa will be high on the agenda at this month's G8 Summit, where leaders share a moral and strategic imperative to assist in Africa's emergence. They, along with the region's own leaders, should beware: the continent's positive outlook is threatened by fluctuating commodity prices, rising inequality and youth unemployment. Currently, 70% of the population is under the age of 30. There are over 1 billion Africans today, with that number expected to double by 2050. In 2040, Africa will have more people of working age than China. As such, many jobs will need to be created so that the next generation can be productive and contribute to economic growth. To succeed will require political will and the ability to undertake a variety of structural reforms. In addition, African countries need to diversify their economies, investing in infrastructure and human capital.
Inadequate infrastructure is an obstacle to increased productivity. This means not only improving traditional infrastructure such as better road systems to increase the flow of trade (although even with better roads, economic growth is slowed by rigid border controls and high customs tariffs; trade between African countries is still equivalent to only about 12% of the total trade), but also digital infrastructure.
The introduction of new technology has played a significant role in Africa's emergence as an economic player. It is estimated that 52% of all Africans who live in cities have access to the Internet; this is in line with Brazil and China. The online revolution is also opening new educational opportunities, with more and more young people taking free online courses and educational programs.
Since 2000, more than 360 million African mobile subscribers have been added to the market. For many, mobile phones are the most importantly way, sometimes the only way, to connect to a modern payment system. In Kenya, the value of transactions through mobile phones was equivalent to 60% of GDP in 2012. There are now twice as many mobile banking customers in Africa compared to Facebook users.
Innovative applications and technologies in developing economies have also laid the foundation of African technological clusters. Google's Eric Schmidt recently declared Kenya as the continent's most exciting high-tech environment. And in January, investors launched a US$ 10 billion investment in Konza Technology City on the outskirts of Nairobi. No wonder Nairobi is touted as "Silicon Savannah."
But, continued success will depend a large part on political stability and improved security, which are necessary preconditions for further development. Lack of security and crime pose serious challenges in many nations.
The fight against corruption is also a strategic imperative for Africa. The World Bank estimates that 1,000 billion dollars every year globally is going to various forms of bribery; Africa loses about 25% of GDP from corruption. In fact, corruption is identified as the top impediment to conducting business in 22 out of 144 economies, as measured in the World Economic Forum's Global Competitiveness Report. Corruption is widely recognized as a major obstacle to the stability, growth and competitiveness of economies. Such lost resources could be used for education, health and reducing poverty.
Nearly 500 million people in Africa do not have access to electricity; 300 million Americans use more electricity for air-conditioning than Africa's 1 billion inhabitants use in total. But Africa has large reserves of hydropower and natural gas and near limitless amounts of solar energy, which is both renewable and environmentally friendly and does not require large investments in electricity grids. This area needs to be further developed so that more people can be connected to the grid and reap the benefits of improved access.
Many challenges remain for Africa. But, if the continent continues to accelerate its economic diversification, boost strategic infrastructure and unlock talent, especially its youth, it could grow in line with the Asian tigers, and ultimately achieve GDP per capita as some northern European countries.
The rich world can and must help achieve this goal. A prosperous, stable Africa is in all our best interests, a fact that will not be lost on leaders in Fermanagh next week, as are the risks to stability -- economic and political -- should growth run out of steam.
When describing his vision for Africa during a high-level panel at the World Economic Forum on Africa, Swedish Finance Minister Anders Borg hoped that his great-grandchildren will one day ask: "Is it really true that in former times Africa was poorer than Europe?" I believe this is an aspiration worth striving for.