Wednesday, February 10, 2016

Forgetting All About Africa Again

Africa has achieved much progress, but many challenges remain - including inequalities in income, politics and between groups. Far from a continued scramble for Africa, as some analysts exalted only a few years ago, we're far more likely to see a potential re-marginalisation of sub-Saharan Africa in the years ahead. Three factors underpin this.

The first is changes in China - today Africa's largest trading partner, but a country whose own economic rebalancing has reduced its thirst for commodities. This is, of course, temporary. Eventually India's economic awakening should drive the next commodities super-cycle and Africa should regain some of its lost momentum. But that is still some years hence. In the meantime, global growth elsewhere remains anaemic and insufficient to replace China's previous demand for Africa's natural resources.
Saudi Arabia's determination to protect its global share of the oil market, resulting in an oil price per barrel hovering below US$30, has hit Africa's oil producers very hard. Large oil producers such as Nigeria and Angola have seen their main source of revenue slashed and others, including aspirant and marginal producers - such as Ghana - face strong headwinds. Countries such as Tanzania and Mozambique, who were counting on the potential of huge oil and gas incomes, have discovered that interest in exploiting their natural bounty has waned.
Together with the impact of the shale revolution in the USA, Africa's oil is not in current demand and this has translated into economic pain and strategic marginalisation, particularly for West Africa.

Secondly, development assistance aimed at promoting inclusive growth, poverty alleviation, infrastructure development and good governance (traditionally from the West) is being decimated as Europe scrambles to respond to crises in Syria and elsewhere. Millions of poor Africans stand the risk of losing the sustenance provided by humanitarian and development assistance at a time when their own governments do not provide. Sub-Saharan Africa faces large constraints on the capacity of governments to deliver on development .Business and the private sector, we are told, have to step up and assume their rightful place as the drivers of poverty alleviation, humanitarian assistance and employment creation. By default, the private sector is interested in profit. Without appropriate regulation and oversight, its role exacerbates divisions rather than promoting inclusive growth.

The third factor relates to a change in global patterns of political violence. Great power games have shifted to the Middle East. The Sunni/Shia divide now pits Saudi Arabia against Iran in an ever-widening series of proxy wars, in a region that is geo-strategically important, heavily armed, politically unstable and already host to an important number of proxy wars. Subsequently, for the next few years, sub-Saharan Africa may get less attention and less money. Rather than providing a breathing space for autocrats who believe in their right to govern indefinitely, we believe that the pressure from below will increase. Instability is moving from rebellions in distant rural districts to urban areas as social protest and violence around elections continue to rise. Expectations from African citizens are high and leaders will inevitably struggle to respond to the demands of their young, restless and connected urban populace; who are better educated than before, but with few employment prospects.

No comments: