Africa’s vast potential for prosperity – here’s how

Africa’s vast potential for prosperity – here’s how
Africa's vast potential for prosperity - here's how. Image source: Pixabay

Africa is beginning to realise its vast potential for prosperity – here’s how

It is well known that Africa is a continent of immeasurable potential, as well as considerable challenges. Today, the average poverty rate for African nations is higher than both China’s and India’s. Only three decades ago, it was lower than both. The question of why African nations have not matched rates of development seen in other regions of the world remains unanswered.

What needs to change? How can Africa’s leaders and policymakers realise the full potential of their nations? And where can they learn from each other’s successes and identify the obstacles blocking the pathway to greater prosperity? To answer these questions, we have produced the Africa Prosperity Report, which we will present to leaders this week at the African Union Summit. The Report measures each of the nations of the AU against a range of economic, social, and institutional benchmarks. Using over 150,000 datapoints, it provides a uniquely holistic picture of prosperity across the continent.

The Report makes for encouraging reading. Africa has seen a decade of improving prosperity across all its regions, led by East Africa. Much of the improvement over the past decade has been driven by micro-economic reforms, and strong levels of social wellbeing – a consistent feature of African nations. Many of the most improved nations (Côte d’Ivoire, Ethiopia, Ghana, Mauritius, Zimbabwe, and Rwanda, for example) and other strong performers (such as Guinea, Kenya, Tanzania, Togo, and Mozambique) have used their growing institutional resilience to underpin their success.

Though each nation is unique, our analysis of these – and other – success stories suggests a clear pattern of progress, based upon five principles. First, nations must deliver essential security, by reducing political violence and crime. In Côte d’Ivoire, for example, we have seen the dividends of minimising the impact of terrorism and civil conflict, while in Zimbabwe, the reduction in levels of political violence has seen the country rise nine ranks since 2009, and Ethiopia’s success in addressing violent crime has helped it rise 16 places. However, insecurity in Kenya threatens to undermine astonishing progress in creating one of the best places in Africa for investment and entrepreneurship, and high levels of violent crime remain a major challenge for many other African countries.

Second, nations must strengthen the social contract between government and the people, by improving people’s freedom of speech and assembly; increasing institutional trust through strengthening the rule of law; and fostering greater civic participation. While improved inclusiveness in nations like Ghana, Togo, and Kenya has driven increases in overall prosperity, in other nations like Morocco, challenges remain. Striking an appropriate balance between personal freedom and national security is required to avoid placing the longer-term success of Morocco’s economic model at risk. In Egypt too, restriction of personal freedoms in the name of security has gradually eroded the country’s status as one of Africa’s most prosperous nations, causing it to fall six ranks since 2009. Both nations would benefit from a new settlement that commits to rebuilding civic participation, inclusiveness, and personal freedom to rekindle a sense of hope and expectation for the future.

Third, nations must create an environment for investment, by strengthening property rights (as Mauritius has done to great effect); by being open to international investment (as exemplified by Rwanda); and by maintaining stable inflation, (as Cote d’Ivoire has done). Countries succeeding in this area can provide lessons for others. For example, Zimbabwe’s biggest opportunity lies in a bold programme of reform of its economic policies to open its economy and restore investor protection and property rights. Doing so promises to fuel an economy long starved of investment.

Fourth, nations must improve the conditions for enterprise, by increasing market contestability and competition, improving the ease of doing business, and ensuring labour market flexibility. All countries – including those like Botswana, one of Africa’s most prosperous nations and a socio-economic model for resource-dependent economies that enjoy strong fiscal sustainability and a diversified economy – could benefit from greater contestability. Botswana’s relatively small domestic market is dominated by too few corporations and boosting competition could drive innovation and growth.

Finally, nations must increase the government’s own capacity to deliver key public services. Specifically, by improving preventative interventions in key areas like healthcare and by investing in improving the quality of primary education. Ethiopia, for example, has achieved widespread improvements in education (for which it ranks 29th) and health (21st). In Kenya, education (9th) has been central to its development since independence, with demand increasing in recent decades. Kenya’s health outcomes have also improved alongside the country’s overall care system. Rwanda has shown how healthcare can be best delivered, developing its own mechanisms for improving healthcare outcomes, rather than relying solely on aid agencies.

The Africa Prosperity Report illustrates the many reasons to be optimistic about Africa. By highlighting these five steps, it shows how countries are already making significant progress, and what lessons they can offer others on the same trajectory. We are ambitious about supporting all African nations to identify and address their binding constraint to further progress, placing them on a pathway from poverty to prosperity and, in doing so, helping to unlock Africa’s astonishing potential.

Dr Stephen Brien

Director of Policy, Legatum Institute