Via The Economist, a look at Africa where several fast-growing economies show that not everyone is having a lost decade:
To walk around Luanda, Angola’s capital, is to tour a graveyard of another era. Half-finished or empty skyscrapers loom over the sun-kissed corniche. Some of the bars along the beach are gaudy monuments to when the price of oil was consistently above $100 and the elites partied in sub-Saharan Africa’s second-largest producer country. You can still see the odd bottle of Château Pétrus gathering dust on a supermarket shelf, a relic of a headier time.
A decade on from the end of the commodities boom that fuelled Africa’s growth at the start of the 21st century, Angola’s economy is still struggling. gdp per person is almost a third lower than it was in 2014. Debts from the good times are now due. Vera Daves de Sousa, the country’s finance minister, says that despite her successful efforts to renegotiate terms with Chinese creditors and get a loan from the imf, 58% of government revenue goes on servicing debts.
Angola’s story has echoes in other African countries. In October the imf described what it calls “sub-Saharan Africa’s two-track growth pattern”. On one track are the 23 countries it classifies as “resource-intensive”, which it defines as having at least 25% of exports in non-renewable commodities such as oil, gold or diamonds. As well as Angola this list includes the two largest economies in sub-Saharan Africa: Nigeria (also the region’s largest oil producer) and South Africa (where gold, platinum and coal alone comprise about a third of exports).
On average, resource-intensive countries have a lower gdp per person today than they did a decade ago. This is a direct result of lower prices for their exports. But it also reflects deeper problems. Most resource-rich countries have focused more on dividing the spoils of the boom years than on using the proceeds to build resilient economies.
On the other track are those countries less dependent on commodities. GDP per person there kept growing steadily after the boom ended and the divergence is set to continue. In 2025, the imf says, nine of the world’s 20 fastest-growing economies will be in Africa. Most of these are non-resource-intensive states. Rwanda, Ethiopia, Ivory Coast and Tanzania, for example, are projected to grow by at least 6%. For all the faults of their politicians, it probably helps that, in the absence of a golden (or oily) goose, they have had to learn to find other sources of growth.
This is good news for sub-Saharan Africa. The region faces profound challenges: tight budgets caused by low growth and high debts mean there is little room to invest in the future. Financing for schools, infrastructure and adapting to climate change is hard to raise at home or internationally. A lack of formal jobs for the millions of people entering the labour market every year worries policymakers. Many observers are sceptical that the region can ever catch up with the rest of the world. So if some African states can close the gap they can be exemplars.
The bad news is that the economies of these outliers are not big enough to power the continent, at least not yet. South Africa, Nigeria and Angola alone make up almost 40% of sub-Saharan Africa’s gdp. It is time that these giants got their act together—and started to learn from their nimbler peers.