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Africa rising

Published:Thursday | March 11, 2010 | 12:00 AM

Columbia University's Xavier Sala-i-Martin is my kind of economist. On his webpage, well before you get to any academic links, you have a long list of highlights of FC Barcelona (okay, not my first choice of team, but a close second). This is a man who has his priorities straight!

Internationally known within the economics profession, Professor Sala-i-Martin is never one to shy away from provocation. And in a recent paper of his published by the National Bureau of Economic Research (NBER), and co-authored with MIT's Maxim Pinkovskiy, he makes the claim that over the last decade or so, both poverty and inequality have declined across Africa.

Not all of this is controversial. After decades of hearing a litany of economic woes out of Africa, the continent has been quietly rising since the mid-1990s. And while we hear about the big stories - South Africa's reintegration into the continental and global economies, Ghana's emergence as the next hot market - in fact, the continent has been growing at steady rates across all regions. Of the big countries, only the war-torn Republic of Congo has missed most of the action.

However, scholarly opinion differs on whether the gains of growth have been concentrated in a few hands, and whether the boom is sustainable. With respect to the latter point, many economists maintain that Africa's resource-dependent economies have merely ridden the global commodity boom. Now that the world economy has slowed down, commodity prices have fallen. To the doubters, Africa's economic future looks less certain.

Beg to differ

Sala-i-Martin and Pinkovskiy beg to differ. They argue that the gains of growth are spread across all countries, resource-rich and resource-poor. More controversially, they maintain that the gains of growth are spreading far and wide. As a result, they predict that the continent's Millennium Development Goals will be reached within a couple years of the 2015 target date.

Other estimates of poverty in Africa reach very different conclusions, though. The World Bank's own estimates have placed the poverty rate as much as two times higher than that found in the NBER paper. Techniques of estimating poverty and income distribution vary greatly, and there is as yet no orthodoxy in the field.

Nonetheless, whether or not one accepts Sala-i-Martin and Pinkovskiy's estimates as to the rate of poverty, what is more widely accepted is that poverty is declining in Africa. And for this, one can credit the fact that the economies of the continent have enjoyed a long growth phase of a sort not seen in decades.

One has to be wary of getting carried away by this. Africa's growth rates are still well below those of the surging Chinese and (to a lesser extent) Indian economies. To some extent, the continent is benefiting from external conditions over which it has little control.

Take the sanguine view

All the same, to a considerable degree, many African governments have exercised the control they do have more effectively. Economic reforms that facilitated growth explain no small part of the transition. Moreover, one could take the sanguine view and argue that Africa's previously slow rate of growth means that it has more unused capacity than elsewhere.

Africans will be among the first to spot these opportunities. Indeed, there is evidence that as the economies of the industrialised world slow, educated Africans who had migrated there to work are now, slowly, returning home. If this is the start of a trend, then the injection of human capital is likely to help continue the quiet revolution.

African countries have disappointed before, and dynamic economies have become laggards, or worse. Still, the omens are more promising than they have been in a long time.

John Rapley is president of the Caribbean Policy Research Institute (CaPRI), an independent research think tank affiliated with the University of the West Indies, Mona. Feedback may be sent to