For centuries Africa has been referred to as the “dark continent” – but today it is full of new light. The scale and extent of Africa’s boom is unprecedented. Over the last decade, six of the world’s 10 fastest growing economies were African. There are millions of new entrepreneurs. There is fresh investment everywhere. The world’s largest multinationals are taking notice and rushing in. And this growth is trickling down: Africa now has the fastest growing middle class on the planet.
|KPMG IDAS, Africa
One important factor supporting these trends is technology. Africa is connected – it is the world’s fastest growing mobile phone market. The pace of innovation and rapid development of user-friendly technologies may allow African countries to leap-frog development stages. Somalia, for instance, has one of the best mobile communications systems in Africa, while mobile banking developed in Kenya is now being replicated in several countries, transforming the financial landscape.
|Professional organizations have a key role to play in the continent’s development agenda, and in this, KPMG remains steadfastly committed. Our commitment is underscored by a unit that is fully dedicated to offering development advisory services in Africa – KPMG’s International Development Advisory Services (IDAS).|
This new interest in the continent means that resource transfers and both foreign and local investment are on the rise. There is a significant qualitative change also: there are far more private resources supporting Africa’s development today, as opposed to mostly public support previously, with plenty of new actors – South-South investors from BRIC states and others, new foundations and endowments - and new modalities – Special Purpose Vehicles (SPVs), Challenge Funds, and Impact Investment.
However, serious challenges remain: corrupt governments and power structures, low average life expectancy, insufficient access to education and health services, drought and famine, deforestation and desertification, insecurity, conflict, and inadequate provision of basic utilities such as water and electricity.
If we analyse these trends soberly and avoid leaning too hard towards either “Afro-optimism” or “Afro-pessimism”, we see several scenarios going forward:
- Differences across countries will accelerate – in principle favouring those with a larger resource base that are able to use it properly; across the continent we will see consolidating democracy and the rule of law, while some countries become more business friendly, with improving human capital and labour productivity.
- Some countries will have the chance to transit into the middle income club – forecasts for 2020 include combined consumer spending of US$ 1.4 trillion, 1.1 billion Africans of working age, and 128 million households with discretionary income, pushing some countries into a higher income bracket.
- For most African countries the problems of development will continue – and with stronger democracies and a younger population, pressure for more inclusive development and demonstrable results will increase.
Multiple growth paths will require different development approaches and new ways to realize sustained development. To make sure that countries will not lose out on available opportunities for growth, it is time to take a more innovative approach to delivering development, to maximize the impact of public and private resources.
It is also time for new partnership-oriented approaches to development policy and programmes that will take full advantage of the strengths and expertise of different stakeholders. These include African governments, continental and regional integration institutions, bilateral and multilateral development partners, the private sector, civil society, individual citizens and other players dedicated to uplifting the continent.
We look forward to working with you to realize Africa’s potential.