African Economic Growth and Development

1990s Context:

• Developing world struggled in early 1990s
• Notable exceptions: Singapore, South Korea
• Significant gap between advanced economies and others

Late 1990s Shift:

• Explosive growth in global trade
• Rapid closing of income gap
• Poverty reduction: from 36% in 1990 to <10% in 2022
• African extreme poverty: from 53% to 35%
• Despite population growth, African economies fast growing

Economic Performance Categorization:

• Strong Growth: 5% or higher
• Weak Growth: Less than 5%
• Subgroups: non-resource-intensive, oil exporters, other resource-intensive
• 2013-2023: 18 out of 41 countries had growth ≥ 5%

Varying Growth Reasons:

• Commodities' impact on economics
• High commodity prices -> Economic growth
• Low prices -> Struggles
• Africa: rich in mineral reserves, oil, diamonds
• Debate: Colonial impacts vs. current governance
• McKinsey: Africa exceeding expectations

Lessons from Specific Countries:

Rwanda vs. Burundi:

• Similar backgrounds: landlocked, population-dense
• Rwanda: Triple income since 1990s
• Burundi: Poorest country today
• Key Difference: Governance quality
• Rwanda: Functional government, low corruption
• Burundi: Political strife, coups
• Ibrahim Index: Rwanda (12th), Burundi (43rd)

Kenya vs. Tanzania:

• Similar initial conditions (1960s)
• Kenyas' free-market policies vs. Tanzania's socialism
• Result: Kenyan wealth 80% higher
• Examples: Investment climate, entrepreneurship

Zimbabwe vs. Botswana:

• Zimbabwe once wealthier
• Zimbabwe: Economic collapse under Mugabe
• Botswana: Sustainable growth under Serece Kama
• Botswana: Nine times wealthier than Zimbabwe today

Mauritius’ Success:

• High GDP per capita, HDI
• Historical skepticism (Malthusian trap)
• Policies: FDI transformation, economic stability
• Mauritius growth: 5% annually (1980-2000)
• Critical elements: robust institutions, democracy, low corruption

Nigeria and South Africa:

Nigeria:

• Largest African economy
• Challenges: Corruption, reliance on oil
• Transparency International: Ranked 150th
• Potential growth: Reduce corruption, diversify

South Africa:

• Second largest economy
• Diversity, industrialised, technological advancement
• Effective institutions, cooperation (1990-2005)
• Growth, middle class expansion, public services

African Growth Trends:

• Internal consumption and investment driving growth
• Regional trade expansion reinforces industry
• Example: Nigeria reducing oil reliance
• Opportunities in tourism, commercial farming (e.g., Rwanda, Ethiopia)
• Challenges: Education, skills for job market

Demographic and Societal Trends:

• Rapid population growth vs. economic prospects
• Education: More children attending school and universities
• Urbanization, migration, remittances

Key Takeaways:

• Governments’ role in economic outcomes
• Importance of sound policies, robust institutions
• Potential for virtuous cycles: Good governance, education, economic growth