The Next Big Thing? The Changing Face of Africa and its Implications for Australia Scott Featherston 17 November, 2010 Lowy Institute, Sydney, Australia

The Next Big Thing?The Changing Face of Africa and its

Implications for Australia

Scott Featherston17 November, 2010

Lowy Institute, Sydney, Australia

1

Why are people now excited about Africa?

2

20 lost years

A New Africa?Early optimism

forecast

Strong Economic Growth

Source: World Bank Development Indicators, IMF

GDP and GDP/Capita Growth Rates for Sub-Saharan Africa1960-2011

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6.9%

7.3%

8.7%

5.9%

7.5%

3.9%

8.0%

4.6%

7.8%

5.5%

6.8%

7.1%

Sector Share of Change in Real GDP, 2002-07(100% = US$235 billion)

Compound Annual Growth Rate (%)

Growth that is Diversified

Source: McKinsey Global Institute4

163m 196m 244mGlobal (>$20,000)

Middle class (>$10-15,000)

Emerging middle class (>$5-10,000)

Basic consumer (>$2-5,000)

Destitute (<$2,000)

# Families

~60m pulled from extreme poverty from 2000 to 2020(277m people to 220m)

~60m pulled from extreme poverty from 2000 to 2020(277m people to 220m)

~350m new global, middle class, and emerging consumers between 2000 to 2020(285m people to 634m)

~350m new global, middle class, and emerging consumers between 2000 to 2020(285m people to 634m)

Middle Class Growing, Poverty Reducing

Source: McKinsey Global Institute

Forecast Family Annual Incomes(2000 – 2020)

5

China

India

Africa

Europe

North America

Demographic Trends: Growing and Young

Source: United Nations World Population Prospect

Population Growth Projections(1950-2050)

Working Age Population (15-64 years old)(Percentage of total population, 2000-2050)

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What’s driving this growth?

7

An

Angola – Civil War, 1975-2002

Burkina Faso – Sankara Coup, 1980s

Burundi – Civil War, 1993-2005

Rwanda – Civil War and Genocide, 1991-1996

Central African Republic – Civil War, 1980s and 1990s

Chad – Civil War, 1965-1979

Congo (Brazzaville) – Civil Uprising, 1997-1999

Eritrea – War of Independence, 1958-1991

Ethiopia – Civil War, Wars with Neighbours, 1977-2000

Kenya – Tribal Conflict, 2007

Liberia – Civil Wars, 1989-2003

Sierra Leone – Civil War, 1990-2002

Libya – War with Chad, 1980-87

Zimbabwe – Civil Unrest, 1965 - present

Namibia – War of Independence, 1964-1990

Nigeria – Civil War/Unrest: Delta, 1966-present

Senegal – Casamance War, 1982-2004

South Africa – Anti-Apartheid, 1948-1994

Sudan – Civil Wars, 1955 - present

Uganda – Anti-Amin/”The War in the Bush”, 1971-1985

West Sahara – Moroccan War, 1975-1991

Cote d’Ivoire – Civil War, 2002-present

Somalia – Civil War, 1991-present

Mozambique – War of Independence and RENAMO War, 1964-1992

DRC – Civil War, 1998-present

Wars and Civil Unrest: 1970 to 2010

Source: GlobalSecurity.org

1970 1975 1980 1985 1990 1995 2000 2005 2010

# Active Wars 8 11 13 14 15 12 12 6 5 8

An

Zimbabwe – Civil Unrest, 1965 - present

Sudan – Civil Wars, 1955 - present

Cote d’Ivoire – Civil War, 2002-present

Somalia – Civil War, 1991-present

DRC – Civil War, 1998-present

Wars and Civil Unrest Today

Source: GlobalSecurity.org9

Inflation (%)

-64%

-28%

+60%

Public Debt (% of GDP)

Public Budget Deficits (% of GDP) Labour/Productivity Growth (%)

Improving Macroeconomic Conditions

Source: McKinsey Global Institute10

Microeconomic Reform

Source: McKinsey Global Institute

Share of African Countries Improving the Business Environment(percent)

Acceleration in Real GDP,2000-08 versus 1990-2000(percent)

2.1%

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Growing and Diversifying Capital Inflows

Composition of Private Financial Flows(US$ billion)

Concentration of Gross Private Inflows(% of total and excluding South Africa)

6.0% 4.1% Sub-Saharan Africa’s share of total global flows

Source: IMF, Regional Economic Outlook12

46%

22%

32%

world comparison

EuropePR = 1.1CL = 1.2Middle EastPR = 5.7CL = 4.9AmericasPR = 2.2CL = 2.4Asia-PacificPR = 3.5CL = 3.4

Improving Political Rights andCivil Liberties

Source: Freedom House

% of Free, Partially Free, and Not Free States in Sub-Saharan Africa

Political Rights and Civil Liberties inSub-Saharan Africa

13

Improving Corruption? Perhaps.

Source: Transparency International

% of People Who Reported Paying Bribes(2005 versus 2009)

% of People Who Felt Their Governments’ Anti-Corruption Efforts to be Effective(2007 versus 2009)

Not recorded

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Is Africa the Next Big Thing?

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1980-2000

1966-1986

1992-today

1995-today

1995-today

1961-1981

1995-today

1950-1970

Not Compared to Other “Big Things” …

Source: World Bank Development Indicators, Growth Commission

Average Growth Since Initial “Take Off” for Previous “Big Things”(Maximum 20 years, Percent)

Time it Takes to Progress, Depending on Average Growth per Capita Achieved(Years)

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Human Capital – Education

Secondary Schooling – developing countries only, apart from OECD(Gross enrolment, Percent)

Tertiary Education – developing countries only, apart from OECD(Gross enrolment, Percent)

Source: World Bank Development Indicators

19

Human Capital – Health

Life Expectancy – developing countries only, apart from OECD(Years)

Infant Mortality – developing countries only, apart from OECD(deaths per 1,000 infants born)

Source: World Bank Development Indicators





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Documents

The Next Big Thing? The Changing Face of Africa and its Implications for Australia Scott Featherston 17 November, 2010 Lowy Institute, Sydney, Australia