It’s fine to celebrate high growth rates in Africa, but to look at them in isolation is to distort the real picture, says Diana Games, CEO of South Africa-based research company Africa@Work in a report in BusinessDayLive.
A new list of the fastest-growing economies in Africa by African Development Bank in its Africa Economic Outlook 2013 includes some of the poorest countries in Africa. Some are developing off an extremely low base, Games said. Topping the list is Libya (11.6 percent), Sierra Leone (9.6 percent), Chad (9.5 percent), Cote d’Ivoire (9.3 percent), Republic of Congo (8.8 percent) and Ghana (8.4 percent).
Growth rates are used by fund managers, investment bankers and others to portray Africa as the new frontier for growth, in essence to talk up their book, Games argues.
She cites figures for Sierra Leone, which ranked 177 out of 187 countries on the U.N. Human Development Index 2012 on education, life expectancy, health, per-capita incomes, poverty and inequality. Per-capita gross national income was $881. Its high growth rates are based on a few large deals in the resources sector — mostly in iron ore and diamonds — yet about 70 percent of people live below the poverty line, the report said.
Chad ranks 184th on the same list, with a life expectancy of 49.9 years. National income per capita is $1,258. Cote d’Ivoire, finally stabilizing after a long-running civil conflict, is ranked at No. 168.
Republic of Congo is ranked at 142nd, while Mozambique, at No. 7 on the African Development Bank list and a top destination for investment, ranks No. 185. Its per-capita income is $906. In Chad, the government reneged on a deal with World Bank to spend a portion of oil profits on alleviating poverty in return for bank funding of a pipeline to take oil from the landlocked country to the sea. Chad remains one of the poorest countries in the world.
Chad, Congo and Cote d’Ivoire are in the bottom 10 of World Bank’s ease-of-doing-business rankings, the report said.
Angola, eighth on the African Development Bank list, saw its growth rate drop to 2.4 percent in 2009 after the oil price crashed in 2008, down from more than 20 percent in 2007, highlighting its undiversified economy.
Despite the sorry state of the human development stats in most of these rapidly growing countries, there is no shortage of investment in resources, Games says. But lifestyle improvements tend to be reflected almost entirely in the big cities, with limited trickle-down of new wealth and opportunity beyond these “city states” unless it is in towns close to resources.
This raises issues of governance and the commitment of leaders to invest in a sustainable future, Games argues.
Not only is underdevelopment a potential security threat in high-growth countries, but not fully understanding the nature and spread of that growth presents investment risks, Games says.