Wish you were here

Despite its reputation as “the forgotten continent,” Africa is experiencing spectacular growth. More people than ever are rising above the poverty line. It’s time to take a look at the good news coming out of Africa.

Marco Visscher, René Bogaarts and Gerbert van der Aa | June 2011 issue

The steel entrance gate at A-Z Petroleum Products has been painted in the company colors: blue and red. A security guard sits in the booth beside the gate, her hair a blanket of thin braids. After she’s taken down their names, visitors may enter. In the factory yard, a man is loading cardboard boxes filled with cans of motor oil onto a truck. Beyond him, four men in coveralls are pulling oil barrels off a stack while their supervisor watches from a distance.

A-Z Petroleum is one of dozens of industrial companies in Nnewi, the second-largest city in Nigeria after Lagos. In addition to oil and grease, local entrepreneurs manufacture all kinds of things, from plastic outdoor furniture to electric cables. Nigerian commerce languished for decades, but in recent years the situation has vastly improved. Dependence on petroleum export—Nigeria is one of the world’s 10 largest exporters—is slowly diminishing. Rather than import products, the country is manufacturing more. After South Africa, Nigeria is one of the first countries south of the Sahara to see the rise of a worthwhile industrial sector.

“Our turnover is growing by 10 percent per year,” says Cosmos Ekwo, A-Z Petroleum’s manager. “To meet demand, we’re operating 24 hours a day.” In addition to selling its products in Nigeria, which with 150 million residents is Africa’s largest potential market, A-Z Petroleum ships them continent-wide. The company is considering exporting to Europe. “We have the international certification we need,” Ekwo says. “But for the time being, we’ve got our hands full in the African market.”

According to the cliché, Africa is “the forgotten continent.” Thousands of people die each day from hunger and simple diseases while no one looks on. Now that Africa is experiencing unprecedented economic growth, there still seems to be little interest. At present, China and India are synonymous with rapid economic growth—and rightly so. But this year, just as last year, the African economy is projected to grow by 4.8 percent: the largest continent-wide increase outside of Asia. Eastern Europe—hailed with increasing frequency in the media as an “economic wonder”—pales in comparison. And so—drumroll, please—now the good news about Africa.

Though Western experts claim that primarily the African elite are profiting and growth will surely decline, there is little reason to be somber. Africans are building skyscrapers, hospitals and highways. A middle class is springing up in the cities. Emigrants are returning to their home countries. It seems Africa is finally entering a “virtuous circle” in which growth leads to knowledge, which leads to investment.

First, a few more figures. In recent years, countries such as Kenya, Tanzania, Uganda and Ethiopia have achieved impressive growth rates. Six of the 10 fastest-growing economies of the past decade are African; Angola tops the list. In 2009, the crisis year par excellence, Africa and Asia were the only regions where the economy grew.

And there seems to be no end to this growth in sight. Chinese companies are looking to Africa to outsource simple manufacturing. The World Bank is working with the Chinese government to establish an industrial zone in Ethiopia. A-Z Petroleum will be seeing a lot more industry springing up around it.

Of course, high growth rates don’t automatically translate to progress for the poor. Calculated per capita, Africans may be more prosperous than Indians, but that doesn’t mean all 1 billion Africans have profited from that prosperity. Still, not only countries but their inhabitants are getting richer, or at least less poor. While many corrupt leaders are still padding their bank accounts, prosperity is seeping down to the average citizen: Poverty has been more effectively combated in the past 10 years than ever before.

In 2008, the United Nations stated in its Millennium Development Report that little progress had been made in terms of reducing extreme poverty in Africa, much to the surprise of economists Xavier Sala-i-Martin at Columbia University and Maxim Pinkovskiy at the Massachusetts Institute of Technology. The UN hoped to cut the number of people living below the poverty line in 2015 relative to 1990 by 50 percent; to date, the figure is 30 percent. According to Sala-i-Martin and Pinkovskiy’s conservative estimates, Africa’s growth is so vigorous that the continent will almost certainly reach the Millennium goal in 2017: that would be two years too late, true, but is that reason to lament?

Of course Africa is still plagued by well-known problems such as corruption. The watchdog group Transparency International claims that corruption “is rampant” in 36 of the 53 African countries. An Angolan activist takes visitors to the capital, Luanda, on a “corruption tour,” in which he tells them which presidential crony owns which building or bank. Moreover, it takes a great deal of time and money to start a company outside the informal sector. But political and economic reforms are slowly affecting change. Taxes and barriers to trade have gone down, for example, while the banking and telecommunications sectors have opened up and become more accessible.

Other critics point out that Africa is severely dependent on commodity prices, which have risen in recent years. As soon as prices drop, the African economy will decline, they warn. Indeed, there have been earlier periods of growth, fueled by the exploitation and export of petroleum and minerals such as gold, copper and diamonds. But less than a quarter of the past decade’s growth can be attributed to natural resources; the rest comes from flourishing sectors such as banking, agriculture and telecommunications. What’s more, the growth is strikingly even. Poverty has been greatly reduced in countries rich in minerals and countries poor in them, in countries with and without favorable agricultural conditions, in countries on the coast and surrounded by land.

Western pessimists also view rising food prices as a disaster for Africa because of the social unrest they cause. But, ideally, higher food prices mean higher incomes for Africans, too. After all, roughly 60 percent of African workers are employed in agriculture, which has been given new impetus by rising prices. The time when no one was interested in farmers’ products is gone. Today, merchants around the world flock to Africa to buy fruit, grains and meat. New agricultural techniques are raising productivity, sometimes by a factor of 10. African farmers’ earnings are growing steadily.

“There’s more work in the country than in the city,” says Sadiou Dembéle, a 21-year-old farmer in Mali. On the banks of the river Niger, some 20 miles outside the capital city of Bamako, Dembéle is hard at work in an irrigated field. He is cleaning the irrigation ditches by cutting the grass threatening to block the water with a machete. Malinese music wafts from his cell phone. Dembéle is from the town of Kita, where he works on his family’s farm. “Now, after the harvest, there’s not much to do there,” Dembéle says. “That’s why I came here, to earn a little extra.” Dembéle’s seasonal work brings in money for extra purchases. His brand new moped is parked at the edge of the field.

Agriculture in Mali is growing. According to UN’s Food and Agriculture Organization (FAO), the West African country’s agricultural yield has doubled since 1985. Agriculture is growing more quickly than the population. Other West African countries are doing well, too. Niger and Burkina Faso also doubled their agricultural yields in a 25-year span, while Nigeria and Ghana experienced even greater growth. Foreign entrepreneurs are lining up to invest in the agricultural sector. Chinese and South Korean companies are particularly active, but investors from the Netherlands and other Western countries are also hard at work. According to critics, including Oxfam Novib, a national affiliate of Oxfam International, the investors are stealing scarce farmland, but the UN and the World Bank are largely positive. They emphasize that these investments stimulate the development of African agriculture. Large tracts of farmland have lain fallow for decades. Moreover, the investors bring their expertise and money along with them.

A major driver for all this good news is Africa’s urbanization. Because so many Africans work their own fields, the continent has begun the process of urbanization fairly late. Today, roughly 40 percent of the 1 billion Africans live in cities. This is comparable to China and more than in India. Historically, city dwellers have stimulated the development of amenities such as clean drinking water, electricity, roads and other elements of infrastructure.

Tieko Cheikh Diouf is happy with his cell phone. He’s had it for five years now and believes that he can no longer live without it. The 41-year-old merchant from Dakar, the capital of Senegal, buys shirts, pants and other articles of clothing at the market and sells them to office workers in the city. “I could never do that without a phone,” he says.

Diouf recently purchased the equivalent of $2.33 in cell phone minutes. Because he rarely makes calls, primarily letting people call him, he expects that get him through several weeks. His clothing sales more than cover the expense. Diouf has noticed colleagues, friends and family members around him in Dakar following his example. They, too, profit from the regular contact, says Diouf, because they can schedule their work more efficiently. “But life is expensive,” he complains, “and there are plenty of traders like me.”

The unmistakably positive effect of mobile telephony cannot be emphasized enough, says Graham Thomas, head of private equity investments at the South African Standard Bank, one of Africa’s largest banks. “I don’t know if it was crucial, but mobile telephony and the Internet have given rise to greater openness,” he says. “The government can’t keep things as quiet as before.” Thomas emphasizes that when Vodafone came to Africa years ago, the company expected no more than a million Africans to be interested in a cell phone; current estimates say 350 million Africans have one.

Thomas takes it a step further. “Africa’s economic growth revolves around consumption,” he says. More and more Africans are earning enough to eat more upscale food, buy new furniture or have a house built. That in turn affords farmers, craftsmen and construction workers the chance to spend more. This means money no longer stagnates in one place, but is continually being reused. That, says Thomas, is what it’s all about.

For prosperity, the fact that money is spent is more crucial than how much there is. And it provides security, Thomas says. “Things are going so well now because democracy is gaining ground and people are starting to believe in themselves.”

Photo: VARIO IMAGES GMBH &CO.KG/ALAMY

For more than 10 years, consumer expenditures in Africa have been growing two to three times as rapidly as in more developed countries. African households spend $926 billion each year, more than Indian households. Disposable income levels may well increase dramatically. Some Western critics will point to the havoc a consumer culture can wreak, but who truly begrudges Africans a step forward?

Not everything is rosy, and the progress of millions of Africans is obstructed on a daily basis by hunger, disease, uncertainty and the abuse of power. But it looks as though it won’t always be that way. Demand for Africa’s food, petroleum and minerals will continue to grow, particularly in emerging economies, which already comprise half of southern Africa’s business partners. It’s time to trade our image of “the forgotten continent” for a picture of the unforgettable continent.

Gerbert van der Aa enjoys writing about Africa, René Bogaarts enjoys writing about economics and Marco Visscher simply enjoys writing.