Small wonder Africa grew poorer between 1980 and 2000.Now inflation has largely been tamed, most central banks are islands of excellence and many ministers boast of cutting red tape.Five of the ten fastest reformers in the World Bank’s latest report on the ease of doing business are African.Better government has led to better results.The proportion of Africans living in absolute poverty has fallen from 58% to 41% since 2000.In that time primary-school enrolment has risen from 60% to 80%. Annual malaria deaths have fallen by more than 60%.
Pessimists fret that much of this progress will reverse now that Africa faces economic headwinds.There are some worrying signs.Leaders once hailed as democrats are amending constitutions to escape term limits.In Congo, Joseph Kabila’s efforts to cling to power risk restarting a civil war, as the president of neighbouring Burundi already has.
The continent’s two biggest economies are making needless and costly policy errors.Nigeria is trying to prop up its overvalued currency by, in effect, banning imports.Instead it is driving up inflation.South Africa, meanwhile, has prompted capital flight and brought economic growth to a halt by keeping in power a president who was found to have breached the constitution and on whose watch corruption has flourished.
But massive missteps like these are now the exception rather than the rule.Most countries in Africa are following sound economic policies, controlling government deficits and keeping inflation in check.Dig beneath the headlines, and even in countries that are making big errors there is momentum for reform:in South Africa once-taboo policies such as privatisation are back on the table, and in Nigeria the government is clamping down on corruption and trimming a bloated civil service.Ethiopia is sucking in foreign investment, and smaller economies such as Ivory Coast and Rwanda are growing rapidly after making it easier to do business.
The continent’s future is in the balance. Whether it bounces back from this commodity slump or slips back into stagnation, war and autocracy will depend on whether enough of its leaders keep moving forward. Two goals stand out. The first is to recognise the new reality. Given the decline in its terms of trade, Africa’s buying power has gone down. Currencies must fall and governments adjust. Those that relied on mineral royalties must broaden their revenue bases: taxes are just 10-15% of GDP in most African countries.
Second, African governments need to keep up the hard slog of improving the basics. Bad roads, grasping officials and tariff barriers still hobble trade between African countries, which is only 11% of total African exports and imports. Improving that means investing in infrastructure, fighting corruption and freer trade.
Africa’s past has long been defined by commodities, but its future rests on the productivity of its people. By 2050 the UN predicts that there will be 2.5 billion Africans—a quarter of the world’s population. Given good governance, they will prosper. The alternative is too dire to imagine.