In the last year, Africa had 6 of the world’s fastest growing economies and, despite having growth rates revised downwards because of European debt and economies woes, overall growth for the continent is likely to be 5.75% in 2012. The long term prospects are seen as equally promising. Current total African economic output is about $1.6 trillion – about the same as that of Brazil or Russia; it is forecast to rise by nearly 40% to $2.6 trillion, by 2020.
Population change and improved living standards are critical to that growth, but also present major challenges. Africa’s overall population will probably double by 2050. At present, its median age is about 20, compared with 30 for Asia and 40 for Europe. Significant numbers of young people, with more education will be arriving in the workforce. Africa is also urbanising and becoming more middle class. By 2025, about 50% of Africa’s population will be urban, making access to market easier. Meanwhile, those with disposable incomes are growing in number too: currently about 60 million have incomes of $3000 per annum. That will rise to 100 million by 2015, and could reach 128 million by 2020.
Other indicators are equally enticing: inward investment has grown 10 fold in a decade; total market capitalisation has quadrupled in 8 years to $1300 billion; productivity is up 2.7% since 2000; political stability and governance have improved radically, with two thirds of countries now holding elections; trade with the world has increased 200% in the same period – with 50% and rising going south:south, and Europe being squeezed.
Mobile technology is both a driver and a continuing opportunity. Urban coverage now reaches about 90% of the population, rural only about 48%, up from 17% and 5% respectively in the late 1990s. Mobile tower investment continues, with some 30,000- 50,000 additional shared towers expected by 2015. The economic impacts of mobile phone access are significant. the M-Pesa payment scheme, brings financial services; Txt-Eagle type services bring small scale work opportunities; information services provide essential market price and weather information to farmers; health care workers can manage care and inventory. Mobile advertising is booming.
Feeding Africa’s growing population is one of the critical challenges: mobile technology is seen as a major part of the solution. Mobile technology could add $138 billion to farmers’ income by 2020, according to a recent report from Vodafone and Accenture. Information services – such as market prices or weather cold add $51 billion; financial services/ payment systems another $50 billion; improved trade in products $35 billion; in addition, 2 mega tonnes of CO2 could be saved.
The other major obstacle is infrastructure. Here too investment is coming, and Africa is also building its own internal airline connections.
In a world stared of economic growth and transfixed by China and India, we are in danger of ignoring equally big, if not bigger long term opportunities. Media focus on crises and droughts continues to mask much of the potential, despite last year’s flurry of attention around the world cup. The risks are still significant, but many are beginning to argue that the potential growth on returns far outweighs other risks, and that the growth rates are real and sustainable. Africa is beginning to create its own million – and billionaires; it needs more, and needs the innovation and investment to support them. The opportunities are there for what Eric Kacou, who heads the Rwanda National Innovation and Competitiveness Program, describes as ‘Archimedes entrepreneurs’ who subscribe to triple bottom line philosophies of people, profit and planet.
By Sheila Moorcroft
Sheila has over 20 years experience helping clients capitalise on change – identifying changes in their business environment, assessing the implications and responding effectively to them. As Research Director at Shaping Tomorrow she has completed many futures projects on topics as diverse as health care, telecommunications, innovation management, and premium products for clients in the public and private sectors. Sheila also writes a weekly Trend Alert to highlight changes that might affect a wide range of organisations. www.ShapingTomorrow.com