Africa, the next frontier in economic growth: Opportunity versus reality

On many and varied fronts, Africa is considered the next frontier for global economic growth and especially for those who want to maximise on investment and drive growth across many industries worldwide.

Africa’s latent potential is vast and underpinned by its growth in population, varied natural resources, and unexploited creativity, even as factors such as adverse effects of climate change, wars and poor governance threaten to scuttle this desirable future.

In many development and investment forums and discussions, the attention towards Africa is growing, even if currently, the continent’s economic fortunes are tremendously varied and consist of lower, middle and higher-middle income economies.

What many analysts have taken note of is that its aggregated Real Gross Domestic Product (GDP) growth rate is greater than the global average and poised to rise even further should certain constraining factors improve.

Many economic analysts are convinced that technology adoption in Africa is catching up and, in fact, moving fast beyond some countries in the developed world, as seen by the penetration of digital (mobile) money transfers in Kenya. Indeed, many analysts agree that Africa currently remains the fastest-growing region in the world and tapping into the African economy is one way to remain relevant in the future.

By 2050, every 1 in 4 people in the world will be African

The United Nations (UN) notes that the world’s population has witnessed an incredible growth in the last six decades. The world’s population was around 3 billion in 1960 and in under two decades… by 1982, it had surpassed 5 billion, and since November 202,2 there are more than 8 billion people in the world.

Africa has been at the centre of this population boom, in which it accounts for the largest relative growth compared to other regions. Africa had a population of 283 million in 1960, but this ballooned to more than 1.5 billion by 2024, and is projected to reach 2.5 billion by 2050. This 63 per cent increase in population will increase Africa’s share of the world’s population from the 10 percent in 1960 to 28 percent by 2050.

Globally, more than 1 in 4 people will be African by 2050. The UN says that five of the eight countries worldwide that will account for more than half of the global population growth between now and 2050 are in Africa: The Democratic Republic of the Congo, Egypt, Ethiopia, Nigeria, and the United Republic of Tanzania. Three of these nations close neighbours of Kenya and trade with it.

The United Nations notes that of all the continents in the world, Africa is by far the youngest continent globally, with 70% of sub-Saharan Africa under the age of 30. Such a high number of young people is an opportunity for the continent’s growth, but only if this young generation is fully empowered to realise its full potential. Of utmost importance is that young people are included in decision-making and given appropriate opportunities to acquire relevant education and skills, to work and to innovate.  

A youthful Africa will be a force to reckon with

Young Africans in the near future will present an enormous consumer market and a critical, huge chunk of the global workforce. This turn of events, as opposed to now, could see African youth become influential in the growth of local and international businesses and thereby create a huge emerging market.

Leadership in Africa has to shape up or ship out

But what is appalling is that many African governments are caught in a time warp, with either old dictatorships or new leadership caught up in the mould of old top-down authoritarianism. Apart from the plotless public authorities, other stakeholder institutions that could be involved in their lives, from businesses, civil society organisations, and development agencies, do not seem to be fully prepared for the opportunities and challenges created by this new demographic.

Kenya was poised to leapfrog many of its African peers when it made basic education free in 2003 under Kibaki’s administration. However, lately, many of the gains have been lost and to the consternation of many at around July 16^th this year, President William Ruto reiterated that the government was implementing deliberate and intentional policies and programs aimed at creating jobs for the youth.

Well, this seemed well-intentioned, but what keen observers remember is that he said among the employment opportunities were artisan jobs at the “Affordable Housing Programme”, digital jobs from firms abroad, and export of local labour to some destinations predominantly within the Arabian Peninsula.

These are some of the President’s key initiatives designed to expand job opportunities for high school, college and university graduates; it is baffling, a good number of Kenyan youth are not artisans nor are they domestic home managers.

President Ruto claimed that 400,000 young Kenyans had already secured jobs abroad through the government labour mobility programme indeed they will continue to sign Bilateral Labour Agreements with various countries across the world, which seek the expertise, diligence and experience of the Kenyan workforce.

Locally, the President said that 320,000 young people were fully engaged in the Affordable Housing Programme projects, while another 180,000 are earning a livelihood through digital jobs in Jitume Labs. All these might look like rosy statistics, but at the heart of the matter is a discordance with the reality on the ground, which is that many Kenyan youths are well educated and yet cannot find meaningful engagement over a number of years. Will Kenya’s youths be ready when the time comes?

A huge youthful population is disruptive or a blessing if well directed

Unlocking the potential of Africa’s youth is essential towards achieving a bright future for its citizens. It is also crucial for advancing global economic growth and development. African governments need to know that a huge working-age population can be a disruptive force, leading to unrest and criticism from within and ultimately to migration if there are insufficient opportunities. But with ample prospects created by forward-looking governments, the youthful demographics can help catalyse economic growth, particularly in domains that require educated, motivated and skilled labour, such as digital technology, agri-business, manufacturing, and renewable energy, among others.

The leap towards the new, bold and prosperous Africa has taken a very rapid tangent to the consternation of many. Africa’s digital tech sector, including software, cloud, and internet services, grew remarkably since 2010.

Over the last five years, the growth rate in this sector is at almost at fifty per cent. Internet penetration has grown tenfold in the past 12 years, and this might see the internet economy gross upwards of seven hundred billion dollars by 2050. There are over 600 active tech hubs across the continent, which are making extraordinary advances in fostering innovation and with both home-grown and global companies participating. The largest hub activities are domiciled in Kenya, Egypt, South Africa and Nigeria. Ghana, Morocco, and Tunisia follow closely behind the trailblazers.

AfCFTA is a huge promise yet to be realised in Africa

On matters of intra-continental trade, in 2018, 44 of the 55 African countries established the world’s largest trading block when they signed the African Continental Free Trade Area agreement (AfCFTA). By 2021, the AfCFTA accord had been adopted by 54 member states and is on its way to full operation.

Those who are holding this new baby of intra-African trade must prepare to overcome hurdles of the past, including logistics and transport, tariffs to free trade, visas, and protecting nascent local industries. If well handled, it could produce substantial positive economic value.

Agenda 2063, will it see the light of day

Africa Union’s (AU) adoption in 2015 of “Agenda 2063” is another strong move in the right direction for intracontinental cooperation. Agenda 2063 is the AU’s master plan for the continent’s socio-economic transformation by the year 2063. It focuses on developing a prosperous, unified, peaceful, and democratic continent with a thriving cultural identity, underpinned by self-determination and inclusive, sustainable growth.

Among its 20 goals are transformed economies, high standards of living, an educated populace, Engaged and Empowered Youth, modern agriculture, and a stable, peaceful Africa driven by capable institutions, and gender equality. In short, Agenda 2063 seeks for “an integrated continent politically united and based on the ideals of Pan Africanism and the vision of African Renaissance.” Included in this blueprint are future continental projects, including high-speed rail systems. Within the African renaissance is a move towards strengthening continental and regional organizations such as the East Africa Community, Southern African Development Community, and the Economic Community of West African States.

A survey funded by the USAID and carried out by Boston Consulting Group (BCG) in 2022 found that, unlike other parts of the world, the poor state of job creation in Africa has seen the spirit of entrepreneurship light up like in no other region of the world. This has seen 22 per cent of working-age Africans would rather start small businesses. This is as compared to 18% in Latin America and 13% in Asia.

The continent leads in recent digital breakthroughs in innovation in areas such as mobile payment platforms, among others. Africa’s entrepreneurial culture is especially promising from the standpoint of gender parity. Women from Africa are twice as likely to start an enterprise as women in other geographies.

Entrepreneurship in Africa is fueling transformative change in sectors such as communication, energy, education, health services, pharmaceuticals, and sustainable agriculture and land use. By approaching the agricultural sector as a business, this could grow to as much as $320 billion per year in annual revenues by 2030, helping to solve the challenges of food shortages related to climate change. Africa could even evolve into a breadbasket for Europe and the Middle East.

Meeting African Opportunities and Challenges

If these trends can be navigated successfully, it could help advance Africa’s socioeconomic progress. In the Western world and in certain parts of Asia, a good number of emerging economies have directed the entrepreneurial spirit of the youth into innovative growth. Should Africa record relevant high-impact investment and successfully implement, the same could be true for Africa.

One major way of enabling African innovation should be to expand and provide competitive funding, such as venture capital and private equity.  Africa’s young population will soon see it becoming one of the world’s largest markets for consumer goods and services. Africa will be poised to offer skilled labour for any corner of the world, but only if the right education and impartation of skills is successfully done.

Food self-sufficiency is important in Africa

It is the hope of many analysts that the COVID-19 pandemic and ensuing food crisis proved to African decision-makers in the public and private sectors that the continent needs to become more self-sufficient. Africa needs to be weaned off reliance on international support, and the current administration could not have come at a better time.

With the decimation and final killing off of the USAID, many African countries are having to re-evaluate and recalibrate how they handle their internal issues, as they have lost responsibility over matters of their core mandate, such as within the health sector.

Africa is home to the world’s youngest and fastest-growing population, fast-growing cities, and bold digital innovations in every field. These present abundant opportunities for robust, inclusive growth that harnesses its vast human potential and natural resources to increase prosperity, not just in Africa but across the world.

The question, however, is not whether Africa will rise to meet the demands of a rapidly globalizing world, but how it will do so while building on its inherent strengths. The pertinent query here is… Can African nations apply their resources towards having a healthy and skilled population in place? Will Kenya’s youth be ready? Time will tell.