We live in a rapidly changing world with megatrends that are leading to significant disruptions in the commercial and political landscape. Africa is not isolated from this. Indeed, Africa and the rest of the planet currently referred to as ‘emerging economies’ appears to be the epicentre of these changes. The continent has a growth potential and demographic edge over the rest of the world and is (or is expected to be) the converging point following the ongoing shift in global economic power.
A number of megatrends that are critical to current and future growths in Africa has been identified. These trends (five of which will be discussed in this piece) are critical because they have a major influence on the economic and commercial landscape over the next decade; permeate across all sectors of the economy and society; and fundamentally disrupt our lifestyle and the way we do business. In other words, these trends will change the way we work, travel and the way businesses and governments operate. It is thus important that we begin to think critically about them, especially what their implications are and begin to shape the future of our country and the continent accordingly.
Africa has a larger, younger and more affluent population. By 2050, the continent is expected to account for nearly 24% of the global population. Together with India, the continent represents the two major global population growth areas. Furthermore, by 2020, more than 50% of households in Africa will be middle class. What are the implications of this on education and health for example? Data from UNESCO indicates that Sub-Saharan Africa (SSA) represents close to one-half the global lower secondary education shortage (46%). SSA will need an extra 1.6 million teachers by 2015, and 2.5 million by 2030. Similarly, the 2013-2014 Global Competitiveness Reports states that SSA continues to underperform in providing health and basic education. Nigeria ranks 140 of 140 nations in the 2015-2016 report for Health and primary education. What is government’s response to this?
The second megatrend is Africa’s transformational Urban Swell. From a current rate of 38%, urbanisation level in Africa are expected to increase to 50% in 2030 and by 2050, two in three Africans will be urbanised. One of the implications of this is that pressure on food supply will continue to increase. Likewise housing and other infrastructure. There are even possible health implications. Urbanisation and the reduction of physical activities will likely result in widespread obesity with undernourishment and over nutrition co-existing in some instances. This population need to buy products, go to school, move around, how are our policymakers planning for this?
Africa is also a fertile ground for technological advancement. New solutions have changed banking, social engagement, education, entertainment, agriculture and will continue to do so with increased broadband penetration and advancements in mobile technology. With a younger population expected in the next decade, how are governments preparing to bring these impact to bear in key sectors such as education? For example, how are we remodelling our curriculum to be in tune with this reality and what are the policies in place to transit from the current system to a more digital and mobile way of learning for our children in school?
Resource Scarcity, a global challenge, will also be impacting the continent. Africa we know is endowed with an abundance of untapped resources. 60% of the world’s total amount of uncultivated, arable land is in Africa. What are the implications for food security on the continent? In addition, Africa has majority reserves of platinum, chromite ore, phosphate rock and cobalt among others. This is in addition to large reserves of oil and gas. Globally by 2030, the demand for energy will increase by 50%. What is the implication of this on the exploitation of the energy resources on the continent and the flow of FDIs?
Africa’s deepening financial services sector is another megatrend that will shape the future of the continent. According to the World Bank’s Global Financial Inclusion Database, approximately 2.5 billion people do not have a formal account at a financial institution. As a result, most poor households operate almost entirely in the cash economy, particularly in the developing world. Mobile money, FinTech and other non-typical banking models are critical to closing this gaps.
In considering how we can prepare for the future, we must acknowledge that Africa is complex and diverse. There are few generalisations that hold true on the continent as the countries are profoundly different from each other economically, geographically and historically. In essence, there is no one size fits all model. But there are general lessons we have learnt from developed economies which can serve as guidance for African countries. Typically these economies have gone through a process of economic diversification, have witnessed the spread of new technologies, ensured the expansion of the manufacturing and service sector and championed the development of a skilled workforce.
To achieve this in Africa, there has to be greater collaboration between the government and the private sector. Three fundamental shifts in the relationship between government and business is needed viz; (1) From a belief of ‘public good, private bad’ to an appreciation of the best of both; (2) From forced cooperation to mutual collaboration and; (3) From distrust to mutual recognition of responsibilities on both sides.
Governments should create a business-friendly environment by improving their countries infrastructure, create skilled a workforce, ensure financial sector stability and access to affordable capital while also creating jobs for young people. In addition, Africa’s resources must be sustainably managed for the benefit of Africans. The plundering of Africa’s resources has to cease.
The twin deficits in infrastructure and inclusive finance must be addressed. Regional co-operation on energy and transportation is vital in order to achieve economies of scale in infrastructure projects. Governments can also support the development of mobile banking and e-commerce to overcome financial inclusion building on successes such as M-PESA in Kenya. Free movement on the continent should also be actualized. Its hope the recent launch of the Africa passport will bring this dream to reality.
Both Government and the private sector must work together to invest in agriculture. Governments should act on their pledge to spend 10% of annual budgets on agriculture. Businesses on the continent must also focus on building the right organisation, reducing cost and inefficiencies. They must educate and train their people and invest in technology thus positioning their companies and the continent for higher agility and sustainable growth.
First published here on July 28, 2016