THE current state of the global economy is bad news for most people, but the situation is better for Africa, according to Zambian economist Dambisa Moyo.
But, she says, African economies need to work harder to fix educational systems, fight corruption and reduce poverty.
Moyo spoke at an investment conference organised by fund managers RE:CM (Regarding Capital Management) in Sandton this week.
“The current economic situation is bad for the rest of the world, but good for Africa,” she said.
Africa has — or will soon have — an abundance of capital, labour and productivity, the three key factors needed for economic growth.
Due to its isolation from global investment, the continent has largely escaped the debt crisis and budget deficits which characterise other economies.
“I used to say it was a great disservice that Africa was not engaged as a global partner, now I’m grateful, in a way, because it means economic growth will be driven from here, as we are not facing deleveraging,” she said.
Developed countries — particularly in Europe and Asia — struggle with declining populations and risk contraction as a result.
But 64% of Africa’s population is under the age of 24 and, increasingly, people are moving to cities. Africa’s population will double to two billion in the next 40 years, resulting in an enormous labour force to power growth.
Productivity accounts for 60% of economic growth and many African countries have higher productivity levels than their counterparts in the developed world, she said.
Africa has made great strides in reducing corruption and securing political freedom, with 63% of African countries free or partly free.
Much of Africa’s corruption problem resulted from the aid regime, and with donors pulling out of the continent, corruption is expected to decrease.
Sub-Saharan Africa is expected to grow at 5,4% this year and 5,3% next year, according to the International Monetary Fund. Africa will be among the top-five regions for growth, after China and India, during this period.
“And yes, I know Africa is not one country, but they (investors) do think of Africa as one conglomerate. This is why it’s so essential for large economies, such as South Africa, Nigeria and Ethiopia, to get it right.
“The rest of Africa won’t go anywhere if people think the large economies can’t get it together,” she said.
Growth rates of more than 5% are good news, “but it’s not enough”. A rate of more than 6% has to be maintained over the years to dent poverty.
Innovative solutions are needed to improve weak education and high unemployment.
People in many countries such as Zambia are starting to question the value of education when educated people are without jobs.
“We need to think about what else we can be doing to provide opportunities for livelihoods,” she said, suggesting alternative-skills training linked to export-based sectors and entrepreneurship.
Africa is far more business-friendly than before, with 20 stock exchanges and more than 1 000 listed companies.
In Rwanda, it takes just 30 minutes to open a business, making it the most advanced country in the world in which to do business.
Africa has spent too much time looking to Europe and the US, to its own detriment. It needs to focus on new partners, such as China, she said.
“As my mother said, it’s important for a girl to have more than one suitor,” said Moyo.
Governments also need to focus on regional opportunities, as small economies such as Zambia’s will not be able to compete alone, she advised.