The African Development Bank (AfDB), the Organization for Economic Co-operation and Development (OECD) and the United Nations Development Program (UNDP) released their report on “Prospects for the African economy in 2017” . The press release, which was widely taken up by the media, compiled some figures, including a growth forecast for the entire African continent of 3.4% in 2017 and 4.3% in 2018, a middle class that would reach 350 million people (Out of a total of 1.2 billion people), or foreign direct investment in 2017 of about $ 57 billion (50 billion euros). This report contains many interesting data which it is useful to put in context.
Spectacular population growth
Let us return to growth. First, regional disparities are large, with growth of only 0.4% in West Africa and 0.8% in Central Africa in 2016, when it exceeds 5% in Africa ‘East. Let us also look at the growth needed for structural and sustainable development, particularly given the continent’s spectacular population growth.
The United Nations Conference on Trade and Development (UNCTAD) published a report in 2014 entitled “Economic development in Africa”, which assumes a 7% growth in economic growth over the medium to long term. Over the last ten years, only 10 countries in Africa have reached this figure (Economic Report on Africa for 2013, UN Economic Commission for Africa). The UNCTAD states that in order to achieve such medium-term growth, the average investment rate (gross fixed capital formation to GDP ratio ) should be at least 25% (UN Economic Commission for Africa (33%). Over the past 20 years, this average investment rate has been only 18% in Africa (UNCTAD, 2014).
The poverty rate in Africa has been declining for several years, but the population growth is such that the number of poor is increasing! The report on the outlook for the African economy states that there will be more than 500 million Africans below the poverty line, living on less than $ 2 a day. At the same time, according to the same report, there would still be an average class of 350 million people. The African Development Bank defines a person in the middle class by an income between $ 2.2 and $ 20 per day. Recall that the poverty line is $ 2 a day, which means that 20 cents would make the difference between poverty and middle class membership.
The AfDB estimates that of the 350 million people living with a daily income between $ 2.2 and $ 20, nearly 60% live with $ 2.2 to $ 4 a day, or about 200 million people. The AfDB modestly calls this category “the floating middle class” . “Floating” because it is so precarious and close to the poverty line that one can not decently call it middle class.
An embryonic middle class
To this end, UNCTAD recommends three sectors of concentration: infrastructure, agro-industries and the manufacturing sector. The quality of the investment relates to the relevance, quality of implementation and governance of investments. Unfortunately, investment in Africa remains an opportunity for officials to get rich. Many ministers and presidents levy their tithes on each investment or accept projects that are unsuitable or of poor quality by means of large commissions.
The cost of corruption
As Mauritanian businessman Mohamed Ould Bouamatou said at a conference organized by the Mo Ibrahim Foundation in April in Marrakech, ” power should not be used as a shortcut to personal enrichment” . Moreover, the Mo Ibrahim Foundation has only been awarded four prizes since 2007, failing to designate an African political leader who has demonstrated excellent leadership. This bad governance has a cost for African economies. It constitutes an additional handicap in terms of competitiveness, since the cost of corruption is always reflected in the costs of investment.
As for private investment, it remains low in Africa. Foreign direct investment is expected to reach $ 57 billion by 2017, equivalent to what the Netherlands has received in 2014 for a population of 17 million. Migrant remittances will exceed by 2017 the amount Of foreign direct investment, or $ 66 billion, and official development assistance is expected to be around $ 50 billion (African Economic Outlook, 2017).
Suffering and misery
In short, the figures remain figures to which one can make say everything and its opposite. If Africa is a continent of commercial opportunities, as Jean-Michel Sévérino and Olivier Ray wrote in their book Le Temps de l’Afrique in 2010 , the economic potential of Africa remains Largely unexploited and, as far as the exploited part is concerned, it benefits only a minority, whose ruling classes are enriched in shocking proportions. Seen from the commercial angle, Africa is thus already an eldorado for many companies and will remain so. Seen from the human angle, Africa is a continent where suffering and misery continue to grow. How long will the African peoples accept all these inequalities?
Source: Le Monde.fr