Africa in 2015 – a mixed picture

Thursday, 8 October 2015
Author: 
Richard Dowden

Africa suffers from adjectives: hopeless, dark, rising. Good or bad they are all wrong and should be banned. The only adjectives we should use these days should convey only the size and complexity of the continent. Vast, varied and complex are fine.

At the Financial Times Africa Conference on Monday the mood began gloomily with talk of the collapse of oil and mining prices. Ivan Glasenberg, the CEO of Glencore, the world’s biggest mining company whose shares are now almost junk, was the opening speaker. He blamed hedge funds and other mining houses for pushing down the price of commodities. He told rival miners to shut unprofitable mines to keep the price up. They must be smirking. Welcome to capitalism Mr Glasenberg!

For those who thought that Africa was simply a pile of raw commodities waiting to be exploited and exported this was a depressing start to the conference. All African countries produce minerals and about 20 are – or are about to become – serious oil producers. After the devastation of African economies by the IMF and World Bank reforms of the 1980s and 1990s, very few African countries produced anything else except minerals. But that has all changed. Mobile phones and banking services are leading the way and creating wealth for a new middle class. At the rest of the FT Conference, speaker after speaker talked up the continent’s dynamism and immense prospects. The gloom of that first session soon lifted.

By coincidence, on the same day the Mo Ibrahim Foundation launched its 2015 Index of African governance. Of the continent’s 54 nation states, 33 are doing better, 21 are doing worse, and the headline is that human rights and human development are doing better but safety and the rule of law and economic opportunity are doing worse. 

On “Sustainable Economic Opportunity”, the index shows 29 countries declining this year. Some, like Angola, are oil producers affected by the collapse of its price. Others, like Namibia and Botswana, rely on other mineral exports. Countries rich in minerals like South Sudan and Libya are wrecked by war although Somalia, which has been at war since the late 1980s, is improving. And among the countries with declining economic opportunity there are countries whose economies are more diverse – for example Uganda, Ethiopia and Tunisia.

The World Bank predicts that sub-Saharan Africa’s growth will be 4.2% this year, down a little from last year, but picking up to 5% in 2017. If you discount two points for the rise in population, that is still better than much of the rest of the world. Of the three biggest economies, Nigeria and Angola are hit by the fall in the oil price, and South Africa is in the doldrums under a government which lacks vision and leadership.

What is fascinating is to see that the bottom quartile of the governance index contains eight of Africa’s oil producers. The others at the bottom of the list have – or have recently had – civil wars. No surprise that Somalia, South Sudan and Central African Republic are all in the bottom quartile.  But there are only three oil producers in the top quartile, and all of them were well-established democracies before the oil was discovered. Oil can be profoundly anti-democratic because rulers come to depend on oil traders for their budgets, rather than taxes from the people.

Wars in Africa have declined steadily in number and intensity since 2000 but what the index calls “Safety and the Rule of Law” has got worse this year. Even in the top ranked countries – Mauritius, Botswana, Cabo Verde, Namibia, Seychelles and Ghana – security has got worse. It has also worsened in 31 others, some through state breakdown like in Somalia, others through state terrorism against its own citizens or a power struggle at the top as in Burundi.

24 countries have declined in the “Participation and Human Rights” which is hardly surprising but worrying because since more and more young people will be leaving school and finding there is no employment, they will drift to the towns where they will see the luxurious lifestyle of their rulers. This may lead to demands for a better life. But the Index also shows that in 30 countries sustainable economic opportunities are also declining.

The reasons for this are clear. Chinese economic engagement in Africa is reducing although there will be no sudden withdrawal. And the strength of the dollar means that remittances may decline too. So if this does not turn around soon I suspect the newly urban young will fight for change. The only good news here is that both in Nigeria and South Africa, the biggest economic drivers of the continent’s economy, opportunities are improving. And the decline in investment from outside the continent may mean that wealthy Africans who keep their money offshore or in London or New York may start to bring it back. More African entrepreneurs may emerge to fill the gap. Any further generalisation about Africa’s economies is hard to make. Mixed and unpredictable are the only appropriate adjectives for Africa in 2016.