Development Prospects for Africa in the Context of the Global South
By Elizabeth Sidiropoulos, Chief Executive of the South African Institute of International Affairs (SAIIA), Member of the United Nations High-level Advisory Board on Economic and Social Affairs
At the most recent BRICS summit in Johannesburg in August 2023, one point that was made regularly by policy makers and commentators alike was that the BRICS now contributed more to global GDP than the G7 nations (31.5% of global GDP versus 30%), with their share expected to grow to over 50% by 2030 – before factoring in the expanded membership. Clearly the Global South is no longer a spectator at the main dining hall.
The rise of the Global South, of which the pre-eminent economy is China’s which is now the second largest in the world, has also created new opportunities for Africa. The continent is still the poorest with 24 of the world’s 28 low-income countries; yet, the ability to diversify trading and investment partners, roll-out infrastructure projects, and explore different development paradigms from the traditional western precepts has brought some benefits to the continent, although the much-needed structural transformation has been slow.
Since the start of the XXI century Africa’s average economic growth rate has been second only to that of developing Asia, realising positive growth for nearly a quarter a of a century until the Covid-19 pandemic halted that in 2020. Growth has since rebounded but these positive economic growth rates have not translated into structural transformation. The 2022 Africa report by the United Nations Conference on Trade and Development (UNCTAD) notes that 83% of African countries (45 of 54 countries) are commodity dependent, accounting for 45% of the commodity-dependent countries worldwide.
With the world’s youngest population (over 60% are below the age of 25), Africa can be the next frontier of investment and growth, taking advantage of the demographic dividend. By 2050 one in three people aged 15-24 years will be African and one in four will be in the 25-34 age group. However, prerequisites for such a dividend are education and skills and the ability to take advantage of the opportunities presented by the digital revolution. Failing that, the demographic dividend can become a liability leading to social unrest, as young people become disillusioned with their political and economic systems.
The 2023 UN SDG Summit was sobering in its assessment of progress towards achieving the SDGs by 2030 across the world, and Africa faces some of the greatest challenges in that regard. Indeed, a report by the African Union Commission (AUC), the United Nations Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the United Nations Development Programme (UNDP) on Africa’s progress in implementing Agenda 2030 found that without deliberate policies to accelerate SDG implementation, at least 492 million people would still be in extreme poverty in 2030. Equally concerning was that 288 million children of school-going age were not in school, especially in conflict-affected parts of the continent.
Africa’s development trajectory faces a number of headwinds. The most significant of these is the instability that is defining large parts of the continent – from the Great Lakes and the Horn to the Sahel and Libya. The resurgence of coups and ordinary citizens’ disaffection with “elected” political elites, coupled with the growing involvement of a variety of external actors (from the traditional former colonial powers to ostensibly private military companies such as the Wagner group, or emerging players such as Turkey and the Gulf states) have exacerbated already existing developmental and governance challenges. The institutions created by Africans to address these challenges – the AU, its Peace and Security Council, the African Peer Review Mechanism to name a few – have seen their authority or their efficacy recede in parts of the continent.
The Covid pandemics and the Ukraine war have also compounded Africa’s debt problems. In 2022, Africa’s public debt amounted to $1.8 trillion. This was small compared to the overall outstanding debt of other developing countries, but Africa’s debt grew by 183% from 2010 to 2022, a rate four times higher than its growth rate of GDP in dollar terms. In 2022, 24 African countries still had debt-to-GDP ratios above 60%, and they have found it more difficult to reduce their debt levels compared to other parts of the world. This has also placed further pressure on constrained public finances, further exacerbating the ability of states to provide public goods to their citizens. High levels of corruption have also not helped.
Constrained public finances are also impacted by the low levels of domestic revenue. In the assessment of the first ten years of Agenda 2063, it was found that the continent had only managed 31% total tax revenue as a proportion of GDP, compared to the target set for 2021 of 63%.
Agenda 2063, adopted in 2013, is the continent’s long-term development vision to transform Africa into the global powerhouse of the future. Its intent is for Africans to take control of their development trajectory by addressing economic, social, governance, peace and security issues, as well as Africa’s voice in the world and is an affirmation of African agency in that regard.
In the context of a discussion on Africa’s development trajectory, the most important initiative is the agreement signed in 2018 that established the African Continental Free Trade Area (AfCFTA). It injected renewed energy into Africa regarding its development prospects. AfCFTA is premised on developmental regionalism, building regional value chains across the continent which deepen integration and industrialisation and remove barriers to trade enabling intra-African trade. It is regarded as a game changer for Africa’s development prospects as its successful implementation would be a catalyst for the structural economic transformation of African economies.
The AfCFTA’s focus is not just on trade in goods, but includes services too, both of which protocols have already been concluded. The harmonisation of investment, intellectual property rights, competition policy, and e-commerce are also on the table for negotiation. To help facilitate intra-regional trade, the African Export-Import Bank in collaboration with the AfCFTA Secretariat and the AU has also launched the Pan African Payment Settlement System. It is a cross-border financial market infrastructure that enables payment transactions across Africa. It allows for payments and settlements in local currencies. An adjustment fund is also being set up to support African states to adjust to the new liberalised trade environment. These all point to a strong desire by Africa to become economically independent and to industrialise rather than to rely on external development assistance to finance its development.
However, the objective to industrialise must also be seen in the context of the green transition. Many African countries have shown great political commitment to embrace green growth and the opportunities it presents. For one, the continent has 60% of the best solar resources globally. At the first Africa Climate Summit in September 2023, President Ruto of Kenya launched the Accelerated Partnership for Renewables in Africa, and committed Kenya to achieve 100% renewable power by 2030 and to fuel the green industries of the future by 2040. Such initiatives and commitments are not only contributing to fighting climate change but also helping to achieve “green structural transformation“.
Africa’s development journey has a long way to go still. The institutional capacity of many states to effectively deliver on the economic, social and environmental challenges that face them, often in the face of political instability, is limited. These deficits are compounded by an international system whose rules often do not support the specific circumstances facing developing economies; however, over the last few years African countries, both collectively and individually, have sought to take ownership of their development trajectory. The results may take longer than the UN SDG timeframe, and they will require significant political will and often hard decisions around trade-offs, but these are possible. And indeed imperative if Africa’s youth bulge is to be optimised.
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This article was first published in the Annual Trends Report – The Rise of Global South: New Consensus Wanted by the Italian Institute for International Political Studies, the Observer Research Foundation and the Policy Center for the New South.
The views expressed in this article are the author’s and do not necessarily reflect the views of the United Nations or its officials or Member States.