# CHALLENGES AND OPPORTUNITIES

#### The Future of Africa

"Cilliers refuses to adopt a fatalistic attitude . . . or to get stuck in simplistic models that equate GDP growth with genuine development . . . His very practical recommendations, largely focusing on issues of governance and policy efficiency, are based on solid empirical evidence and sound argument. This book can make a difference and will contribute to improving the human condition on our continent."

—Professor Maxi Schoeman, *Professor Emeritus, Department of Political Sciences, University of Pretoria*

"*Africa First!* suggests that the future lies in Africa's ability to seize the significant opportunities opened up by its youthful population, new technologies and infrastructural innovations. Jakkie Cilliers builds on his long experience as a keen analyst of Africa . . . essential reading for those interested in Africa's development."

—Gilbert Khadiagala, *Jan Smuts Professor of International Relations, University of the Witwatersrand*

# Jakkie Cilliers The Future of Africa

Challenges and Opportunities

SWEDISH INTERNATIONAL DEVELOPMENT COOPERATION AGENCY

Jakkie Cilliers Head of African Futures & Innovation Institute for Security Studies Pretoria, South Africa

ISBN 978-3-030-46589-6 ISBN 978-3-030-46590-2 (eBook) https://doi.org/10.1007/978-3-030-46590-2

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#### **Preface and Acknowledgments**

This book draws on a decade of work on Africa's prospects at the African Futures and Innovation (AFI) programme at the Pretoria office of the Institute for Security Studies (ISS). I founded the Institute in 1990 and today the ISS is Africa's largest independent strategic studies institute with offices in each of Africa's five regions.

The bulk of the work done at the Institute is on traditional human security issues, trying to understand radicalisation, crime, advice on peacekeeping and suchlike. The AFI programme that I established after stepping down as executive director in 2015 takes a broader, interdisciplinary and longer-term perspective. I previously worked on peace and security issues but became increasingly frustrated by the extent to which that focus seemed akin to bandaid and did not address the origins of Africa's low levels of development.

I am indebted to the ISS for allowing me to draw on previous work that I authored at the Institute. These are Chapters 4 (demographic dividend), 8 (manufacturing), 12 (violence) and 13 (governance). In addition, Chapter 14 on external support draws on an ISS report that I published on the future of aid. These publications were reviewed by academics and colleagues that are listed in the original studies.

At AFI we have also published a number of country-level forecasts on the long-term prospects that include Ethiopia, Kenya, Mozambique, Namibia, South Africa, Zimbabwe, Angola, Algeria and Tunisia, in addition to regional forecasts on Central Africa and the G5 Sahel countries. The results of our previous studies are freely available on the ISS website at www.issafrica.org as well as on my website at www.jakkiecilliers.org.

Zachary Donnenfeld, Marlene Barnard, Annie Olivier, Zachel van Aswegen and Julia Bello-Schünneman have all worked extensively on the manuscript and I owe them all immense thanks. In addition Alanna Markle, Lily Welborn and Stellah Kwasi each reviewed specific chapters. The result is a book that I hope is comprehensive, logically structured and easily readable. That would not have been the case without their hard work and dedicated support.

An earlier but quite different version of this book was published in South Africa by Jonathan Ball with the title *Africa First! Unleashing a Growth Revolution*. This textbook uses a more recent version of the International Futures forecasting platform (version 7.45) with updated data and some modelling improvements, among various other changes. The structure of the book has also been rearranged to more logically first deal with health, then demographics, agriculture, education, etc.

Institutionally the support for our work on the future of Africa has come from the Hanns Seidel of Germany and the Swedish International Development Cooperation Agency (SIDA). Both have allowed AFI freedom in pursuit of our priorities, offering ongoing support and encouragement along the way.

Finally, my long-standing friends at the Frederick S. Pardee Center for International Futures at the University of Denver, professors Jonathan Moyer and Barry Hughes, were gracious in again allowing me to use their forecasting platform, International Futures, extensively in this book. Barry Hughes, as always, provided detailed and meticulous commentary on an earlier version of the book and Jonathan reviewed the scenarios. Technical details on the interventions used with the International Futures forecasting system for this book is available at www.jakkiecilliers.org.

Although I include reference to the COVID-19 pandemic that is currently sweeping across the world it is still too early to include its long-term impact in the modelling that follows, in part because it is later coming to Africa than elsewhere. Like the situation that followed the 2008/2009 global financial crisis, it may take some time before its impact is sufficiently well understood to include in long-term forecasts.

Eventually the views and analysis presented in these pages do not reflect the views of the ISS, any of its donors or from the Pardee Center, but are my own.

Pretoria, South Africa April 2020

Jakkie Cilliers

# **Contents**

#### **Index** 407

# **List of Figures**

# **List of Tables**

# **1**

# **The Growing Gap**

**Abstract** In this chapter Cilliers introduces the growing divergence in income and other indices of well-being between Africa and the Rest of the World. He touches on various aspects such as extreme poverty and Africa's marginal role in the global economy and illustrates the challenge by comparing the divergent experiences of South Korea and Ghana in demographics and income, before moving to introduce matters relating to productivity, digitisation, agriculture and manufacturing. The chapter presents key characteristics of Africa compared to other countries and regions to 2040, defines some of the terms, introduces the International Futures forecasting platform that is used for the forecasts, and the structure of the book.

**Keywords** Africa · Forecasts · Scenarios · Africa · Ghana · South Korea · Economic size · Population · Agriculture · Manufactures · Demographics · Poverty · Growth

I founded the Institute for Security Studies in 1991 as an effort to contribute to policy development in post-apartheid South Africa. Reflected in our name we focussed our efforts on policies and measures to research and recommend improvements domestically, in the region and eventually to contribute to stability and security in Africa. From about 1994 I worked intimately with the secretariat of the Organization of African Unity, today the Commission of the African Union, sometimes spending week on week in Addis Ababa, attending an incalculable number of planning and strategy sessions there and elsewhere.

The end of the Cold War was a heady time in Africa, offering the prospect for an end to the proxy wars that had been fought across the length and breadth of the continent for decades. But over time my sense of disillusionment increased at the lack of focus on the underlying drivers of insecurity.

We helped the OAU/AU develop numerous policies and plans on peacekeeping, combatting terrorism, organised crime, security sector reform and the establishment of various systems such as those related to early warning. My sense of frustration increased with each effort. It's not that things were not improving. Africa is, today, significantly more stable than the years leading up to the end of the Cold War when large-scale armed conflict was the order of the day. It's just that we forever seemed to be dealing with the symptom of the problem. Like a band-aid plaster we were trying to stop the bleeding but did little to help the patient recover and avoid a relapse. And everything was a crisis with little time spent on reviewing the strategic choices being made and even less on monitoring implementation.

After stepping down as head of the Institute in 2015 I was able to devote my full attention to the study of causality and trends, something I had by then been dabbling in for several years. Following a Fulbright fellowship in the USA, my second career at the Institute, now as chair of the ISS board of trustees and as head of the programme on African Futures & Innovation, has allowed me to indulge in trend analysis, looking much more broadly at the drivers and the solutions to Africa's slow progress and the measures required to accelerate broad progress in governance and development.

For successive decades I've paid regular visits to many countries across the continent, travelling from our head office in Pretoria. I can confirm the good news story of a vibrant and dynamically developing continent, particularly in its cities. Gleaming new airports, bustling streets, traffic jams and youthful vigour and life can be found from Addis Ababa and Lusaka to Nairobi and Lagos. A far cry from the stereotype generally conveyed in most Western media.

Africa is undoubtedly experiencing a broad-based improvement in human well-being, which is reflected in a number of health indicators such as declining rates of infant mortality, improvements in life expectancy and others. In this regard, Africa is catching up with global averages.

However, looking at the bigger picture, one can argue that this is largely because rapid improvements at lower levels of development are easier to achieve while continued improvements in rich countries are more difficult at their much higher levels. On most other indicators of well-being the gap between Africa and the rest of the world is actually *increasing*. In the words of colleague Julia Bello-Schünemann 'things are getting better, but not everywhere and not for everybody'.1

If Africa could have talked itself into development it would be doing very well. But only rarely do the many plans and visions translate into reality. These plans and visions include the 1980 Lagos Plan of Action for the Economic Development of Africa, the New Partnership for Africa's Development (NEPAD) and recently Agenda 2063, the long-term development vision of the African Union.

#### **The Growing Income Divergence**

This book has its origin in the growing gap in average gross domestic product (GDP) per capita in Africa and the rest of the world. GDP per capita is a key indicator of progress since it reflects economic productivity and the relative standard of living. It is a relatively crude measure as it does not take the quality of life into account or the distribution of the economic output among the population. It is calculated by simply dividing the total economic output of a country (GDP) in a year by the total population. Because of this simplicity it remains the most popular measure of national economic productivity that allows easy comparisons between different countries.

In 1960, generally considered the start of the postcolonial era, GDP per capita in Africa was about half of the average in the rest of the world and the gap has been growing larger ever since. It fell to below 40% in 1986 and below 30% in 2011. In fact, average GDP per capita actually declined by more than US\$600 from 1980 to 1995. Then, from 1995 to the global financial crisis in 2008/2009, Africa experienced its most sustained period of growth since 1960. But, in 2018, the standard year of reference used in this book, GDP per capita in Africa is still only 27% of the average in the rest of the world. By 2040, GDP per capita in Africa is projected to be less than one-quarter of the average for the rest of the world.2

Figure 1.1 presents this information in a line graph that compares the average GDP per capita in Africa with that in the rest of the world from 1960 to 2040. Up until 2018 the underlying data originates with the World Bank and thereafter it is a forecast.

1Cilliers, J., Bello-Sch¨unemann, J., Donnenfeld, Z., Aucoin, C., and Porter, A. 2017. *Institute for Security Studies.* [Online] Available at: https://issafrica.org/research/policy-brief/african-futures-key-tre nds-to-2035.

2Using purchasing power parity.

**Fig. 1.1** GDP per capita in purchasing power parity: from 1960 with a forecast to 2040 (*Source* IFs version 7.45 initialised from World Bank, World Development Indicators, 2018)

Like the jaws of a yawning crocodile, it paints a picture of increasing divergence. At the ISS I use this graph at the start of most of my presentations on African futures to illustrate the progress made and the challenges that lie ahead.

The increasing divergence between the trend in GDP per capita in Africa versus the average for the rest of the world correlates with many other indices of human development or well-being, such as average levels of education and various measures of health. Since this book is finalised in mid-2020 the graph does not yet capture the impact of the COVID-19 pandemic, sure to eventually represent a global and African kink similar to that evident from the 2008/2009 financial crisis or worse.

We therefore find ourselves in a situation where Africa is progressing slower even than other developing regions such as South America and South Asia. The future is always clouded by uncertainty. However, based on our understanding of where Africa is today and the correlation between variables across different development systems, we have a good sense of where Africa is currently heading.

For long-term forecasting, I use a general time horizon to 2040, which is well beyond the time horizon of the 2030 Agenda for Sustainable Development but significantly shorter than Agenda 2063. While I will consistently benchmark progress to 2040, in certain areas, such as climate change, demographics and projected waves of democracy and/or autocracy, the presentation of trends extend over longer time horizons, in some instances to the end of the century.

So why does Africa continue to slip further and further behind global averages of well-being and what could be done about it?

My goal with this book is to present a cohesive story about human and economic development in Africa revolving around three essential questions: (1) Where does Africa find itself today in relation to the situation elsewhere in the world and generally, what explains this state of affairs? (2) Given historical trends and what we know about the world, where do we think Africa will be in 2040? Is this future really inevitable? And ultimately, (3) What can be done to improve this trajectory and create a better tomorrow for the continent?

Clearly something drastic is needed. Doing more of the same is not going to lead to tangible progress. The momentum from a burgeoning population, the continued growth of China, India and others, the swift pace of technological change, the impact of climate change and other disruptive events such as pandemics, presents a complex picture. On the one hand there are huge opportunities in electricity generation and access, expansion of mobile broadband networks and better access to financial services. On the other, it is evident that Africa will suffer immensely from the impact of changes in the global climate. What is clear is that on its current trajectory, Africa could be left further behind as development accelerates elsewhere particularly if crises, such as the COVID-19 pandemic hammer the developing world more seriously than the developed world.

In essence this book describes and models the impact of a series of fundamental transitions in health, demographics, agriculture, education, manufacturing, technology, trade integration, stability and governance that is needed if Africa is to narrow and start closing the gap in development between itself and the rest of the world.

Governments need to intervene in many areas. They are supposed to improve education, spend on health, build infrastructure and provide security. But since resources are limited the most important policy question is what to prioritise? What gives the best return on investment? And what is the role of the private sector and external agencies?

These choices imply that some degree of trade-off is inevitable—some short-term pain will accompany long-term gain. This is an issue to which I return in the concluding chapter.

## **South Korea and Ghana**

A comparison between the reasons for the divergent development trajectories of Ghana and South Korea—one that is often used in academic literature emphasises the difference in outcomes and the role that demographics, policy choices and leadership played. The difference is presented in Fig. 1.2 and illustrates the extent to which the demographic dividend and average incomes in these two countries coincide. When Ghana and South Korea gained independence, South Korea was actually poorer than Ghana, but today its average income levels is nine times that of Ghana as measured using GDP per capita in purchasing power parity.

With a focus on food self-sufficiency, basic education, family planning and the provision of basic health care, South Korea managed to rapidly reduce its rates of fertility and, as a result, experienced a steady increase in the number of working age persons to dependents. Thanks to this demographic dividend, the ratio of working age persons to dependents went from 1.2 in the

**Fig. 1.2** Ghana vs South Korea: income per person vs demographic dividend: 1960 to 2015 (*Source* IFs 7.45 initialising from World Bank, World Development Indicators, 2018 and UN Population Division, World Population Prospects: The 2017 Revision)

late 1950s to a recent peak of almost 2.8—an extraordinary high ratio only achieved by China and the Asian Tiger economies in modern history.

Ghana has always had a very low ratio of working age persons. Even in 2018 it is less than 1.4, although it is improving. In retrospect it is perhaps not that surprising that Korea developed so quickly from around 1980, but the foundation for this growth was already laid in the late 1950s and 1960s. Not everything went smoothly, however, and the impact of the 1997–1998 Korean financial crisis on incomes is plain to see as the graph briefly dips in its otherwise smooth upward trajectory.

South Korea's *Saemaul Undong*, the New Village Movement, played an important role in its spectacular growth. This was a community-driven selfhelp movement facilitated by the government. It is not an approach where the government sought to pursue prestige projects meant to leapfrog Korea into an industrial age (as was tried in Ghana in the 1960s). Rather, it was an initiative that first, and primarily, sought to change the mindset at community level towards self-help and self-reliance.

Once Korea had achieved food self-sufficiency and started making steady agricultural and educational progress, it embarked on an export-led manufacturing pathway, starting at a very basic level.3

South Korea had another advantage. It had no oil, gas or other large-scale natural resource. All it had was its people. By comparison Ghana, originally called the Gold Coast as a British colony until independence in 1957, has always had the potential of benefiting from its much more significant natural resources. Except that it did not.

It is now well-established that enclave economics such as those that develop around the oil and gas industry in particular, does not work. The largesse of oil and natural gas have had a particularly deleterious impact on countries like Nigeria, Angola, Equatorial Guinea, and shortly Mozambique. This resource curse occurs when the main driver of the economy creates small, highly developed bubbles with no forward or backward linkages to the domestic economy but serve to prop up the exchange rate and effectively makes it impossible to produce local goods at competitive rates. The only people that benefit are foreign investors, local frontmen and -women, and corrupt government officials.

*Saemaul Undong* was instituted by an authoritarian government and it is seldom mentioned in mainstream analysis of South Korea's escape from underdevelopment. Generally, economic development was the first priority of the South Koreans. This stands in stark contrast to the famous slogan

3See Park, J.-D., 2019. *Re*-*Inventing Africa's Development Linking Africa to the Korean Development Model.* Basingstoke: Palgrave Macmillan.

of Ghana's independence leader, Kwame Nkrumah, to first seek 'the political kingdom and all things shall be added unto you'.4 When comparing the general human development indicators of Ghana and South Korea today, the different results are demonstrable.

Ghana and South Korea were, for much of their independent history, autocratic countries and suffered under colonialism with the latter additionally suffered a debilitating war from 1950 to 1953. Both became hugely corrupt after independence, but whereas South Korea had a leadership that prioritised development and self-help, Ghana did not. Democracy played no role in Korea's development but is, today, highly valued in much of Africa because the alternative, autocracy, has had disastrous results on the continent.

This points to the unique challenges that Africa faces when compared to developing Asia where industrialisation occurred under autocratic but generally developmentally oriented regimes. Here leaders could discount the popular discontent associated with the disruptive changes required for productivity improvements. The ruling elite can introduce tariff protection to support a particular sector or industry and more easily phase it out once that goal has been achieved than in a democracy.

The world of the mid-twentieth century is, however, very different to the twenty-first century. It is not possible to roll back democracy in Africa, even if it were desirable from a narrow economic mindset. Africans simply would not stand for it—given centuries of external intervention and oppression they place a high premium on political freedom.

Although Korea also received substantial conditional development aid, it worked hard to wean itself off it. The contrast with much of Africa cannot be more stark. Instead of becoming economically independent in the 1960s, African countries have willingly subjected themselves to a relationship of dependency, often appearing to look to others rather than themselves for their development—initially to Europe, today towards China.

# **The Importance of Labour and Demographics**

Economies grow as a result of increases in the contribution of labour, capital and multifactor productivity to the economy. The latter is generally calculated as the residual or the remaining improvement in the expansion of the economy after accounting for labour and capital and is sometimes also termed the contribution from technology or total factor productivity.

4Biney, A., 2011. *The Political and Social Thought of Kwame Nkrumah.* New York: Palgrave Macmillan, see Chapter 1

At low levels of development the contribution of labour to economic growth is most important. For the purposes of this book three components of labour are important namely the absence of widespread ill-health, disease, hunger and malnutrition, a sufficient number of working age persons to dependents (to enable a demographic dividend), and education or improvements in knowledge. Once countries achieve middle-income status the contribution of capital gains in importance which can come from various sources, although generally foreign direct investment would follow domestic investment. Remittances also play an important role in Africa's ability to receive sufficient capital to speed up growth. In high-income economies technology generally drives improvements in productivity, although the exact contribution and calculation of each of these three components is complicated, country-specific and contested.

Many studies have tried to explain why Africa has remained so much poorer than other regions over successive centuries. The continent is richly endowed with commodities, including large land for agriculture and is, after all, the birthplace of our species. But it is exactly for this reason—humanity's origins in Africa—that development here progressed at a slower pace than elsewhere even in recent centuries. Humans only started to multiply once they escaped the high disease risk on the continent where Homo sapiens and nature had coexisted for thousands of years. I explain my understanding of the associated dynamics in Chapter 3 (on health).

In retrospect it is clear that the rapidly increasing size of the labour force in relation to dependents such as that in South Korea, but also in the other Asian Tiger economies, Japan and China was key to their rapid economic growth and development, although other factors certainly also played a role.5 Today, several decades later, they all face the opposite problem of a slowdown in growth since a shrinking workforce (as a portion of the total population) has to look after a growing ageing population.

Only since around 1987 has the ratio of working age persons to dependents in Africa started to improve, albeit very slowly. Before that it was declining. As that ratio increases, growth generally accelerates at low levels of development because of the additional contribution that more working age persons make to economic growth. This is discussed in Chapter 4.

Today, the vast majority of African countries are net food importers, despite the continent having millions of hectares of arable land, with huge untapped agricultural potential. Africa imported US\$170 billion food in

5Japan bottomed out at a dependency ratio of 0.43 in 1992, China and the Asian Tigers bottomed out at 0.36 in 2010 and 2013, respectively. All experienced their periods of most rapid economic growth in the years during which their dependency ratios were declining.

2018 and exported only US\$67 billion, implying a food trade deficit bill of more than US\$100 billion. That is expected to increase more than sixfold by 2040.6 Exports are dwarfed by the value of imports although a large portion of the increase in imports is due to changed diets as Africans become more wealthy and change their eating habits, reflected in the rise of obesity and non-communicable diseases such as heart conditions hitherto more common in the developed West.

Whereas agriculture is generally considered the mainstay of Africa's economy, yields per hectare are the lowest globally and improving more slowly than in other regions. Since food is cheaper on the international market than domestically and because palates change with income, Africa is becoming more, not less, dependent on food imports.

Furthermore, the impact of climate change is such that it will impact very negatively on the Sahel and West Africa with more variable impacts elsewhere. With very low levels of basic infrastructure such as access to safe water and sanitation, Africa's population is more vulnerable to the impact of climate change than people living in other world regions.

Clearly there is much that can be done to improve agriculture even as it inevitably declines as a share of national economies. Take South Africa for example. Although primary agriculture only contributes about 2.5% to GDP, South Africa is one of the few African countries that provides food security on the back of a highly productive private agricultural sector, meaning that food imports are dwarfed by exports with sufficient calories available per person.

Looking to the future, the impact of climate change on agricultural yields in Africa is a big uncertainty. Recently, while conducting a long-term forecast on the future of five of the Sahel countries, Mali, Niger, Burkina Faso, Chad and Mauritania, colleagues and I were struck by the impact climate change has already had and will continue to have in this region. The Intergovernmental Panel on Climate Change (IPCC) soberly notes that the Sahel, where agriculture accounts for more than 75% of total employment, has 'experienced the most substantial and sustained decline in rainfall recorded anywhere in the world within the period of instrumental measurements'.7

The impact of climate change will, of course, vary across Africa in terms of changes in temperature and rainfall and the increased variability of weather with many more extreme events such as floods, tornadoes and droughts. That said there is huge potential for technology to increase agricultural production—not through the traditional route of expanding land under cultivation,

6Calculated by deducting total value of food exports from food imports within IFs 7.45.

7IPCC, 2018. *Working Group II Impacts, Adaptation and Vulnerability.* [Online] Available at: https:// www.ipcc.ch/working-group/wg2/?idp=403.

but through the use of more precise farming and more sustainable farming methods. Eventually solar-powered cold storage, accurate weather forecasts, monitoring of soil conditions and access to market information can all play an important role, as could greater efficiencies to reduce food waste. However, this will require current practices to change. I explore agriculture in Chapter 5 and the possible impact of climate change in Chapter 15.

#### **Productivity and Economic Structure**

One of the great economic mysteries of our time is why, with all the hype around the impact of artificial intelligence, digitisation, information and communication technologies, labour productivity is not increasing at a greater rate? In the aftermath of the 2008/2009 financial crisis, labour productivity growth has actually slowed in many economies, dropping to an average of 0.5% in 2010–2014 from 2.4% a decade earlier in the USA and major European economies. By 2016 the output per hour of work had actually been declining for more than a decade, argues well-known author and investment fund manager Ruchir Sharma.8

In theory the potential for improvements in productivity as part of digitisation and automation is large. But, with a shrinking labour force as a portion of the total population in most middle- and high-income countries, artificial intelligence and automation first need to offset the reduction in productivity from that smaller labour force as a portion of total population before these countries will experience general improvements in productivity. With its growing working age population Africa is potentially in a positive position but is coming off a very low base.

A second reason for low productivity to date is the ongoing shift in the structure of the global economy towards services at the expense of manufacturing. Currently the services sector (lending, recreation, tourism, transport, food) constitutes the largest economic sector by value and is significantly larger than any other sector in Africa, including agriculture and manufacturing. COVID-19 will accelerate this transition as persons working in offices were forced to work from home, using Zoom, Teams and Skype for Business, among others, to communicate, and dedicated conference-goers (like myself ) moved to video-conferencing.

Unlike the manufacturing sector, the services sector has not been fully disrupted by technology. Since the service sector is more labour-intensive,

8Sharma, R., 2016. *The Rise and Fall of Nations*—*Ten Rules of Change in the Post*-*crisis World.* New York: Penguin Random House.

the shift to services reduced overall productivity, but that is now rapidly changing although more slowly in Africa given the nature of much of the low-end services, often provided in informal settings.

Many believe that artificial intelligence and automation have the potential to reverse the recent declines in global productivity that have followed the decline in the working age portion of the total population. According to the McKinsey Institute, productivity growth could potentially reach 2% annually over the next decade, with 60% of this increase due to digital opportunities.9 New 'digital ecosystems' are emerging that combine goods and services in a highly customer-centric manner, shifting the border between these sectors.10 Many of these issues are discussed in Chapters 8 and 10 that unpack manufacturing and the potential for Africa to leapfrog.

Being the least developed region in the world, Africa has significant potential for fast improvements in labour productivity through the use of modern technology and practices. Some degree of catching up or even leapfrogging is possible but to date, labour productivity in Africa has been improving much slower than elsewhere and, together with others, I tend towards the belief that an important explanation for the generally slow economic growth of the continent is the fact that the contribution of Africa's already small manufacturing sector has been declining, giving credence to the view that what Africa is experiencing is so-called 'premature deindustrialisation' although there are signs of some recent improvements.

In fact, from already low levels Africa is deindustrialising and becoming even more dependent on low value commodity exports for its foreign exchange earnings. It is the only region globally where the number of commodity-dependent countries (in terms of value of export earnings) increases year on year.11

A vibrant manufacturing sector plays a unique role in boosting productivity throughout the economy, thanks to its forward and backward linkages that fuel the development of other sectors such as agriculture and services. 'Manufacturing contributes disproportionately to exports, innovation and growth', writes James Manyika and other authors in a comprehensive 2012

9Manyika, J., and Sneader, K., 2018. *McKinsey Global Institute.* [Online] Available at: https://www.mckinsey.com/featured-insights/future-of-work/ai-automation-and-the-future-of-workten-things-to-solve-for.

10In a recent article McKinsey Analytics, set out the extent to which the ongoing digital revolution is reducing frictional transaction costs within and across sectors. Atluri, V., Dietz, M., and Henke, N., 2017. *McKinsey Quarterly.* [Online] Available at: https://www.mckinsey.com/business-functions/ mckinsey-analytics/our-insights/competing-in-a-world-of-sectors-without-borders.

11United Nations Conference on Trade and Development (UNCTAD), 2019. State of Commodity Dependence 2019, Geneva. [Online] Available at https://unctad.org/en/pages/PublicationWebflyer. aspx?publicationid=2439.

report for the McKinsey Global Institute.12 The big question is if African leadership and African workers are prepared for the associated labour practices that accompany this growth path?

Going forward, Africa needs to seize the opportunity offered by renewable energy and the promise of the fourth industrial revolution to rapidly improve productivity growth and to provide many more jobs. But how can that be achieved in a global economic environment where Africa is becoming more, not less, dependent on the export of commodities and where the contribution of its small but growing labour force (as a portion of the total population) is likely of declining value? And all of this while growth of the manufacturing sector is constrained by the fact that Southeast Asia has become the world's factory.

Whereas manufacturing is often referred to as the automatic escalator that lifts countries to higher levels of productivity, Africa appears to be embarking on a low-productivity services and commodity escalator. Africa's services escalator does go upward, but only slowly while the manufacturing window is closing. In addition, it has become much harder to establish export manufacturers as the entire sector is shrinking worldwide and competition is fierce.

Africa's structural transformation from low-productivity, often subsistence agriculture to low-productivity, urban-based retail services in the informal sector has therefore been growth reducing rather than productivity improving. This is largely because the share of workers employed in higherproductivity sectors such as manufacturing is declining, resulting in a drop of the average growth output per worker.13

## **The Global Context**

The challenge of the growing divergence between Africa and the rest of the world is reflected in Africa's marginal role in the global economy. In 1960, Africa accounted for 3% of the global economy. Sixty years later that share has increased to 4% despite the fact that Africa's share of the global population

12Manyika, J., Sinclair, J., Dobbs, R., Strube, G., Rassey, L., Mischke, J., Remes, J., Roxburgh, C., George, K., O'Halloran, D., and Ramaswamy, S., 2012. *McKinsey Global Institute*. [Online] Available at: https://www.mckinsey.com/business-functions/operations/our-insights/the-future-of-manufacturing.

13UNU-WIDER Studies in Development Economics, 2016. Manufacturing Transformation: Comparative Studies of Industrial Development in Africa and Emerging Asia. In: C. Newman, et al. eds. Helsinki: Oxford University Press, p. 5. See also Bhorat, H., Kanbur, R., Rooney, C., and Steenkamp, F., 2017. *Sub*-*Saharan Africa's Manufacturing Sector: Building Complexity, Working Paper Series N° 256.* Abidjan: African Development Bank.

almost doubled from 9 to 17%. Compare this to East Asia and the Pacific, a region that increased its share of global economic output from about 11% in 1960 to more than 30% today. East Asia's share of the global population, on the other hand, has shrunk from 34 to 30% during this period pointing to its much more productive economies.

On current trends it would be safe to refer, by mid-century, to a global economic system that is likely to consist of four centres of power, China, the USA, the EU and a rising India. These countries already account for almost 60% of global GDP and their share is slowly increasing. By 2040 the Chinese economy should be about 70% larger than the US economy, which will, in turn, be a bit larger than the EU group of 27 countries (now excluding the United Kingdom). India would then still be about 25 years away from having an economy that is comparable in size to that of the USA although it would have doubled its slice of the global economy to around 7% and would be growing quickly.

China could constitute one-quarter of the global economy by 2040. This is roughly equivalent to the position the USA occupied around 10 years ago while the USA would see its portion of the global economy decline from the current 21–15% by then.

But it is unlikely that the world of 2040 will resemble our current obsession with national economies. The future is likely greater regionalisation, particularly in Asia which may increasingly look inward for growth and development rather than to the rest of the world. Already intra-Asia trade surpassed Asian trade with the rest of the world in 2004 and partly protected the region from the impact of the global financial crisis that followed a few years later.

And Asia, in particular, is likely to be much more dynamic than Europe or North America. In this future an economically interdependent and integrated Asia will become more important.

Asia is, of course, hugely diverse including a group of advanced economies such as Japan, and South Korea, the two giants (China and India), a group of large countries such as Indonesia and Bangladesh and a group of poorer countries that includes Afghanistan, Bhutan and Papua New Guinea.14

On the Current Path forecast Africa is likely to remain a peripheral player in this world, although its share of the world's population will increase very quickly. By 2040 Africa's population will have crossed the two billion mark and be significantly larger than the population of India or China. In fact, Nigeria alone would have a population of 360 million by 2040, making it

14According to Economy Watch, 2019. *Developing Asia (Emerging and Developing Asia) Economic Statistics and Indicators.* [Online] Available at: http://www.economywatch.com/economic-statistics/cou ntry/Developing-Asia/.

the fourth most populous country globally after India, China and the USA. But because of poor growth prospects, Nigeria will account for less than 1% of the global economy and is unlikely to emerge even as a global middle power.

Figure 1.3 presents the total populations of key countries and groupings namely Africa, China, India, the EU27, USA and the rest of the world at twenty-year intervals from 1980 to 2040. Africa's population size is set to rapidly increase over the time horizon set out in this book.

Although Africa's population is set to increase from its current 17% of the global population to 23% by 2040, the continent will then only represent 4% of the global economy. And Asia, knitted together by China's Belt and Road Initiative, an infrastructure superhighway, will have more than double the population of Africa.

Figure 1.4 presents the same countries and groupings as in Fig. 1.2, also with 20 year time intervals, this time presenting the size of each economy in market exchange rates.

**Fig. 1.3** Composition of the global population: 1980–2040 for Africa, China, India, EU27, USA and the Rest of the World (RoW) (*Source* Historical data from United Nations Population Division, forecast in IFs 7.45)

**Fig. 1.4** Comparing economies: 1980–2040 (*Source* Historical data from IMF World Economic Outlook, forecast in IFs 7.45)

#### **Dealing with Africa's Diversity—Using Country Income Groups**

A book of this nature can hardly do justice to the rich diversity of Africa, its 55 states, thousands of languages and many different cultures.

For the most part, I use the 2019/2020 World Bank groupings of low, lower-middle and upper-middle-income groups to explore trends across countries at roughly similar levels of development.15 Of 31 low-income countries around the world, 24 are in Africa. And African countries account for 21 of the 47 low-middle-income countries globally. Africa has only eight (out of 60) upper-middle-income countries namely Algeria, Botswana, Equatorial Guinea, Gabon, Libya, Mauritius, Namibia and South Africa. Of 80 highincome countries, only one is in Africa, the island state of Seychelles and I largely ignore it in what follows.

These classifications are particularly useful to compare the structure of economies, levels of income, education and access to infrastructure between countries at roughly the same levels of economic development. Where appropriate, I benchmark Africa to the rest of the world within these categories such as comparing averages in low-middle-income Africa with that for the average for low-income countries globally or for low-middle-income countries in the rest of the world (Fig. 1.5).

15For its 2020 fiscal year. See World Bank Country and Lending Groups. Available at https://datahe lpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups.

**1 The Growing Gap 17**

**Fig. 1.5** Economic size and population size for low, lower-middle and upper-middleincome Africa in 2018 (*Source* UN Population Division and IMF World Economic Outlook data in IFs 7.45)

Generally low-income countries grow more rapidly, so the average economic growth forecast from 2020 to 2040 for Africa's 24 low-income countries is 6.7%, 5.1% for the 21 low-middle-income countries and 2.6% for Africa eight upper-middle-income countries.

Occasionally, I look at Regional Economic Communities (RECs) such as the East African Community (EAC), the Southern African Development Community (SADC) or the Economic Community of West African States (ECOWAS). Since many of these communities have overlapping membership I define Africa's five geographic regions as follows (see Fig. 1.6):

**Fig. 1.6** Regions in Africa

These categories are exclusive in that no country belongs to more than one geographical region.

Looking at the average rates of economic growth for these five regions, East/Horn of Africa is set to experience the most rapid economic growth from 2020 to 2040, at 6.3%, followed by West Africa at 5.5%. Northern and Southern Africa will grow at 3.7 and 3.8%, respectively, and Central Africa at 4.7%. Over this period the population of Central Africa is expected to increase by 75%, however, meaning that average GDP per capita in purchasing power parity in this region will only increase by US\$840 from 2020 to 2040. The population in West Africa will increase by 68% and, by 2040, West Africa will have a GDP per capita that is US\$2270 larger than in 2020. The number for East/Horn is a 60% population growth and an increase in GDP per capita of US\$1890. The population of Southern Africa will increase by 50% and, by 2040, it will have a GDP per capita that is US\$2035 bigger than in 2020. The population of North Africa will increase by only 25% and, because it includes a number of upper-middle-income countries, therefore coming off a higher base, by 2040 it will have a GDP per capita that is US\$4020 larger than in 2020.

In summary, this is a picture of Central Africa that, with each passing year, falls further and further behind the rest of the continent. Average income growth will be highest in North Africa followed, at some distance by West and Southern Africa with East/Horn of Africa trailing slightly behind.

There is, of course, a limit to the utility of these regional comparisons since each region includes countries at very different levels of development and with unique population and income characteristics, such as the very high levels of inequality in Southern Africa compared to the rest of Africa (and the lowest average levels of inequality in North Africa compared to other regions in Africa).

In the interest of standardisation, all US dollar figures taken from the International Futures forecasting system (see below) and used in this book (such as those on GDP per capita in the previous paragraphs) have been converted to 2018 values. Unless indicated otherwise, figures and data presented in the various chapters are estimates taken from IFs for 2018 is used as a general reference year throughout, also when using material from other sources.16

Finally, I sometimes compare Africa with two other developing regions, namely South America and South Asia,17 that align most closely on a host of development indicators except in agricultural yields where South America is close to a global leader.

#### **Previous Studies and the International Futures Forecasting Platform**

Long-term trends are affected by deep drivers that are slow-moving but powerful, like demographics, education or commodity super cycles, which also unfold over decades. These deep drivers are increasingly well understood

16The rate of conversion from the 2011 US\$ values in IFs to 2018 prices is 1.1163. Where no data is available for 2018, I use the forecasts from the International Futures forecasting platform (IFs, which initialises from 2015 values) but make no distinction in the use of the term data or forecast. Since the IFs forecasts generally demonstrate a high level of continuity with historical trends, the forecasts are a close representation of reality and likely paint a more accurate picture than 'most recent data', which can often be several years old.

17Within IFs South America consists of Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela. South Asia includes Afghanistan, Bangladesh, India, Iran, Maldives, Nepal, Pakistan and Sri Lanka.

in forecasting literature, even though the exact contribution and sometimes the direction of causality remains a subject of intense academic debate. Some prospects, such as demographics, are easier to forecast than others, like the potential impact of technology or how changes in governance may evolve, but none are impossible.

When all is said and done, it is much more useful to spend time and effort on systematically exploring plausible futures than relying on speculation or gut-feel. Which brings me to another important characteristic of the type of forecasting that follows, namely that each chapter is based on realistic expectations of what could be possible (benchmarked against historical precedent) instead of a desired future. This is not a blue-skies book on where I would like to see Africa, but on what could realistically be possible given the right policy choices, clear leadership and determined implementation.

The forecasts in this book rely on the International Futures (IFs) modelling platform that is developed and housed at the Frederick S Pardee Center for International Futures at the Josef Korbel School of International Studies at the University of Denver. The model is open source and is available for download at the Pardee Center website at https://pardee.du.edu/access-ifs.

Each of the following chapters compare the IFs Current Path forecast with a set of interventions grouped as a coherent scenario. The Current Path is an integrated forecast (or scenario) of the likely future development trajectory. In other disciplines it is also known as the Base Case or Business as Usual forecast. It does not assume any major paradigm shifts, seismic policy changes, or transformative events such as global war, pandemic (such as COVID-10) or cataclysmic climate change tipping point. In other words, it is not a forecast that anticipates very low probability but high impact events, although one can create scenarios within IFs that emulate anything from global war to drought, or swift technological progress. Rather, the Current Path represents a reliable expectation of how major development systems are likely to unfold, and is a useful starting point from which to design alternative future scenarios.

The details of the modelling and the specific levers pulled within IFs can be found at www.jakkiecilliers.org that also details the benchmarking of each intervention, as well as the adjustments that have been made in the IFs Current Path forecast for the purposes of this book.

The forecasts presented in this book are sure to be wrong in many respects. Beyond our limited ability to understand the evolution of human, environmental and other systems, data from many African countries are poor or even absent. Fortunately, the quality of international data gathering is improving as the efforts to improve statistical service agencies bear fruit. Governments

also more regularly recalculate the overall price structure of their economies. To that end the African Union and various partners have embarked on a *Strategy for the Harmonization of Statistics in Africa (SHaSA)*, now in its second strategic period with a time horizon from 2017 to 2026.18

In 2014 alone, Kenya, Nigeria, Tanzania,19 Uganda and Zambia all completed economic rebasing exercises, which led to significant revaluations of their GDPs. Nigeria's (2013) GDP nearly doubled and the country overtook South Africa as the largest economy in Africa when measured in market exchange rates. The increase of about 90% in the size of the Nigerian economy was attributed to the inclusion of new sectors of the economy such as telecommunications, the burgeoning local film industry (known as Nollywood), the retail and informal sectors.

The calculations also revised the size of Kenya and Zambia upward by a quarter and the World Bank categorised Kenya from a low-income to a lower-middle-income country. Ghana found that its economy increased by 60% when the previous rebase was announced in 2010—and by another 25% when the latest rebase was announced in 2018. When Zimbabwe rebased its economy in 2018 it also concluded with a 40% increase in the size of its economy, much of which was now sadly part of the informal rather than the formal sector. Country classifications also go the other way. In contrast to Kenya, Zimbabwe was downgraded from lower-middle to low-income in 1991, but was again reclassified as lower-middle in mid-2019.20

Finally, since data for Africa is often incomplete, the IFs system has a preprocessor—a sophisticated series of algorithms—that estimates and fills data gaps. In this manner the model is able to provide a solid foundation for each of the 500 or so variables that are forecast for each country.

In all instances where data is provided without a reference in the form of an endnote, the reader should assume that the data comes from IFs.

18African Union Commission; African Development Bank; United Nations Economic Commission for Africa; African Capacity Building Foundation, 2017. *Strategy for the Harmonization of Statistics in Africa 2017* –*2026 (SHaSA 2).* [Online] Available at: https://www.tralac.org/documents/resources/ african-union/2031-strategy-for-the-harmonization-of-statistics-in-africa-shasa-2017-2026/file.htm.

19The 2019 rebase of Tanzania to 2015 found that its economy had increased by 3.8%. Reuters Africa, 2019. *Tanzania Rebases Economy, 2015 GDP Now 3.8 pct Larger*—*Stats Office.* [Online] Available at: https://af.reuters.com/article/investingNews/idAFKCN1Q91G0-OZABS.

20Sy, A., 2015. *Brookings.* [Online] Available at: https://www.brookings.edu/blog/africa-in-focus/ 2015/03/03/are-african-countries-rebasing-gdp-in-2014-finding-evidence-of-structural-transformation/; Benghan, B., and Noshie, A., 2018. *AllAfrica.* [Online] Available at: https://allafrica.com/stories/201 810010595.html; Musarurwa, T., 2018. *The Herald* . [Online] Available at: https://www.herald.co. zw/economy-rebasing-to-grow-zim-revenue/.

#### **Structure of the Book**

In addition to some characteristics already presented in this chapter, Chapter 2 presents the Current Path forecast for Africa to 2040 and serves as a broad overview for the eleven scenarios, each in a separate chapter, on health, demographics, agriculture, education, poverty, manufacturing, leapfrogging, trade, security, governance and external support. Chapters 9 and 15 do not have separate scenarios, but compares the impact of key scenarios on the future of jobs and the impact of climate change. Chapter 16 concludes and includes the impact of a combined scenario ("Closing the Gap"). It shows what could be possible by 2040 and compares those outcomes with the Current Path trajectory.

The book adopts a structured approach to Africa and the analysis builds from one chapter to the next, although some chapters can be read in a different sequence. But what Africa needs is the combined impact of all of the interventions across the different sectors and hence there is no shortcut to either a better future or to this book but to read it all.

#### **Further Reading**

www.jakkiecilliers.org. www.issafrica.org. www.pardee.du.edu.

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

# **2**

# **Africa's Current Path**

**Abstract** Cilliers provides a summary and analysis of Africa's development history since the 1980s including the impact of the Brundtland Commission report that culminated in the Millennium Development Goals and, in 2015, the Sustainable Development Goals. Other key matters covered in the chapter are the impact of the various structural adjustment programmes, Africa's growing dependence upon commodities, the continents rapid democratisation and slow pace of urbanisation. The chapter concludes with a summary of key characteristics of Africa's likely future—the Current Path forecast to 2040—that includes a forecast of economic size, demographics, income and poverty levels. The chapter serves as essential backdrop to the struggle for development that is examined across different sectors in subsequent chapters.

**Keywords** Africa · Development · Growth · Population · Economy · Forecast · Brundtland · Aid · MDGs · SDGs · Commodities · Democratisation · Urbanisation · Washington consensus · Structural adjustment programmes

#### **Learning Objectives**

Between 1980 and 1990 Africa lost considerable ground—in development terms it was actually moving backwards. Average income per person decreased by about 12% and declined by a further two percent in the early 1990s.

Then, from 1994 until 2008 (when the financial crisis hit), Africa experienced its most sustained period of growth since independence in the 1960s—an average of 4.6% per annum. During this period the average per capita income increased by 35%.1 However, the share of Africans living in extreme poverty decreased by only about five percentage points, in part due to the high levels of inequality on the continent and rapid population growth.

Africa's low levels of integration into the global economy provided it with a degree of protection from the global financial crisis but its impact was nevertheless significant. In its aftermath global and African growth was significantly slower. From 2010 to 2019 Africa experienced average growth of only 3.1%. Yet, even shortly after the financial crisis, in 2010, the United Nations Development Programme (UNDP) could report that 'the past 20 years have seen substantial progress in many aspects of human development. Most people today are healthier, live longer, are more educated and have more access to goods and services'.2 Almost all countries in the world have benefited from this progress, except three African countries, namely the Democratic Republic of the Congo, Zambia and Zimbabwe, which have a lower Human Development Index score today than in 1970.3 This positive story, the UNDP report notes, 'paints a far more optimistic picture than a perspective limited to trends in income, where divergence has continued'.4

Four factors likely explain the post 2008/2009 lower growth. The first is that North African countries and the Sahel region have been caught up in the turmoil that followed the Arab Spring. A decade later Libya is still trapped in a debilitating civil war and the region is awash with weapons spreading across the Sahel to West Africa. The second is that oil exporters have been affected by the sharp decline in oil prices that has accompanied the shale revolution in the USA and the general decline in commodity prices that follows the restructuring of China's economy. The third is that, outside of Africa, the size of the working age population relative to dependents had started to decline, meaning that labour was no longer contributing positively to improvements in productivity. These developments are all discussed in subsequent chapters.

1From US\$3 482 to US\$4 685 in constant 2017 US\$ at PPP.

2United Nations Development Programme (UNDP), 2010. *Human Development Report 2010.* New York: Palgrave Macmillan.

3Ibid., p. 3.

4Ibid.

Then, in 2020, the Sars-CoV-2 virus spread to humans in China's Wuhan province and the subsequent COVID-19 pandemic brought the global economy to a shuddering halt. Recovery is dependent on the development, manufacture and global delivery of an effective vaccine that is, at the time of writing, still unsure but unlikely to materialise before 2021.

Against that background, this chapter discusses the key events and trends that currently shape Africa's development trajectory. It concludes with a summary of characteristics of Africa's likely future—the Current Path forecast to 2040—that includes economic size, demographics, income and poverty levels. It provides an essential backdrop to the struggle for development that is examined across different sectors in the chapters that follow.

#### **From Brundtland to the Sustainable Development Goals (SDGs)**

In 1983 concern about growing poverty in low-income countries and the extent to which the world had embarked on an unsustainable growth path saw United Nations Secretary-General Javier Pérez de Cuéllar appoint the World Commission on Environment and Development. It came at a time of deep pessimism about the environment and about Africa's development prospects in particular.

The purpose of the commission, that was named after its chairwoman, Gro Harlem Brundtland, was to chart and agree on a common sustainable development pathway.5 The Brundtland Commission report was released in October 1987 under the title *Our Common Future*. It popularised the notion of 'sustainable development' by establishing a clear relationship between economic growth, the environment and social equality. The commission presented its results just as the Cold War came to its messy conclusion with the collapse of the Berlin Wall in 1989.

The Brundtland Report called for an international meeting to map out goals and programmes to pursue sustainable development. It led to the Earth Summit in Rio de Janeiro in Brazil that was held five years later, in 1992. As an aside, the impact of the report and the Summit continues to resonate several decades later, first with the eight Millennium Development Goals that were adopted at the United Nations Millennium Summit in 2000 and more recently with the Sustainable Development Goals 2030 (SDGs), adopted by the UN General Assembly in 2015. To that end, the Brundtland

5Gro Harlem Brundtland is the former prime minister of Norway served; 1981, 1986–1989 and 1990–1996.

Report served as an important impetus to the developmental vision of the twenty-first century.

An important tool to assist in achieving this vision of sustainable development was international cooperation and solidarity, including the provision of overseas development assistance (aid) which will be examined in greater detail in Chapter 14. However, instead of increasing in constant dollar terms, aid levels declined steadily from their peak in 1990 to the Millennium Summit in New York a decade later. Kenya, Somalia, Sudan and the former Zaïre (now the Democratic Republic of Congo) experienced some of the largest declines.

One of the reasons for this was that a prolonged recession began in 1991 in Japan, a major aid provider. A second reason was the resource pull exerted by transition economies in South Asia that was steadily diverting attention away from Africa. But the most important reason was that the dissolution of the Soviet Union freed Western countries from the need to prop up African dictators who supported the West during the Cold War. With the collapse of the Berlin Wall, Africa lost much of its previous geostrategic relevance and hence the external motivation to assist.

Aid only started to regain momentum with the 2000 UN Millennium Summit in New York. It was substantially bolstered by the support of international celebrities such as Bono and Bob Geldof who campaigned for greater awareness about poverty and the AIDS crisis and also helped to raise funds for relief programmes in Africa.

In addition, the post-2000 momentum was marked by various initiatives such as the Report of the Commission for Africa, spearheaded by UK Prime Minister Tony Blair and the European Consensus on Development. The 2005 World Summit in New York also called for increased aid transfers in order to reach the Millennium Development Goals of halving poverty and hunger by 2015.

## **The Impact of the Structural Adjustment Programmes**

The Brundtland Report and the broader context within which the debates around poverty occurred, also had a wider impact. Among others, it led to deep introspection by the World Bank and the International Monetary Fund (IMF)—the two global financial institutions mandated to respond to underdevelopment—about the effectiveness of their structural adjustment programmes.

The oil and debt crises during the late 1970s created numerous economic problems in sub-Saharan Africa. During the 1980s the World Bank and the IMF responded by creating loan packages for highly indebted poor countries that required them to reduce spending on health and education in favour of debt repayment and the liberalisation of the economy through privatisation and other means.

These measures were not new. The World Bank and the IMF had been attaching conditionalities to their loans since the early 1950s and their policy prescriptions inevitably closely aligned with the free-market economics dominant in the USA, where their secretariats are located and who is the largest contributor to both.

In return for budget and balance of payments support, the Bank and the Fund required African governments to adhere to an agreed set of policy reforms geared towards achieving macroeconomic stability. Perhaps the most significant impact of these structural adjustment programmes was the devaluation of Africa's overvalued currencies to more reasonable levels.

But the negative impact on health, education, poverty and agriculture that followed would resonate for many years and earn both institutions the enduring enmity of many Africans in what has been described as an effective 'race to the bottom'.6 These painful reforms impacted very negatively on large populations in the recipient countries and offered African leaders and activist academics a ready target.

The conditionalities, generally known as the Washington consensus, put an effective end to national industrial policies that countries as diverse as Ethiopia, Ghana, Kenya, Mauritius, Mozambique, Nigeria, Senegal and Tanzania had tried to implement, albeit with very limited success. Consequently, industrialisation as a development option for Africa was replaced by trade liberalisation, deregulation, the free market and a small state.

The development framework had shifted away from the state as the main engine and instigator of growth to a reliance on markets and the private sector for resource allocation. Henceforth, the role of the state would be limited to policymaking and regulatory functions. This was based on many African states' inability, in the view of the Bank and the Fund, to effectively deliver public goods and limit the abuse of funds.

Whereas development elsewhere had been facilitated through an active role for the state, the corruption and mismanagement by African governments now presented the continent with an impossible situation. It had to develop without the guiding hand of government.

6See for example, Shah, A., 2013. *Global Issues.* [Online] Available at: http://www.globalissues.org/art icle/3/structural-adjustment-a-major-cause-of-poverty.

Unable to rapidly improve productivity and with a fast-growing and youthful population, per capita average income levels in Africa peaked in 1980 and declined to 1994 as trade shocks and economic crises took their toll. The percentage of people living in poverty in Africa followed suit and steadily increased.

From 1989 onwards, development assistance from the West—which a number of African states had become addicted to—also shifted ground. The focus shifted to the importance of democracy, good governance and anticorruption as part of the efforts to correct some of the egregious misuse of public money and abuse of power by a number of African leaders that followed decolonisation and the end of the Cold War.

Africa's Western development partners subsequently invested in civil service reform and efforts to improve public financial management, and helped to set up anti-corruption watchdogs and public audit bodies. Multiparty elections, decentralisation and other methods to encourage greater citizen participation were equally popular. In the process, democracy became associated with liberal economic policies that envisioned a small state and a dominant role for the private sector in development. The problem is that poor countries need an activist, developmental government if they are to engineer an escape from poverty.

By 1999, the IMF had replaced its structural adjustments programme with the Poverty Reduction Growth Facility and placed poverty alleviation at the heart of its efforts. The following year the World Bank admitted that the poor are better off without structural adjustment.7 Writing for the African Development Bank, John Page notes, 'Structural adjustment had taken place without producing structural change'.8

But in the interim it was alleviating Africa's large debt burden that focussed the minds of many in the international development community. Africa's debt peaked twice during these years, first at 79% of gross domestic product (GDP) in 1988 and then slightly lower at 77% in 1995. Whereas a general debt-to-GDP ratio of 60% is generally seen as a responsible ceiling that should not be exceeded, the suggested long-term debt-to-GDP ratio for developing and emerging countries is sometimes set at 40% although there is also evidence that it is the debt trajectory and rate of economic growth rather than the debt level that is more important. Perhaps even more important is

7Easterly, W., 2001. The Effect of International Monetary Fund and World Bank Programs on Poverty. *Open Knowledge Repository,* Working Paper (No 2517).

8African Development Bank Group, 2017. Introductory Remarks: Promoting Sustainable Industrial Policies. In: *Industrialize Africa: Strategies, Policies, Institutions, and Financing.* Côte d'Ivoire: African Development Bank Group, p. 74.

the very high interest rates that African countries generally pay on commercial loans that may go up to five or sixteen percent interest on a ten-year bond.9

In response to the alarming levels of debt in many poor countries, the IMF, the World Bank and other creditors began the Heavily Indebted Poor Country (HIPC) Initiative in 1996 that was reviewed and comprehensively expanded in 1999. From 2005 HIPC was complemented by the Multilateral Debt Relief Initiative, a debt relief proposal initially advanced by the G-8 in June 2005.10

Public debt among low-income countries declined from close to 100% in the early 2000s to a median debt ratio of just over 30% in 2013. By 2018 30 African countries had been assisted (out of the global total of 36 countries that were relieved of US\$99 billion in debt). As the HIPC programme matured, the international community has focused on strengthening the links between debt relief and progress in implementing Poverty Reduction Strategies and macroeconomic and structural reform programmes.11

The debate about the role of the state in Africa's development trajectory evolved markedly during this period. The mantra of 'good governance' defined as 'the manner in which power is exercised in the management of a country's economic and social resources for development'12—steadily replaced the need to downsize the state. For donors like the IMF and the World Bank the focus on good governance was a way to respond to the inefficiencies, corruption and predation that had become a defining characteristic of many African governments.

Later the debate would again shift, now to the need to attract and enable foreign direct investment from the private sector as the best means to facilitate growth. In its most recent incarnation the focus is on the importance of domestic resource mobilisation, effectively completing a circle where the role of capable African governments is again being recognised as key to the continent's future.

9Pescatori, A., Sandri, D., and Simon, J., 2014 Debt and Growth: Is There a Magic Threshold? IMF Working Paper (WP/14/34). [Online] Available at: https://docs.google.com/viewer?url=https% 3A%2F%2Fwww.imf.org%2Fexternal%2Fpubs%2Fft%2Fwp%2F2014%2Fwp1434.pdf; Mutize, M., 2020. African Countries Aren't Borrowing Too Much—They're Paying Too Much for Debt. *Quartz Africa.* [Online] 22 February 2020. https://qz.com/africa/1806793/imf-world-bank-are-wrong-africais-piling-on-too-much-debt/.

10World Bank, January 2019. *Debt in Low*-*Income Countries: A Rising Vulnerability.* [Online] Available at: https://blogs.worldbank.org/developmenttalk/debt-low-income-countries-rising-vulnerability.

11World Bank, 2018. *Heavily Indebted Poor Country (HIPC) Initiative.* [Online] Available at: http:// www.worldbank.org/en/topic/debt/brief/hipc.

12World Bank, 1992. *Governance and Development.* Washington, DC: The World Bank.

While aid as a portion of government revenues have steadily declined, remittances and private capital flows have both increased significantly in the intervening years. In current dollars, by 2015, personal remittances (US\$43 billion) and net foreign direct investment (US\$45 billion) to sub-Saharan Africa were approximate to aid flows (US\$46 billion).13

The general trend suggests a steady decline in aid dependency in the region. For example, in 2015, 22 out of 54 African countries received more foreign direct investment than aid.14 Since their economies are growing quite rapidly, middle-income countries are experiencing the sharpest declines in aid as a share of total inward flows, despite the fact that the portion of aid that goes to lower-middle-income countries (compared to low-income countries) has remained relatively constant.

The debate about the potential contribution of the Washington consensus to Africa's recent growth rates remains mired in controversy but it is undeniable that the lack of policy certainty and high transaction costs attracted little private investment to Africa outside of the resources sector.15 And when looking to the future along Africa's current development pathway, commodities will likely continue to drive growth with all its attendant risks and opportunities. This is a concerning trend.

## **Africa's Growing Dependence on Commodities**

Much of Africa's recent growth was enabled by the commodities supercycle that started in 1996 and peaked in 2011. The demand behind the supercycle came from the higher primary export volumes that were required to feed Asia's manufacturing and construction boom. Its recent decline is largely a function of the economic restructuring and lower growth in China. The Arab spring caused a brief spike in oil prices, but the ongoing shale oil and gas revolution in the USA and the economic contraction associated with the COVID-19 crisis will ensure a continued downswing until such time

13World Bank, n.d. *World Development Indicators.* [Online] Available at: https://datacatalog.worldb ank.org/dataset/world-development-indicators.

14Angola, Botswana, Cameroon, Republic of Congo, Djibouti, Egypt, Equatorial Guinea, Gabon, Ghana, Lesotho, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Seychelles, South Africa, Sudan, Tunisia, Zambia and Togo. See World Bank, n.d. *World Development Indicators.* [Online] Available at: https://datacatalog.worldbank.org/dataset/world-development-indicators.

15See for example; African Development Bank Group, 2017. Introductory Remarks: Promoting Sustainable Industrial Policies. In: *Industrialize Africa: Strategies, Policies, Institutions, and Financing.* Côte d'Ivoire: African Development Bank Group.

as growth in India, globally likely to be the next growth point, reignites the demand for commodities.

Supercycles are not smooth and consequently the upward and downward cycles can vary greatly. Furthermore, each commodity class also has its own pendulum, so that shifts in the price of base metals do not generally correspond with that of livestock, agricultural products or oil, which has evidenced most volatility as the Organization of Petroleum Exporting Countries (OPEC) tries to govern oil prices. For example, despite the 2007/2008 depression that depressed prices for a year thereafter, commodity prices subsequently recovered until the impact of sharp deterioration of the global economic outlook as a result of COVID-19 saw a sharp drop in most commodity prices.

Particularly significant is that during the most recent supercycle the prices for oil, base metals and agricultural produce, all started to increase at roughly the same time. It was therefore generally a stronger and more uniform up and downward cycle than with previous supercycles, lifting economic growth across all regions in the world, including in Africa, hence the more rapid growth prior to the 2008/2009 financial crisis.

When the United Nations Conference on Trade and Development (UNCTAD) released its 2019 report on *The State of Commodity Dependence*, it noted that an increased number of countries, 102 out of 189, were dependent on commodity exports. Nine out of ten sub-Saharan African countries are commodity dependent.16 Only 82 countries were considered commodity dependent in 2009–2010.17

While the number of commodity-dependent countries in Africa has increased markedly in the intervening years, it generally remained static in other global regions, contributing to the relative decline in Africa's competitiveness. Actually, the extent to which African countries are dependent on commodities when measured by value of exports has increased, most of it exported to Europe and increasingly China.

It is unclear exactly when the downturn that started after the 2011 peak will bottom out.18 Based on the duration of previous cycles it can

16United Nations, 2019. *The State of Commodity Dependence.* New York: UNCTAD, p. 3.

17Ibid. UNCTAD defines a country as dependent on commodities when its commodity exports account for more than 60% of its total merchandise exports in value terms and "strongly commodity export dependent" when this share exceeds 80%.

18According to research done by the Bank of Canada, the previous four commodity super cycles have peaked in 1904, 1947 and 1978 and lasted for 33, 29 and 34 years respectively from trough to trough. Commodity prices subsequently declined to 1995. The most recent supercycle peaked in 2011.

Bahattin Büyük¸sahin, B., Mo, K., and Zmitrowicz, K., 2016. Commodity Price Supercycles: What Are They and What Lies Ahead? In: *Bank of Canada Review.* Ottawa: Bank of Canada, p. 37.

take anywhere from five to 17 years before a general improvement in commodity prices occurs again. On average, full trough-to-trough supercycles take 32 years—but no two supercycles are the same and the length and intensity of each down and upswing varies considerably from cycle to cycle. That said, on the 32-year average we should reach the trough around 2027 and the cycle would then peak at around 2043. It is still too early for any confident forecast as to the impact of COVID-19 on these broad cycles of commodity prices over the medium to long term.

In addition to favourable demographics, the next commodities supercycle will lift African growth rates, but likely to a lesser extent than before the 2008/09 global financial crisis and it may also take several years for demand for commodities to recover from the impact of the COVID-19 pandemic. But the world will still require commodities, even though the resource intensity of growth is declining and that the previous Chinese demand for base commodities is shifting from iron ore, copper and coal to consumer-related commodities such as meat, dairy and apparel. Just how rapid China is growing (in spite of moderating rates in recent months) is difficult to grasp. For example, in the four years from 2014 to 2018, China added the size of the entire economy of Africa to its GDP in market exchange rates. The Chinese economy is already larger than the US economy in purchasing power parity and is expected to overtake the size of the US economy in market exchange rates around 2028.

In addition, a next supercycle (i.e. from around 2030 onward) would be driven by the expected demand for commodities from a rising India that is experiencing a steady improvement in growth rates. Although the world appears to have entered a lower growth trajectory due to having passed the peak relationship between working age and dependents discussed in Chapter 5, the larger global economy will continue to drive a steady demand for commodities. Global GDP will expand by more than 40% by 2030 (from 2018) and by 2040 the world economy would have almost doubled in size (all figures in market exchange rates).

# **The Challenges of Commodities-Dependent Growth**

There is ample evidence that commodity dependence leads to slow and poor quality growth over long time horizons.

Extreme commodity dependence is also closely associated with poor governance and supporters of the 'resource curse' hypothesis argue that a too heavy dependence on energy resources such as oil or gas impedes rather than accelerates economic growth and investment. It may also hinder the broadening of the economic base by impeding value-add in agriculture and manufacturing, while impeding the development of the various institutions of good government.19

Some of the severe risks that single-commodity exporters face include the inevitable exposure to price volatility of that commodity (that occurred, for example, in 2014 and again early in 2020 with the collapse of the oil price), the decline in the contribution from other economic sectors (the so-called Dutch disease), an increased likelihood of undemocratic government (since governance is dominated by competition for control over the income stream from its single commodity and not by other considerations such as service delivery), the prevalence of a rentier state (where the state is not accountable to citizens but to special interest groups aligned to the commodity income), pressures to spend within a short-term horizon to maintain support (also to align with surge in commodity incomes) and a greater likelihood of lowquality institutions (the sum impact of all of the above). A recent article by Larry Diamond and Jack Mosbacher summarises it as follows:

The surge of easy money fuels inflation, fans waste and massive corruption, distorts exchange rates, undermines the competitiveness of traditional export sectors such as agriculture, and preempts the growth of manufacturing … Rather than fostering an entrepreneurial middle class, oil wealth, when controlled by the government, stifles the emergence of an independent business class and swells the power of the state vis-á-vis civil society.20

The result is an 'observable correlation between resource abundance and political corruption'.21

To date Botswana is the only African country that has successfully developed its resources sector (diamonds) to the general benefit of its populace, yet it too struggles to spread its commodity-led growth beyond a small, privileged elite in a country that has the third highest level of inequality globally.

The result is that resource poor economies generally outperform resource rich countries with South Korea, Japan and Taiwan often cited as the best examples of the former and Nigeria, Angola and Equatorial Guinea as examples of the latter. South Korea, contrasted with Ghana in the previous chapter,

19Gylfason, T., and Zoega, G., 2006. Natural Resources and Economic Growth: The Role of Investment. *The World Economy,* 29(8), pp. 1091–1115.

20Diamond, L., and Mosbacher, J., 2013. Petroleum to the People: Africa's coming Resource Curse— And How to Avoid It. *Foreign Affairs*, September/October, pp. 87–88. 21Ibid.

has virtually no natural resources of any value. In 1962 the country exported mostly raw materials like fish, rice, iron ore and unprocessed silk while today it boasts a well-diversified export portfolio that includes electronics, cars, ships and other high-end machinery.

By contrast, Nigeria's main exports in 1962 were assorted agricultural products—mostly groundnuts, soybeans and cocoa beans—and crude petroleum. In 2014, crude petroleum and liquefied petroleum gases accounted for about 85% of Nigeria's total exports. In 1962 GDP per capita in South Korea was about half that of Nigeria, in 2018 it is about sixfold larger.

To a degree the CFA franc that is practically still used in fourteen west and central African states has the same negative impact as a high level of commodity export dependence.

The original meaning of CFA in 1945, when it was established, was Colonies Francaises d'Afrique (French Colonies in Africa), accurately reflecting its intent. In this arrangement participating states had their currency pegged to the French franc and, as from 1999, to the euro. Participant states needed to keep half their foreign reserves in France, on which the French treasury paid 0.75% interest and agreed to a French representative on the currency union's board. The arrangement provided monetary stability, controlled inflation and supported trade with Europe but made it very difficult for other sectors in the economy to establish themselves since it kept the exchange rates artificially high, in spite of a once-off 1994 devaluation intended to boost exports from the region. Since a number of these countries are also petro-states, heavily dependent upon oil experts, they are unable to go up the value-added curve.

A December 2019 announcement by eight Francophone members of the West African Economic and Monetary Union (generally known by the French acronym UEMOA) to rename the CFA to the Eco changed some of the details. As from 2020 Eco members would no longer keep half of their reserves in the French Treasury and there would no longer be a French representative on the board, but the Eco will still be linked to the Euro. Without a much more flexible currency arrangement that reflects the relative economic conditions in West and Central Africa, the Eco is unlikely to differ from the CFA in its impact.

In much of low-income Africa people are moving from subsistence agriculture in rural areas to informal jobs in the urban services sector. Investment and jobs are often limited to capital-intensive commodity enclaves such as in northern Mozambique's gas fields with little or no forward or backward linkages into the surrounding economy. And the few jobs that are created through these megaprojects do little to provide employment or create local value chains. They provide jobs for a small number of expatriates and generate large streams of revenue for governments, but generally enclave economics don't benefit national economies. Yet commodity-based enclave development is often the norm.

#### **Rising Debt Levels**

Debt has also resurfaced as a serious challenge. In a wide-ranging study on the relationship between debt and growth Carmen Reinhart and Kenneth Rogoff concluded: 'When external debt reaches 60 percent of GDP, annual growth declines by about two percent'.22 On average, Africa's low and lowmiddle-income countries consistently had debt levels in excess of 60% of GDP from the mid-1980s for almost two subsequent decades, levels that clearly contributed to slow growth.

After 2011, when commodity prices declined, commodity exporters such as Angola, Chad, Republic of Congo, Niger, Nigeria and Zambia were the first to be particularly badly affected. Rising debt had also been driven by a number of other factors such as internal conflict (Burundi), the impact of epidemics such as Ebola (in Liberia and Sierra Leone) and fraud/corruption (Mozambique and The Gambia). Finally, a larger liquidity crunch, delays in the start of natural resource production, and weaknesses in revenue administration contributed to large increases in debt in Benin, Cameroon, Djibouti, Ethiopia, Ghana, Kenya, Senegal, São Tomé and Princìpe, Rwanda, Togo, Uganda and Zimbabwe.23

In its 2018 Regional Economic Outlook for Sub-Saharan Africa, the IMF noted that public debt rose above 50% of GDP in 22 countries at the end of 2016, up from ten countries in 2013. 'Debt servicing costs are becoming a burden, especially in oil-producing countries, and Angola, Gabon and Nigeria are expected to absorb more than 60% of government revenues in 2017', the IMF said.24

It was against this background that the announcements of additional large loans from China (such as on the margins of the Forum on China–Africa Cooperation meeting held in September 2018 in Beijing) elicited concern

22Reinhart, C. M., and Rogoff, K. S., 2010. Growth in a Time of Debt. *American Economic Review: Papers & Proceedings 100,* pp. 573–578.

23International Monetary Fund, 2018. *Macroeconomic Developments and Prospects in Low*-*Income Developing Countries.* Washington, DC: IMF, pp. 39–40.

24International Monetary Fund, 2018. *Regional Economic Outlook. Sub*-*Saharan Africa: Capital Flows and the Future of Work.* Washington, DC: World Economic and Financial Surveys, p. 6.

that debt levels in sub-Saharan Africa were rapidly becoming unsustainable. Exact information is hard to decipher since China does not release comprehensive data, but it seems that interest-bearing loans from the Chinese government, banks and contractors have gone from almost nothing in 2000 to US\$143 billion in 2017.25 To some analysts it appeared that Africans had to borrow money from the IMF to repay China but others argued that it was only in Zambia, Djibouti and the Republic of the Congo where Chinese loans were a significant contributor to high risk of debt distress.26 Actually, Chinese lending appears to have resulted in an increase of nearly four percent of debt-to-GDP of low-income countries in recent years while that of multilateral institutions like the World Bank had seen an equal decline.

Recently, a systematic comparison of Chinese and World Bank lending terms found that Chinese lending to developing countries is 'generally offered on less concessional terms than those offered by Western and multilateral creditors, although more favourable than the market would offer'.27 Always careful about the associated tide of criticism, in 2019 Beijing announced that it would establish an analysis framework on debt sustainability for Belt and Road Initiative projects and improve transparency.28 The shift in debt away from the concessional (i.e. below market) rates offered by the World Bank and IMF towards China has also seen other effects such as higher interest rates, shorter maturities and shorter grace periods.29

All of this has been dramatically accentuated by COVID-19.

25John Hopkins School of Advanced International Studies, Data: Chinese Loans to Africa. [Online] Available at: http://www.sais-cari.org/data-chinese-loans-to-africa.

26Moore, W. G, 17 September 2018, The Language of "Debt-Trap Diplomacy" Reflects Western Anxieties, Not African Realities. Quartz. [Online] Available at: https://qz.com/1391770/the-anxious-cho rus-around-chinese-debt-trap-diplomacy-doesnt-reflect-african-realities/. Also see *The Economist*, 2018. *Reckless in Lusaka: Zambia's Looming Debt Crisis Is a Warning for the Rest of Africa.* [Online] Available at: https://www.economist.com/leaders/2018/09/15/zambias-looming-debt-crisis-is-a-warning-forthe-rest-of-africa?frsc=dg%7Ce; Neuweg, I., 2018. What Types of Energy Does China Finance with Its Development Aid? [Online] Available at: http://www.lse.ac.uk/GranthamInstitute/news/china-ene rgy-development-aid/. Also see Brautigam, D., 2019. Is China the World's Loan Shark? [Online] Available at: www.nytimes.com/2019/04/26/opinion/china-belt-road-initiative.html.

27Morris, S., Parks, B., and Gardner, A., 2020 Chinese and World Bank Lending Terms: A Systematic Comparison Across 157 Countries and 15 Years, 2 April 2020, Center for Global Development Paper 170. [Online] Available at: https://www.cgdev.org/publication/chinese-and-world-bank-lending-termssystematic-comparison.

28Yao, K. China in Bid to Allay Fears of Debt Risk in Its Belt and Road Initiative Business Day, 25 April 2019. [Online] Available at: https://www.businesslive.co.za/bd/world/asia/2019-04-25-china-inbid-to-allay-fears-of-debt-risk-in-its-belt-and-road-initiative/.

29Morris, S., Parks B., and Gardner, A., 2020. In Global COVID-19 Response, New CGD Research Shows China Should Lead on Poor Country Debt Relief, Center for Global Development, 2 April 2020. [Online] Available at: https://www.cgdev.org/blog/global-covid-19-response-new-cgd-researchshows-china-should-lead-poor-country-debt-relief.

In April 2020, the IMF released its first post-COVID-19 growth forecasts, now indicating a sharper global growth contraction than even during the 2008/2009 financial crisis, although, perhaps optimistically, expecting a sharp recovery in 2021. Global growth for 2020 was revised downward by 6.4 percentage points (its forecast is now for −3% growth in 2020) with a bounce to global growth at 5.8% in 2021.30

As the impact of COVID-19 has become more evident, the Group of 20 countries agreed, in April 2020, to suspend debt service payments for 76 low-income countries, including 40 in sub-Saharan Africa, eligible for the World Bank's most concessional lending via the International Development Association. In related news, the IMF approved six months of debt service relief for 25 low-income countries, including 19 in Africa, and approved additional funding support for several.31 Slow growth will transform Africa's debt challenge into a full-blown crisis.

#### **The Third Wave of Democratisation in Africa**

Contrary to the general trend elsewhere, Africa's recent cycle of commoditiesled growth was accompanied by unprecedented democratisation. The world experienced various surges in democracy in the previous two centuries, with the third wave of democracy cresting between 1989 and 1993 with the collapse of the former Soviet Union and its immediate aftermath.

Prior to that there was little to distinguish independent Africa from colonial Africa in terms of the quality of governance. The events in the Soviet Union changed things as pro-democracy movements and reforms washed across the continent.

According to the *Freedom in the World* annual index published by Freedom House, levels of democracy in Africa increased by 12 percentage points from 1988 to 1994 with 25 out of 54 countries classified as free or partly free.32 The West had triumphed, or so it appeared, and with the subsequent

30IMF, 2020, World Economic Outlook, April 2020: Chapter 1. [Online] Available at https://www. imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020.

31Gandi, D., Golubski, C. 2020. International Community Looks to Support Africa with Debt Relief, Health Aid, Brookings Institution, 18 April 2020. [Online] Available at: https://www.brookings.edu/blog/africa-in-focus/2020/04/18/africa-in-the-news-african-govern ments-and-multilaterals-address-covid-19-emergency-debt-relief/.

32In 1988 only 17 out of the 50 African countries included in the Freedom in the World survey could be classified as 'free' or 'partly free'. Shortly after the collapse of the Berlin Wall, in 1994, the organisation estimated that 25 out of 54 countries were now 'free' or 'partly free'. Freedom House, 2018. *Freedom in the World.* [Online] Available at: https://freedomhouse.org/report/freedom-world/fre edom-world-2018.

concerns for elections, human rights and accountability (rather than ideological orientation), came the closely associated belief in liberal capitalism.

However, history has shown that democracy is generally more resilient above certain minimum levels of income and education, when a solid web of institutions and the rule of law are able to constrain the misuse and abuse of state institutions.33 In countries with low levels of income, democracy is often fragile, largely because the formal institutions, rules and norms upon which it rests and depends for effective functioning are absent or insufficiently developed.34

When comparing the average levels of democracy in low- and uppermiddle-income countries on the continent to that of other countries with similar levels of education and income elsewhere in the world, Africa is more democratic than one would expect.35 In fact, improvements in the levels of democracy have outpaced improvements in levels of income and education in Africa. Hence, democracy here rests on somewhat fragile foundations.36

The fact that levels of democracy are somewhat out of sync with levels of income and education could be attributed to a number of factors. The conditional engagement by Western donors over several decades created space for civil society, a free press and competitive elections that otherwise would not have emerged or at least not as rapidly. Moreover, a series of national democratisation conferences in French-speaking Africa (Benin, Gabon, Congo, Mali, Togo, Niger and the Democratic Republic of Congo)

33The American social scientist Barrington Moore popularised the notion of 'no bourgeois, no democracy', denoting the fact that minimum levels of economic development were required for democracy. See Moore, B., 1966. *Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World.* Boston: Beacon Press. For more recent work see Przeworski, A., and Limongi, F., 1993. Political Regimes and Economic Growth. *Journal of Economic Perspectives,* 7(3), pp. 51–69. 34Glaeser, E. L., Ponzetto, G., and Shleifer, A., 2006. Why Does Democracy Need Education? *NBER Working Paper,* Issue No. 12128, pp. 3–4.

35Varieties of Democracy (V-Dem) distinguishes between five high-level indices of democracy ideals: electoral, liberal, participatory, deliberative and egalitarian, and collects data to measure these and numerous component indices and indicators. It is a large collaborative project, with headquarters at the V-Dem Institute at the Department of Political Science at the University of Gothenburg, Sweden. In version 8 of its data release (June 2018) the project now covers 201 political units with historical data from 1789 to 2017.

36Various large datasets track and measure comparative levels of democracy globally including the Varieties of Democracy or V-Dem (Gothenburg University) and Polity datasets (Center for Systemic Peace) with their results now going back more than a century. Others, such as from the Economist Intelligence Unit are more recent and less compelling.

served to confront the economic and political crisis that had enveloped these countries and ignited a thirst for pro-democracy reforms.37

But the most important reason for the relative high levels of democracy in Africa is simply the lived experience of decades of brutal authoritarianism. Numerous opinion surveys, such as those conducted by Afrobarometer in more than 35 African countries, point to the strong and growing support for democracy in Africa.38

For decades the military dominated politics and often yesterday's liberation heroes became today's autocrats.

Muammar Gaddafi in Libya and Omar Bongo Ondimba of Gabon were Africa's longest modern rules. Teodoro Obiang Nguema Mbasogo of Equatorial Guinea has been in power since 1979, i.e. for 40 years, a number only equalled by Haile Selassie of Ethiopia. Paul Biya has presided over Cameroon since 1982 and King Mswati lll of eSwatini and Yoweri Museveni of Uganda since 1986. José Eduardo dos Santos of Angola was president for 36 years and Robert Mugabe of Zimbabwe for 35 years. When he was toppled by his military in April 2019, Sudan's Omar Al-Bashir had been in power for 30 years.

Long-term incumbency often leads to looting of the state and almost inevitably culminates in a violent uprising and turbulent transition. Mobutu Sese Seko of the former Zaïre, now the Democratic Republic of the Congo, allegedly stole at least US\$4 billion while serving as president.39 More recently, Teodoro Nguema Obiang—vice president of Equatorial Guinea and son of the current president—was accused of embezzling more than US\$100 million. Human Rights Watch describes the situation in that country as one where the state foregoes investment in health and education in favour of grandiose infrastructure projects that really function as 'conduits for enriching the ruling elite'.40

The problem is that, with few exceptions, Africans don't yet benefit from substantive democracy. In many countries, Africans go through the motions

37Robinson, P.T., July 1994. The National Conference Phenomenon in Francophone Africa. *Comparative Studies in Society and History,* 36(3), pp. 575–610. Cambridge University Press. [Online] Available at: https://www.cambridge.org/core/journals/comparative-studies-in-society-and-history/art icle/national-conference-phenomenon-in-francophone-africa/F20505B66CA65C8D71ACBB7919A

DE1D0; also see Banzet, A., 2017. #CAFDO2017: The First Francophone African Conference on Open Data and Open Government. [Online] Available at: https://www.opengovpartnership.org/sto ries/cafdo2017-the-first-francophone-african-conference-on-open-data-and-open-government/.

38Afrobarometer, n.d. [Online] Available at: http://afrobarometer.org.

39Transparency International, n.d. *Seize Mobutu's Wealth or Lose Your Own Money, Western Governments Told.* [Online] Available at: https://www.transparency.org/news/pressrelease/seize\_mobutus\_wealth\_or\_ lose\_your\_own\_money\_western\_governments\_told.

40Saadoun, S., 2017. *Human Rights Watch.* [Online] Available at: https://www.hrw.org/news/2017/ 07/10/trial-one-africas-most-corrupt-politicians-shows-fighting-graft-global.

of regular elections but incumbent leaders have become adept at interfering in the electoral process, as recently seen in countries as diverse as Zambia, Cameroon and Uganda.41

Incumbents will even change the constitution to retain the presidency if that is what it takes.42 In January 2019 in the Democratic Republic of the Congo, outgoing president Laurent Kabila blatantly rigged the presidential and national assembly election held on 30 December 2018 to instal himself as the power behind newly elected president Félix Tshisekedi.43 The rest of the continent remained silent, thankful that the transfer of power (if that is what it could be called) occurred peacefully.

Leaders in these countries invest significant resources in ensuring a favourable electoral outcome by constraining the democratic space. This is done by rigging the registration process, running interference (for instance, by tying opposition candidates down in spurious legal cases or barring public gatherings), misusing state resources to dispense patronage, controlling the diet of information (particularly through the abuse of public media in favour of the ruling party) and, if all else fails, directly manipulating the results or frustrating any subsequent legal challenge.

The situation is further complicated by the fact that competitive politics in a multi-ethnic context generally rely on the mobilisation of ethno-linguistic groupings for political support.

For decades African leaders have primarily taken their cue from the West in pursuit of their governance and social model. Today autocratic China is increasingly calling the shots. Since 2000, China has embarked on a vigorous process of courting African states with its offers to build infrastructure financed by Chinese banks as it sought a new role for its excess capacity, sometimes as part of its Belt and Road Initiative. However, while their leaders increasingly look East, Africa's citizens generally continue to look to the West.

41In Gabon the incumbent, Ali Bongo Ondimba, son of the previous ruler of some 41 years, 'won' with 49.8% of the vote, while the presidential candidate of the Démocratie Nouvelle party, Jean Ping, received 48.23%. This followed the delivery of implausible results that boosted the national voter turnout from 59.46 to 99.93% in Haut-Ogooué, where Bongo won 95.5% of the votes cast. In Zambia numerous malpractices and irregularities were reported. President Edgar Lungu of the Patriotic Front was eventually declared the winner with 50.35% of the vote, with a lead of 100 530 over rival Hakainde Hichilema of the United Party for National Development.

42Paul Biya of Cameroon, serving as the prime minister, has been in power since 1975, but has only technically been president since 1982. If one includes his time as prime minister he comes in at 43 years.

43Wolters, S., 2019. *Will This Election Change the DRC?* [Online] Available at: https://issafrica.org/ iss-today/will-this-election-change-the-drc.

Democratisation and economic growth is buoyed by Africa's unfolding urban transition. The question now is what kind of urbanisation is taking place on the continent and how does it impact on the political situation?

#### **Africa's Slow Pace of Urbanisation**

Historically, urbanisation has gone hand in hand with growth and development. A 2010 analysis by the McKinsey Global Institute found that the shift from rural to urban employment could account for 20–50% of productivity growth in Africa.44

Yet, by historical standards urbanisation is taking place very late in Africa. At the time of independence in 1960 less than one-fifth of Africans could likely be classified as urban. By 1980 that number had increased to around 27%, by 2000 to 34% and should, by 2037 or thereabout, cross the halfway mark. The rest of the world crossed that point shortly after the turn of the century. Africa is likely to only get to the two-thirds mark around 2070 compared to 2040 for the rest of the world. The impact of climate change may, of course, accelerate this process.

East/Horn of Africa is the most rural part of the continent by a long stretch, and likely to stay that way with levels of urbanisation currently almost 30 percentage points below North Africa, the most urban region. West Africa is experiencing the most rapid rates of urbanisation (average rates are currently roughly on par with Central Africa) and will, beyond mid-century, approach rates of urbanisation in North or Southern Africa. Currently Gabon, Djibouti and Libya are the most urbanised countries and Malawi, Rwanda, Niger and Burundi the least urbanized, with less than 20% of their populations considered urban.

However, contrary to the historical experience in much of the rest of the world, Africans currently don't move to urban areas in response to existing job opportunities in the manufacturing sector (that would increase productivity), but rather to escape the destitution and poverty of rural existence. Consequently, poverty is urbanizing and urban slums and informal settlements are expanding.45 Sharp income inequalities in many African cities also mean that

44Roxburgh, C., Dörr,N., Leke, A., Tazi-Riffi, A., van Wamelen, A., Lund, S., Chironga, M., Alatovik, T., Atkins, C., Terfous, N., and Zeino-Mahmalat, 2010. *Lions on the Move: The Progress and Potential of African Economies*. Brussels: McKinsey Global Institute, p. 19.

45Ravallion, M., Chen, S., and Sangraula, P., 2007. The Urbanization of Global Poverty. *World Bank Research Digest,* 1(4).

the contribution of economic growth to poverty reduction is limited. As a result, Africa has more urban poor than any other region.

The result of the foregoing is that Africa's urban population growth is the fastest globally although from a low base. Each year urban Africa grows by an estimated 20 million people and, by 2040, that number will be more than 30 million every year. By 2030 Africa will host six of the world's 41 megacities. Cairo, Lagos, Kinshasa, Johannesburg, Luanda and Dar es Salaam will have more than 10 million inhabitants each and 17 African cities will have a population of more than five million each.46 The African Economic Outlook 2016 predicted that Africa could see its slum population triple by 2050 as population growth and urbanisation without industrialisation proceeds apace.47

The move from rural subsistence farming to urban informal employment in low-end services is positive in that it is moderately growth enhancing. However, the nature and delay in Africa's urbanisation is a significant drag on economic transformation.

It is also much easier and less expensive to provide bulk services such as clean water, sanitation and electricity to people in denser settlements than to a population spread out across large rural areas. Writing for the International Growth Centre in 2016, Paul Collier succinctly summarised the challenge and the opportunity as follows:

At its best, urbanisation can be the essential motor of economic development, rapidly lifting societies out of mass poverty. At its worst, it results in concentrations of squalor and disaffection which ferment political fragility. To date, African urbanisation has been dysfunctional, the key indication being that cities have not generated enough productive jobs.48

Unless leaders are able to reap the benefits of the greater economies of scale that is offered within an urban setting, Africa's accelerating urbanisation will come with considerable risks. The management of its urban areas will present African leadership with immense challenges.

Urbanisation has powerful socio-political implications and it has become an important consideration in explaining the rise of populism in the West

46Leke, A., Chironga, M., and Desvaux, G., 2018. *Africa's Overlooked Business Revolution.* [Online] Available at: https://www.mckinsey.com/featured-insights/middle-east-and-africa/africas-overlookedbusiness-revolution?cid=other-eml-alt-mkq-mck-oth-1811&hlkid=d07ce11e35584866845b18ad9b7 c7578&hctky=9322113&hdpid=9fc500fa-86ef-4249-87f0-d873aea796b9.

47AFDB., OECD DEV., UNDP, 2016. *African Economic Outlook 2016. Special Theme: Sustainable Cities and Structural Transformation.* Abidjan: African Development Bank Group.

48Collier, P., 2016. *African Urbanisation: An Analytic Policy Guide.* London: International Growth Centre.

and, in Africa, urban areas are first to turn away from support of the governing party evident in cities as diverse as Algiers, Addis Ababa, Harare and Johannesburg. Like elsewhere in the world, Africa urbanites also tend to be much more politically engaged than ruralites. Inevitably, it is in the capital city that support first goes to opposition parties. In Zimbabwe, the ruling Zanu(PF) party has therefore run an extraordinarily violent campaign over several decades to keep the country's population dominantly rural and under its firm control.

Whereas urban populations are more cosmopolitan and often younger, rural populations are generally older and politically more conservative.49 Consequently, there is usually a marked difference in attitude between rural and urban people. 'The young, regardless of where they live, tend to associate more with urban outlooks',50 Auerswald and Joon write.

#### **The Current Path Scenario**

In this section, I briefly summarise some of additional characteristics to that in Chapter 1 of Africa to 2040 along the Current Path forecast within the International Futures forecasting platform (IFs), namely demographics, the composition of the African economy and GDP, as well as rates of poverty, and compare it to the global trends.

The IFs Current Path forecast is that Africa's total population will increase from 1276 million in 2018 to 2115 million by 2040. At that point the global population will number 9210 million people of which 23% will be African compared to 17% in 2018.

Figure 2.1 presents the total population in Africa from 1980 (477 million), and breaks out the five countries that, by 2040, would have the largest population in the continent. Nigeria's large population historically constitutes around 15% of Africa's population and will, by 2040, constitute about 17%. With the exception of Nigeria and Egypt, consistently the top two, the top population rankings have shifted over time. In 2004 Ethiopia's burgeoning population surpassed that of Egypt, for example. And while, in 2018, South Africa was still at number five it will be overtaken by Tanzania in 2020.

Figure 2.2 presents the size of the total African economy at market exchange rate in 2018 (US\$2.9 trillion) and 2040 (US\$7.2 trillion) and breaks out the economies that, by 2040, would be the ten largest. Nigeria, the

49Philip, A., and Joon, Y., 2018. *The New York Times.* [Online] Available at: https://www.nytimes. com/2018/05/22/opinion/populist-populism-fertility-rates.html. 50Ibid.

**Fig. 2.1** Africa's population 1980 to 2040 with top five by 2040 (*Source* Historical data from United Nations Population Division 2019 medium term forecast, forecast in IFs 7.45)

continent's largest economy, constituted around 0.6% of the global economy in 2018 and, by 2040, it should constitute around 0.8% of the global economy.

Of all the indications of progress, levels of extreme poverty is perhaps the most meaningful in Africa. Poverty has many dimensions ranging from health and education levels to income and how disempowered people feel. Since poverty also has a subjective side, i.e. how it makes people feel about important aspects of their lives, the different dimensions to poverty and how it can be measured is part of an ongoing debate.51

In recent years, broader measures of poverty have gained increased support, such as the Multidimensional Poverty Index that focuses on a set of tangible goods and services without which people might be defined as poor.52 Different regions also use different measures to more accurately reflect poverty in their member states. For example, the European Union typically uses a relative poverty line that is set at 50 or 60% of national median income.

51Carolina, R., and Monica, J., 2018. *United Nations Development Programme: Human Development Reports.* [Online] Available at: http://hdr.undp.org/en/content/measuring-multidimensional-poverty-lea ving-no-one-behind.

52See Oxford Poverty and Human Development Initiative, Global Multidimensional Poverty Index. [Online] https://ophi.org.uk/multidimensional-poverty-index/.

For many years the international community used a single income-based definition of extreme poverty for the purposes of cross-country comparisons. It was first set at US\$1.00, then US\$1.25 and more recently US\$1.90 per person per day. Each was successively set in purchasing power parity, the latest in 2011 constant dollars. That value was, in turn, anchored in the poverty thresholds used by some of the world's poorest countries since national poverty lines inevitably increase as national incomes rise. Using the US\$1.90 threshold, 36% of Africa's total population is considered extremely poor, a ratio that will decline to 33% by 2030 and 24% by 2040, with the continent experiencing an average GDP growth rate of 4.7% to 2040. Due to rapid population growth, by 2040, 513 million Africans would therefore live in extreme poverty compared to 458 million in 2018. Extreme poverty in the rest of the world would, in 2040, be less than 90 million people, down from 320 million in 2018.

In addition to the US\$1.90 international poverty line, in October 2017, the World Bank announced that it will also be reporting poverty rates using three new international poverty lines, namely a lower-middle-income threshold set at US\$3.20 per person per day, an upper-middle-income line set at US\$5.50 per person per day and US\$22.70 for high-income countries.53

Although Western and Eastern Africa have Africa's largest regional populations of people living in extreme poverty, the use of country income categories is an important step in understanding a growing consensus that poverty was relative—it differed between rich and poor countries and that it is different to be poor in the DRC as opposed to Algeria, never mind the difference between poverty in Kinshasa and Algiers.

Previously, using US\$1.90, North Africa was the only region in Africa that would achieve the goal of eliminating extreme poverty as set out in the 2030 Agenda for Sustainable Development headline goal. In fact as a group it has already done so (except for Mauritania) with the portion of its extremely poor population at below three percent. Since the countries in North Africa have all graduated to either low-middle or upper-middleincome status, extreme poverty has now suddenly 'increased' when applying the two additional poverty lines relevant to Africa (US\$3.20 and US\$5.50). The Bank has, however, made it clear that for the purposes of achieving the headline goal on eliminating extreme poverty by 2030 it will continue to apply only the US\$1.90 line since shifting the goalposts in this dramatic manner several years into the SDG process would not make practical sense.

53Ferreira, F., and Sánchez-Páramo, C., *2017* . A Richer Array of International Poverty Line*s. Worldbank Blogs,* 13 October 2017. [Online] Available at: http://blogs.worldbank.org/developmenttalk/ric her-array-international-poverty-lines.

Looking at this Current Path forecast on poverty, the impact of Africa's very rapid population growth should be clear. African economies need to grow at an exceptionally high rate to reduce poverty under these circumstances. In fact, while it was impossible for Africa to reach the 2030 target to eliminate extreme poverty when using the single US\$1.90 poverty line, the goalposts are now very distant indeed.

More than any other single indicator, the Current Path forecast of the expected increase in poverty for the next three decades underpins the reason for understanding what else needs to be done to change Africa's development prospects. In the next chapter, I turn to the first requirement for this change namely the importance of health.

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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# **3**

# **Health**

**Abstract** In this chapter Cilliers covers Africa's unique epidemiological history from the early migration of homo sapiens to the devastation of HIV/AIDS and, more recently, the unfolding impact of COVID-19. It explains how humans' proximity to nature, slow urbanisation and Africa's distinct climatic conditions have led to an unusually high burden of communicable diseases, particularly the HIV/AIDS pandemic. The chapter also explains the double-burden of communicable and non-communicable disease evident in Africa. The chapter highlights the central role that infrastructural improvements and urban planning play in supporting better health outcomes and impact that poor basic infrastructure and lack of urban planning has in much of Africa. The chapter places a particular emphasis on the central role of potable water and water-borne sanitation in preventing the spread of disease. Finally, scenario analysis is used to demonstrate the relationship between health and economics.

**Keywords** Disease · Infectious diseases · Non-communicable diseases · HIV/AIDS · Homo sapiens · Safe water · Sanitation · Urbanisation · Infrastructure · Human development

#### **Learning Objectives**

Homo sapiens evolved in Africa around 300,000 years ago and, although there is evidence of previous waves of migration, only successfully migrated from Africa some 70,000 years ago. Human DNA and archaeologists confirm that all humans who have ancestors outside of Africa today come from a single small group of migrants and not from earlier waves. About 50,000 years ago, they spread along the southern coast of Asia to Oceania, and eventually to Europe—a process that occurred over several thousand years. In the process Homo sapiens eventually displaced Neanderthals and eventually emerged as the dominant species globally. This was not a linear process and there is ample evidence that Homo sapiens, Neanderthals and others interbred and even cohabited.1

Early humans gained an initial health reprieve that lasted for several thousand years when they moved out of Africa for cooler regions with fewer insect-borne diseases and 'the many parasites and disease organisms that had evolved in parallel with the human species'.2 As a result they multiplied rapidly in these new areas.

The development of agriculture and farming was key to humanity's rapid increase in numbers as it increased food production and allowed much higher population densities although density in turn bred new diseases. Larger population concentrations caused competition and sometimes conflict between people over grazing, land, food and status that required political organisation and further role differentiation. Competition spurred innovation and technological advancement.3

In contrast to the situation that developed elsewhere, large parts of ancient Africa's interior appears to have been characterised by very low population densities very likely as a result of the scourge of sleeping sickness and

1Research findings are constantly being updated. For the most recent findings see Harvati, K., Röding, C., Bosman, A. M., Karakostis, F. A., Grün, R., Stringer, C., Karkanas, P., Thompson, N. C., Koutoulidis, V., Moulopoulos, L. A., Gorgoulis, V. G., and Kouloukoussa, M. Article 2019 Apidima Cave Fossils Provide Earliest Evidence of Homo Sapiens in Eurasia. *Nature*, 10 July 2019, https://www.nature.com/articles/s41586-019-1376-z.

2Reader, J., 1998. *Africa: A Biography of the Continent.* New York: Penguin Books, p. 234.

3Diamond, J., 2015. *Guns, Germs and Steel: The Fates of Human Societies*. New York City: W. W. Norton & Company, p. 386.

other vector-borne diseases, such as malaria. Geography, and hence climate, therefore limited population growth in Africa compared to other regions.

Vector-borne diseases are illnesses caused by parasites, viruses and bacteria that are transmitted to humans by insects such as mosquitoes, ticks and tsetse flies that are commonly found in tropical and subtropical regions such as in Central Africa and places where access to safe drinking water and sanitation is limited. In temperate zones, such as much of Europe, parts of Asia and North Africa, the annual seasonal fluctuations serves as a natural constraint on the breeding cycle of insects.4 In Central, West and East Africa where Homo sapiens originated, this cycle is not similarly disrupted, with the result that sub-Saharan Africa has a constant high burden of vector-borne diseases, come summer, autumn, winter or spring.

Malaria, the most deadly vector-borne disease, is particularly prevalent in Africa. The continent also accounts for 34 of the 47 countries prone to yellow fever outbreak and about 40% of the global burden of lymphatic filariasis (elephantiasis).5 Today, Africa is still home to 16 of the 30 countries listed by the World Health Organisation (WHO) as having a high burden of tuberculosis, though none are under the top five.6 Diseases including yellow fever and sleeping sickness were endemic, and insect-borne diseases also prevented the use of the horse, ox or camel, thereby limiting opportunities for more rapid progress.7

The belt of open Savannah south of the Sahara and north of the tropical rain forests in central and western Africa eventually became an exception to the high burden of vector-borne diseases. Higher population densities allowed these regions to experience a modest agricultural revolution, although not on the same magnitude as seen elsewhere in the world.8

Nature eventually reasserted itself into humanity's new habitats outside of Africa. In fact, most of today's most prominent infectious diseases only emerged in the last 11,000 years, following the rise of agriculture. Larger

4Wolfe, N. D., Dunavan, C. P., and Diamond, J., 2012. Origins of Major Human Infectious Diseases. In: *Institute of Medicine. Improving Food Safety Through a One Health Approach: Workshop Summary.* Washington: National Academies Press. Also Reader, J., 1998. *Africa: A Biography of the Continent.* New York: Penguin Books, p. 242.