By Professor Kjell Havnevik, Research cluster leader at the Nordic Africa institute.
The prevailing Africa optimism is false. Short-term exploitation and large-scale agriculture are neither socially nor environmentally sustainable. Economic and social inequalities are growing.
In 2001, The Economist described Africa as ‘The hopeless continent’. Ten years later, this renowned magazine claimed that Africa is the continent of hope for the future.
My assessment is that this optimism is unwarranted in a forward-looking perspective. Current growth is largely based on natural resource exploitation for export, especially of oil, gas and minerals.
In such a perspective, African economic development will in the future be characterized by social exclusion and conflict rather than being inclusive and poverty-reducing.
The prevailing optimism gives no true picture of Africa. Short-term exploitation and large-scale agriculture are neither socially nor environmentally sustainable. Economic and social inequalities are growing on the continent.
The discussion of Africa in recent years has changed drastically – from seeing the continent as hopeless to a perspective expressing strong optimism. The British magazine The Economist is one of the main drivers behind this reassessment of Africa. In 2001, The Economist described Africa as ‘The hopeless continent’. Ten years later, in 2011, the magazine claimed that Africa is the continent of hope for the future.
It is Africa’s economic growth over the past decade that has turned the analysis around 180 degrees. In March 2013, The Economist informed the world that Africa is the continent of new dynamics – where there are good opportunities to invest and continue to generate large incomes. In April 2013, The Economist gives specific advice to investors about Africa.
A company, Invest in Africa, has been established by people who have already invested in Africa, and who want to see their assets grow. Good news is good for increasing investments and returns in the continent.
In the Swedish discussion too, the focus on the ‘new Africa’ has gained momentum. Swedish public television, SVT, has sent correspondents to Africa to report positive news. The newspaper Expressen has done the same.
Photographer Jens Assur’s exhibition ‘Africa is a great country’ has been on show during the spring of 2013 at Liljevalchs art centre in Stockholm with beautiful photos to assure visitors of the African miracle.
My assessment is that the positive analysis referred to above is inadequate in a forward-looking perspective for the following reasons:
The current overall African growth rate of about 5 per cent annually is largely based on natural resource exploitation for export, especially of oil, gas and minerals.
Recent statistics show that South Africa, an important engine of growth for Africa, already has zero growth. The same has happened with Brazil, until recently another growth engine for the world, where GDP last year grew by less than 1 per cent.
A new analysis shows that less than 1 per cent of Africa’s total workforce is employed in natural resource exploitation or activities. These are controlled mainly by foreign companies and interests. Tax revenues from these corporations are very low or non-existent because of favourable conditions for investors. Transfers of profits and illegal capital flight have increased by 12 per cent annually – to at least twice the amount of aid to Africa.
A growing African elite and middle class in collaboration with foreign allies have also secured benefits for themselves. Therefore, economic inequality is growing rapidly in Africa, as in Asia.
The working population in Africa today is 380 million and is expected to increase to 500 million by 2020, which will exceed that of China. Over a third of the working population are assumed to have a paid job, which means that 320 million Africans will be without paid work in 2020. Research shows that about 10 percent of them still have a reasonable income. This leaves nearly 300 million Africans of working age, 15 to 64 years, with very low incomes or in poverty.
Most live in rural areas and are active in agriculture, but many also live in the growing cities. The prospects of finding jobs in the cities are also bleak, because Africa since 1990 has experienced closures of labour-intensive processing and manufacturing industries.
The challenge for Africa in the long term is that half the world’s population growth by 2050, about one billion people, will take place in the continent.
The weakness of the Afro-optimistic perspective is reinforced by recent research showing that foreign investments to a large extent are directed towards African agricultural land for the production of energy crops and food for export.
Such investments often take place in interaction between foreign and domestic African interests, and with the support of international aid. Such projects are highly mechanized and require little labour.
Large-scale agriculture focuses mainly on a single crop, thus undermining biodiversity. Irrigation is necessary but often leads to conflicts with local smallholder farmers, of whom the majority are women.
In Africa, smallholders have weak water and land rights, despite their paramount importance of their production for food security – they produce 90 per cent of the food in Africa.
As a reference, one can learn from Brazil, which in itself is a continent, where large-scale agriculture and agri-business historically has been the main track. This large-scale agriculture uses 75 per cent of the country’s farmland, but contributes only 60 per cent of the gross annual agricultural production. It employs only two people per 100 acres, while small-scale farming provides jobs for 15 people in the same area, accounting for the bulk of food production.
Small-scale farming also promotes diverse agricultural systems that cause less negative environmental and climate impact than large-scale agriculture.
Africa’s growth model is increasingly based on natural resource exploitation for export, which is based on the interaction of a growing African middle class and elite, and foreign traders and investors.These groups have high income and a consumption levels that also have negative effects on the climate.
This growth model, which is considered optimistic by many, is in my judgment neither environmentally sustainable nor can it enable a wider structure of Africa’s economic development. Improvements in health and education in Africa can hardly compensate for this.
In such a perspective, African economic development will in the future be characterized by social exclusion and conflict rather than being inclusive and poverty-reducing. Although there are positive trends in Africa’s development in the short term, in my view there is ground for pessimism in the longer term.
African governments and organizations such as the African Union currently have no strategy that can contribute to a growth pattern that will enable economic improvement for the majority of the continent’s people who live in rural areas.
Research and historical experience shows that such an inclusive growth would require investments in smallholder farming as the main pathway. While short-term natural resource exploitation and large-scale agriculture are neither socially nor environmentally sustainable, they may generate significant economic incomes and profits. But in my opinion, this is only in the short term.
These benefits will only to a small extent reach the broad layers of the African population. The prevailing Africa optimism therefore does not provide a true image of Africa.
The prevailing Africa optimism is false. Short-term exploitation and large-scale agriculture are neither socially nor environmentally sustainable. Economic and social inequalities are growing.
In 2001, The Economist described Africa as ‘The hopeless continent’. Ten years later, this renowned magazine claimed that Africa is the continent of hope for the future.
My assessment is that this optimism is unwarranted in a forward-looking perspective. Current growth is largely based on natural resource exploitation for export, especially of oil, gas and minerals.
In such a perspective, African economic development will in the future be characterized by social exclusion and conflict rather than being inclusive and poverty-reducing.
The discussion of Africa in recent years has changed drastically – from seeing the continent as hopeless to a perspective expressing strong optimism. The British magazine The Economist is one of the main drivers behind this reassessment of Africa. In 2001, The Economist described Africa as ‘The hopeless continent’. Ten years later, in 2011, the magazine claimed that Africa is the continent of hope for the future.
It is Africa’s economic growth over the past decade that has turned the analysis around 180 degrees. In March 2013, The Economist informed the world that Africa is the continent of new dynamics – where there are good opportunities to invest and continue to generate large incomes. In April 2013, The Economist gives specific advice to investors about Africa.
A company, Invest in Africa, has been established by people who have already invested in Africa, and who want to see their assets grow. Good news is good for increasing investments and returns in the continent.
In the Swedish discussion too, the focus on the ‘new Africa’ has gained momentum. Swedish public television, SVT, has sent correspondents to Africa to report positive news. The newspaper Expressen has done the same.
Photographer Jens Assur’s exhibition ‘Africa is a great country’ has been on show during the spring of 2013 at Liljevalchs art centre in Stockholm with beautiful photos to assure visitors of the African miracle.
My assessment is that the positive analysis referred to above is inadequate in a forward-looking perspective for the following reasons:
The current overall African growth rate of about 5 per cent annually is largely based on natural resource exploitation for export, especially of oil, gas and minerals.
Recent statistics show that South Africa, an important engine of growth for Africa, already has zero growth. The same has happened with Brazil, until recently another growth engine for the world, where GDP last year grew by less than 1 per cent.
A new analysis shows that less than 1 per cent of Africa’s total workforce is employed in natural resource exploitation or activities. These are controlled mainly by foreign companies and interests. Tax revenues from these corporations are very low or non-existent because of favourable conditions for investors. Transfers of profits and illegal capital flight have increased by 12 per cent annually – to at least twice the amount of aid to Africa.
A growing African elite and middle class in collaboration with foreign allies have also secured benefits for themselves. Therefore, economic inequality is growing rapidly in Africa, as in Asia.
The working population in Africa today is 380 million and is expected to increase to 500 million by 2020, which will exceed that of China. Over a third of the working population are assumed to have a paid job, which means that 320 million Africans will be without paid work in 2020. Research shows that about 10 percent of them still have a reasonable income. This leaves nearly 300 million Africans of working age, 15 to 64 years, with very low incomes or in poverty.
Most live in rural areas and are active in agriculture, but many also live in the growing cities. The prospects of finding jobs in the cities are also bleak, because Africa since 1990 has experienced closures of labour-intensive processing and manufacturing industries.
The challenge for Africa in the long term is that half the world’s population growth by 2050, about one billion people, will take place in the continent.
The weakness of the Afro-optimistic perspective is reinforced by recent research showing that foreign investments to a large extent are directed towards African agricultural land for the production of energy crops and food for export.
Such investments often take place in interaction between foreign and domestic African interests, and with the support of international aid. Such projects are highly mechanized and require little labour.
Large-scale agriculture focuses mainly on a single crop, thus undermining biodiversity. Irrigation is necessary but often leads to conflicts with local smallholder farmers, of whom the majority are women.
In Africa, smallholders have weak water and land rights, despite their paramount importance of their production for food security – they produce 90 per cent of the food in Africa.
As a reference, one can learn from Brazil, which in itself is a continent, where large-scale agriculture and agri-business historically has been the main track. This large-scale agriculture uses 75 per cent of the country’s farmland, but contributes only 60 per cent of the gross annual agricultural production. It employs only two people per 100 acres, while small-scale farming provides jobs for 15 people in the same area, accounting for the bulk of food production.
Small-scale farming also promotes diverse agricultural systems that cause less negative environmental and climate impact than large-scale agriculture.
Africa’s growth model is increasingly based on natural resource exploitation for export, which is based on the interaction of a growing African middle class and elite, and foreign traders and investors.These groups have high income and a consumption levels that also have negative effects on the climate.
This growth model, which is considered optimistic by many, is in my judgment neither environmentally sustainable nor can it enable a wider structure of Africa’s economic development. Improvements in health and education in Africa can hardly compensate for this.
In such a perspective, African economic development will in the future be characterized by social exclusion and conflict rather than being inclusive and poverty-reducing. Although there are positive trends in Africa’s development in the short term, in my view there is ground for pessimism in the longer term.
African governments and organizations such as the African Union currently have no strategy that can contribute to a growth pattern that will enable economic improvement for the majority of the continent’s people who live in rural areas.
Research and historical experience shows that such an inclusive growth would require investments in smallholder farming as the main pathway. While short-term natural resource exploitation and large-scale agriculture are neither socially nor environmentally sustainable, they may generate significant economic incomes and profits. But in my opinion, this is only in the short term.
These benefits will only to a small extent reach the broad layers of the African population. The prevailing Africa optimism therefore does not provide a true image of Africa.
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