Business Standard

Shankar Acharya: Africa rising

Sub-Saharan Africa is experiencing an economic revival, though progress is uneven.

Shankar Acharya  |  New Delhi 

Shankar Acharya: Africa rising
is experiencing an economic revival, though progress is uneven.
Shankar Acharya / New Delhi May 12, 2011, 0:26 IST

In the mid-1970s I spent a few years working on sub-Saharan African (SSA) countries and concluded in a review paper (World Development, February 1981) that their prospects for robust economic development were problematic. Thirty years later, is there any reason to change that judgement? The overwhelming majority of non-African observers (and many Africans) would say no. After all, median real income in SSA has changed little since the mid-1970s. In the world outside, SSA is mostly associated with widespread AIDS, autocratic (and corrupt) rulers, undiversified economies and perennial civil strife, which have continued to blight the lives of many million Africans.

A fortnight back, I had an opportunity to revisit the issue at a conference convened by the Ghana-based African Centre for Economic Transformation in the beautiful environment of the Rockefeller Centre at Bellagio, Italy. While there were different points of view (as always), the big takeaway was that things were really changing for the better in many SSA countries. The single most persuasive presentation was made by Steve Radelet (currently chief economist of US AID), based on his recent book, Emerging Africa, written during his years with the Centre for Global Development in Washington DC. Let me convey the gist of his analysis.

Mr Radelet divides the 48 SSA nations into four groups: 17 “Emerging Countries” which have averaged over 2 per cent per capita GDP growth since 1995; another six on the “Threshold” of sustained growth; nine “Oil Exporters” (dominated by Nigeria and Sudan) whose fortunes fluctuate with oil prices and the remaining 16 “Other SSA” where average income has actually declined since 1995. The table presents the details of the country groupings and average per capita growth rates from 1996 to 2008. If the trend in average per capita incomes of the three main groups is shown on a graph, it can be seen that per capita income has risen by 60 per cent since 1995 in the “Emerging Countries”, while they have stagnated in the other SSAs and have risen by only about 30 per cent in the oil exporters. It clearly demonstrates the strong performance of the “Emerging Countries” since the mid-1990s, relative to the other groups. What is particularly encouraging is that these nations account for 344 million of SSA’s total 2010 population of 875 million. Indeed, adding the “Threshold” countries’ 89 million would mean that about half of SSA’s population resides in countries doing reasonably well without the benefit of oil riches.

In a series of inter-temporal comparisons of “Emerging Countries” (EC) versus “Other SSA” (OSSA), Mr Radelet proceeds to flesh out the markedly superior performance of the former group. Thus, by 2007, the level of gross investment in EC had nearly tripled since the mid-1990s as compared to rising only about 70 per cent in There had been a similar tripling of total trade of the EC during this period as compared to a hardly 50 per cent increase in Estimates indicate that total factor productivity growth in EC averaged close to 2 per cent a year, as compared to minus 1 per cent in Agricultural production in EC was 50 higher over the period compared to a 30-per cent increase in Infant mortality in both groups fell steadily, though from a significantly lower level in EC. By 2007, infant mortality in EC was below 70 per thousand live births. Between 1999 and 2007, net primary school enrolment increased from 65 to 80 per cent in EC, while in the rise was more gradual from 57 to 67 per cent.

So what explains the substantially superior performance of the 17 “Emerging Countries” of Mr Radelet attributes this to five fundamental factors: the rise of democracy and improved governance; much better economic policies; the end of the African debt crisis and improved donor relations; the rise of new technologies (especially mobile telephony); and the emergence of a new generation of leaders and voters. The first two merit elaboration.

In the late 1980s, there were only three democracies in SSA: Botswana, Gambia and Mauritius. By 1994, the number had risen to 20 and by 2005 to 26. Interestingly, by the end of the millennium nearly all the 17 “Emerging Countries” could be characterised as democracies. Using Freedom House indices, political and civil liberties improved markedly in the EC group from 1990 onwards, while they remained at a low level in the group. Similarly, the incidence of domestic conflict fell sharply (comparing 1996-2008 to the previous 15 years) in the EC group, while remaining high and unchanged in On each of the World Bank governance indicators (rule of law, corruption control, political stability, regulatory quality, government effectiveness and voice/accountability) the EC recorded improvement between 1996 and 2008, while in all indicators worsened.

Turning to economic policy, Mr Radelet draws on the seminal study of “anti-growth syndromes” done by African Economic Research Consortium and published in 2007: Benno Ndulu et al, The Political Economy of Economic Growth in Africa, 1960-2000, (Cambridge University Press). The four identified anti-growth syndromes included three economic ones: heavy-handed control regimes; redistribution systems that rewarded political allies and ethnic groups at the expense of efficiency and growth; and heavy borrowing and asset stripping. Mr Radelet shows that these syndromes declined sharply in the EC group from the mid-1980s and had virtually disappeared by 1995. In contrast, the syndromes retained their stifling hold in right through to 2004 (the end point of the underlying data series).

Threshold countries (89 million)
Benin 1.3
Kenya 2003-08 2.4
Liberia 2005-08 3.1
Malawi 1.2
Senegal 1.4
Sierra Leone 2003-08 3.7

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Shankar Acharya: Africa rising

Sub-Saharan Africa is experiencing an economic revival, though progress is uneven.

In the mid-1970s I spent a few years working on sub-Saharan African (SSA) countries and concluded in a review paper (World Development, February 1981) that their prospects for robust economic development were problematic. Thirty years later, is there any reason to change that judgement? The overwhelming majority of non-African observers (and many Africans) would say no. After all, median real income in SSA has changed little since the mid-1970s.

GROWTH IN GDP PER CAPITA, 1996-2008
Emerging
countries
(344
million)
Other

countries
(180
million)
Oil
exporters
(261
million)
Botswana 4.1 Burundi -0.8 Angola 7.6
Burkina Faso 2.8 Central African
Republic
-0.5 Cameroon 1.7
Cape Verde 4.0 Comoros -0.3 Chad 3.4
Ethiopia 4.1 Congo, Dem. Rep. -1.1 Congo, Rep. 1.3
Ghana 2.6 Cote d'Ivoire -0.9 Eq. Guinea 23.6
Lesotho 2.3 Djibouti -0.4 Gabon -0.7
Mali 2.5 Eritrea -1.7 Mauritania 1.1
Mauritius 3.7 Gambia, The 1.5 Nigeria 2.3
Mozambique 5.4 Guinea 1.7 Sudan 4.7
Namibia 2.4 Guinea-Bissau -2.3    
Rwanda 3.7 Niger 0.6    
Sao Tome and Principe 5.0 Madagascar 0.9    
Seychelles 2.6 Somalia n.a.    
South Africa 2.0 Swaziland 1.9    
Tanzania
Shankar Acharya: Africa rising
is experiencing an economic revival, though progress is uneven.
Shankar Acharya / New Delhi May 12, 2011, 0:26 IST

In the mid-1970s I spent a few years working on sub-Saharan African (SSA) countries and concluded in a review paper (World Development, February 1981) that their prospects for robust economic development were problematic. Thirty years later, is there any reason to change that judgement? The overwhelming majority of non-African observers (and many Africans) would say no. After all, median real income in SSA has changed little since the mid-1970s. In the world outside, SSA is mostly associated with widespread AIDS, autocratic (and corrupt) rulers, undiversified economies and perennial civil strife, which have continued to blight the lives of many million Africans.

A fortnight back, I had an opportunity to revisit the issue at a conference convened by the Ghana-based African Centre for Economic Transformation in the beautiful environment of the Rockefeller Centre at Bellagio, Italy. While there were different points of view (as always), the big takeaway was that things were really changing for the better in many SSA countries. The single most persuasive presentation was made by Steve Radelet (currently chief economist of US AID), based on his recent book, Emerging Africa, written during his years with the Centre for Global Development in Washington DC. Let me convey the gist of his analysis.

Mr Radelet divides the 48 SSA nations into four groups: 17 “Emerging Countries” which have averaged over 2 per cent per capita GDP growth since 1995; another six on the “Threshold” of sustained growth; nine “Oil Exporters” (dominated by Nigeria and Sudan) whose fortunes fluctuate with oil prices and the remaining 16 “Other SSA” where average income has actually declined since 1995. The table presents the details of the country groupings and average per capita growth rates from 1996 to 2008. If the trend in average per capita incomes of the three main groups is shown on a graph, it can be seen that per capita income has risen by 60 per cent since 1995 in the “Emerging Countries”, while they have stagnated in the other SSAs and have risen by only about 30 per cent in the oil exporters. It clearly demonstrates the strong performance of the “Emerging Countries” since the mid-1990s, relative to the other groups. What is particularly encouraging is that these nations account for 344 million of SSA’s total 2010 population of 875 million. Indeed, adding the “Threshold” countries’ 89 million would mean that about half of SSA’s population resides in countries doing reasonably well without the benefit of oil riches.

In a series of inter-temporal comparisons of “Emerging Countries” (EC) versus “Other SSA” (OSSA), Mr Radelet proceeds to flesh out the markedly superior performance of the former group. Thus, by 2007, the level of gross investment in EC had nearly tripled since the mid-1990s as compared to rising only about 70 per cent in There had been a similar tripling of total trade of the EC during this period as compared to a hardly 50 per cent increase in Estimates indicate that total factor productivity growth in EC averaged close to 2 per cent a year, as compared to minus 1 per cent in Agricultural production in EC was 50 higher over the period compared to a 30-per cent increase in Infant mortality in both groups fell steadily, though from a significantly lower level in EC. By 2007, infant mortality in EC was below 70 per thousand live births. Between 1999 and 2007, net primary school enrolment increased from 65 to 80 per cent in EC, while in the rise was more gradual from 57 to 67 per cent.

So what explains the substantially superior performance of the 17 “Emerging Countries” of Mr Radelet attributes this to five fundamental factors: the rise of democracy and improved governance; much better economic policies; the end of the African debt crisis and improved donor relations; the rise of new technologies (especially mobile telephony); and the emergence of a new generation of leaders and voters. The first two merit elaboration.

In the late 1980s, there were only three democracies in SSA: Botswana, Gambia and Mauritius. By 1994, the number had risen to 20 and by 2005 to 26. Interestingly, by the end of the millennium nearly all the 17 “Emerging Countries” could be characterised as democracies. Using Freedom House indices, political and civil liberties improved markedly in the EC group from 1990 onwards, while they remained at a low level in the group. Similarly, the incidence of domestic conflict fell sharply (comparing 1996-2008 to the previous 15 years) in the EC group, while remaining high and unchanged in On each of the World Bank governance indicators (rule of law, corruption control, political stability, regulatory quality, government effectiveness and voice/accountability) the EC recorded improvement between 1996 and 2008, while in all indicators worsened.

Turning to economic policy, Mr Radelet draws on the seminal study of “anti-growth syndromes” done by African Economic Research Consortium and published in 2007: Benno Ndulu et al, The Political Economy of Economic Growth in Africa, 1960-2000, (Cambridge University Press). The four identified anti-growth syndromes included three economic ones: heavy-handed control regimes; redistribution systems that rewarded political allies and ethnic groups at the expense of efficiency and growth; and heavy borrowing and asset stripping. Mr Radelet shows that these syndromes declined sharply in the EC group from the mid-1980s and had virtually disappeared by 1995. In contrast, the syndromes retained their stifling hold in right through to 2004 (the end point of the underlying data series).

Threshold countries (89 million)
Benin 1.3
Kenya 2003-08 2.4
Liberia 2005-08 3.1
Malawi 1.2
Senegal 1.4
Sierra Leone 2003-08 3.7
image
Business Standard
177 22

Shankar Acharya: Africa rising

Sub-Saharan Africa is experiencing an economic revival, though progress is uneven.

GROWTH IN GDP PER CAPITA, 1996-2008
Emerging
countries
(344
million)
Other
countries
(180
million)
Oil
exporters
(261
million)
Botswana 4.1 Burundi -0.8 Angola 7.6
Burkina Faso 2.8 Central African
Republic
-0.5 Cameroon 1.7
Cape Verde 4.0 Comoros -0.3 Chad 3.4
Ethiopia 4.1 Congo, Dem. Rep. -1.1 Congo, Rep. 1.3
Ghana 2.6 Cote d'Ivoire -0.9 Eq. Guinea 23.6
Lesotho 2.3 Djibouti -0.4 Gabon -0.7
Mali 2.5 Eritrea -1.7 Mauritania 1.1
Mauritius 3.7 Gambia, The 1.5 Nigeria 2.3
Mozambique 5.4 Guinea 1.7 Sudan 4.7
Namibia 2.4 Guinea-Bissau -2.3    
Rwanda 3.7 Niger 0.6    
Sao Tome and Principe 5.0 Madagascar 0.9    
Seychelles 2.6 Somalia n.a.    
South Africa 2.0 Swaziland 1.9    
Tanzania
Shankar Acharya: Africa rising
is experiencing an economic revival, though progress is uneven.
Shankar Acharya / New Delhi May 12, 2011, 0:26 IST

In the mid-1970s I spent a few years working on sub-Saharan African (SSA) countries and concluded in a review paper (World Development, February 1981) that their prospects for robust economic development were problematic. Thirty years later, is there any reason to change that judgement? The overwhelming majority of non-African observers (and many Africans) would say no. After all, median real income in SSA has changed little since the mid-1970s. In the world outside, SSA is mostly associated with widespread AIDS, autocratic (and corrupt) rulers, undiversified economies and perennial civil strife, which have continued to blight the lives of many million Africans.

A fortnight back, I had an opportunity to revisit the issue at a conference convened by the Ghana-based African Centre for Economic Transformation in the beautiful environment of the Rockefeller Centre at Bellagio, Italy. While there were different points of view (as always), the big takeaway was that things were really changing for the better in many SSA countries. The single most persuasive presentation was made by Steve Radelet (currently chief economist of US AID), based on his recent book, Emerging Africa, written during his years with the Centre for Global Development in Washington DC. Let me convey the gist of his analysis.

Mr Radelet divides the 48 SSA nations into four groups: 17 “Emerging Countries” which have averaged over 2 per cent per capita GDP growth since 1995; another six on the “Threshold” of sustained growth; nine “Oil Exporters” (dominated by Nigeria and Sudan) whose fortunes fluctuate with oil prices and the remaining 16 “Other SSA” where average income has actually declined since 1995. The table presents the details of the country groupings and average per capita growth rates from 1996 to 2008. If the trend in average per capita incomes of the three main groups is shown on a graph, it can be seen that per capita income has risen by 60 per cent since 1995 in the “Emerging Countries”, while they have stagnated in the other SSAs and have risen by only about 30 per cent in the oil exporters. It clearly demonstrates the strong performance of the “Emerging Countries” since the mid-1990s, relative to the other groups. What is particularly encouraging is that these nations account for 344 million of SSA’s total 2010 population of 875 million. Indeed, adding the “Threshold” countries’ 89 million would mean that about half of SSA’s population resides in countries doing reasonably well without the benefit of oil riches.

In a series of inter-temporal comparisons of “Emerging Countries” (EC) versus “Other SSA” (OSSA), Mr Radelet proceeds to flesh out the markedly superior performance of the former group. Thus, by 2007, the level of gross investment in EC had nearly tripled since the mid-1990s as compared to rising only about 70 per cent in There had been a similar tripling of total trade of the EC during this period as compared to a hardly 50 per cent increase in Estimates indicate that total factor productivity growth in EC averaged close to 2 per cent a year, as compared to minus 1 per cent in Agricultural production in EC was 50 higher over the period compared to a 30-per cent increase in Infant mortality in both groups fell steadily, though from a significantly lower level in EC. By 2007, infant mortality in EC was below 70 per thousand live births. Between 1999 and 2007, net primary school enrolment increased from 65 to 80 per cent in EC, while in the rise was more gradual from 57 to 67 per cent.

So what explains the substantially superior performance of the 17 “Emerging Countries” of Mr Radelet attributes this to five fundamental factors: the rise of democracy and improved governance; much better economic policies; the end of the African debt crisis and improved donor relations; the rise of new technologies (especially mobile telephony); and the emergence of a new generation of leaders and voters. The first two merit elaboration.

In the late 1980s, there were only three democracies in SSA: Botswana, Gambia and Mauritius. By 1994, the number had risen to 20 and by 2005 to 26. Interestingly, by the end of the millennium nearly all the 17 “Emerging Countries” could be characterised as democracies. Using Freedom House indices, political and civil liberties improved markedly in the EC group from 1990 onwards, while they remained at a low level in the group. Similarly, the incidence of domestic conflict fell sharply (comparing 1996-2008 to the previous 15 years) in the EC group, while remaining high and unchanged in On each of the World Bank governance indicators (rule of law, corruption control, political stability, regulatory quality, government effectiveness and voice/accountability) the EC recorded improvement between 1996 and 2008, while in all indicators worsened.

Turning to economic policy, Mr Radelet draws on the seminal study of “anti-growth syndromes” done by African Economic Research Consortium and published in 2007: Benno Ndulu et al, The Political Economy of Economic Growth in Africa, 1960-2000, (Cambridge University Press). The four identified anti-growth syndromes included three economic ones: heavy-handed control regimes; redistribution systems that rewarded political allies and ethnic groups at the expense of efficiency and growth; and heavy borrowing and asset stripping. Mr Radelet shows that these syndromes declined sharply in the EC group from the mid-1980s and had virtually disappeared by 1995. In contrast, the syndromes retained their stifling hold in right through to 2004 (the end point of the underlying data series).

Threshold countries (89 million)
Benin 1.3
Kenya 2003-08 2.4
Liberia 2005-08 3.1
Malawi 1.2
Senegal 1.4
Sierra Leone 2003-08 3.7

image
Business Standard
177 22
GROWTH IN GDP PER CAPITA, 1996-2008
Emerging
countries
(344
million)
Other
countries
(180
million)
Oil
exporters
(261
million)
Botswana 4.1 Burundi -0.8 Angola 7.6
Burkina Faso 2.8 Central African
Republic
-0.5 Cameroon 1.7
Cape Verde 4.0 Comoros -0.3 Chad 3.4
Ethiopia 4.1 Congo, Dem. Rep. -1.1 Congo, Rep. 1.3
Ghana 2.6 Cote d'Ivoire -0.9 Eq. Guinea 23.6
Lesotho 2.3 Djibouti -0.4 Gabon -0.7
Mali 2.5 Eritrea -1.7 Mauritania 1.1
Mauritius 3.7 Gambia, The 1.5 Nigeria 2.3
Mozambique 5.4 Guinea 1.7 Sudan 4.7
Namibia 2.4 Guinea-Bissau -2.3    
Rwanda 3.7 Niger 0.6    
Sao Tome and Principe 5.0 Madagascar 0.9    
Seychelles 2.6 Somalia n.a.    
South Africa 2.0 Swaziland 1.9    
Tanzania

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