What about the future of Africa?

Stefan Mair (BDI), Jakkie Cilliers (ISS), Hanns Bühler (HSS) © BDI

Jakkie Cilliers (ISS), Peter Mathuki (EABC), Heike Bergmann (SAFRI), Hanns Bühler (HSS) © BDI

Prior to the outbreak of the corona pandemic, Africa was considered as a place with a promising future - with a growing middle class, booming trade and, in some countries, disproportionately high growth rates. But will the corona virus change Africa's potential for prosperity?

Many things in Africa - like in the rest of the world - will not be as they were before the outbreak of the pandemic. Sub-Saharan Africa's economy will experience this year its first recession in a quarter of a century and is expected to decline by two to five percentage points. The UN Development Programme (UNDP) warns that almost half of all jobs in Africa could be lost. According to forecasts, Corona will increase the proportion of the population living in poverty in Africa from 33 to 38 %. This makes it clear that we urgently need an economic recovery.

"Africa First!"

In the webinar series "The Future of Africa - Will the Corona virus change Africa's potential to prosper?", BDI, Hanns-Seidel-Foundation (HSS) and the Institute for Security Studies (ISS) in Pretoria, South Africa, discuss the consequences of the pandemic with over 200 participants. The key question is: How can Africa, despite corona, succeed in igniting a growth revolution that will take millions of people out of poverty and into employment.

Jakkie Cilliers, Chairman of the Board of the ISS, presents the results of his book "Africa First! - Igniting a Growth Revolution" and the new study by ISS and HSS „Impact of COVID-19 in Africa. A scenario analysis to 2030“. In order to meet the challenges ahead, the question of debt relief for African states must be clarified, health spending increased, and basic infrastructure expanded. In addition, Africa's priorities should focus on the following four areas:

  1. Increasing agricultural productivity: Africa must focus on agriculture and the production of staple foods for its own consumption.
  2. Industrialisation of African economies ("Made in Africa"): Industrialisation can create more jobs in the formal sector and achieve faster growth. This requires the establishment of special economic zones, increased government spending on research and development and the expansion of digitization.
  3. Leapfrogging - skipping development steps: In the 21st century, scientific knowledge is advancing at a rapid pace, for example mobile payment. So-called "leapfrogging" has a positive effect on poverty reduction. However, technology is not a miracle weapon. Countries must invest in people and institutions.
  4. African Free Trade Area (AfCFTA): If properly implemented, the free trade area, more than any other factor, can boost Africa's economic growth and combat extreme poverty in the long term. By 2050, the AfCFTA could reduce extreme poverty by more than six percent.

BDI: Larger markets are key for German companies

The BDI considers the African free trade area as a long-term facilitation for investment and trade of German companies with the more than 50 African countries. Most nations - except for South Africa, Nigeria and Egypt - are still too small to offer an attractive market for German companies.

The EU-Africa Strategy must set priorities

According to Peter Mathuki, Chief Executive of the East African Business Association (EABC), the European Union (EU) should focus on the following areas in its new Africa strategy: debt relief for African countries, development of the health and infrastructure sectors, private sector development and innovation. Innovations, for example in the field of e-commerce, could be essential for the way out of the crisis.