Post on 08-Nov-2014
THE BRENTHURST FOUNDATION TOWARDS A THIRD LIBERATION? The New Search for Prosperity and Jobs Greg Mills & Jeffrey Herbst
Point of Departure
Six Drivers.
Three Scenarios for Africa …
Six Drivers
People.
Growth and Differentiation.
Democracy and Conflict.
Resources.
Food.
Competitiveness and Technology.
DRIVER ONE: People
SSA Population: 1950-2050
1.4 Billion in 2025
0
0.5
1
1.5
2
1950 1975 2000 2025 2050
(Bil
lio
ns)
Source: United Nations 6
Population by Age Group
1.0 0.5 0.0 0.5 1.0
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90-94
100+
(in Billions)
1980
Male Female
1.0 0.5 0.0 0.5 1.0
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90-94
100+
(in Billions)
2020
Male Female
Source: United Nations 7
But it’s also where they will be living …
The Urbanization Phenomenon
Source: United Nations
0
10
20
30
40
50
60
70
0
0.5
1
1.5
2
1950 1975 2000 2025 2050
Bil
liio
ns
Total Population % Urban
12
0
100
200
300
400
500
600
700
196
0
196
2
196
4
196
6
196
8
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
2010
African Per Capita Income, Constant (2000) US$
0
200
400
600
800
1000
1200
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
Co
nst
ant
Pe
r C
apit
a 2
00
0 U
SD
Where It Went Wrong
Indonesia
Nigeria
Start of Indonesia's sustained growth 1967
15
UPSIDE DOWNSIDE
PEACE DIVIDEND RISING INEQUALITY
BETTER GOVERNANCE SMALL MIDDLE-CLASS
POVERTY DOWN LOW SAVINGS
DIFFERENTIATION POOR INFRASTRUCTURE
16
UPSIDE DOWNSIDE
PEACE DIVIDEND RISING INEQUALITY
BETTER GOVERNANCE SMALL MIDDLE-CLASS
POVERTY DOWN LOW SAVINGS
DIFFERENTIATION POOR INFRASTRUCTURE
17
UPSIDE DOWNSIDE
PEACE DIVIDEND RISING INEQUALITY
BETTER GOVERNANCE SMALL MIDDLE-CLASS
POVERTY DOWN LOW SAVINGS
DIFFERENTIATION POOR INFRASTRUCTURE
- At 68 GW, entire electricity production of SSA = Spain; without SA = 28GW = Argentina. - P/million capacity = one-third of South Asia’s, one-tenth of Latin America’s.
Over the past two decades, Africa’s coastal cities have been growing by 4+% a year. Lagos, Mombasa, Dar es Salaam, Accra, Abidjan and Dakar have seen populations explode from in-migration. SS Africa’s littoral population should double to 250m by 2030, with faster growth expected. (Two-thirds of world already within 400kms.)
• Expand administration, governance and rule of law
• Investment in basic services and infrastructure – fuel, water and (electrical) power
• Increased threats of environmental instability, overfishing, piracy, ‘threat networks’, and ‘ungoverned urban spaces’
In 1990 there were only 24 cities in Africa with more than one million inhabitants. Today this number is 48 cities, of which Cairo and Lagos have more than ten million inhabitants each.
By 2025 there will be 300 million people
younger than 24 years in African cities – a
most potent political and cultural force on the
continent.
What does this mean for Africa?
• Stress on urban infrastructure
• Risk of appeal of populism
• Need to manage expectations
• Need to ensure rural growth
Yet her
generation has
the best
chance of
breaking out of
poverty
The demographic dividend
50
55
60
65
7019
60
196
5
1970
1975
198
0
198
5
199
0
199
5
200
0
200
5
2010
2015
2020
2025
2030
2035
204
0
204
5
2050
Working Age Population (% of total population)
World Sub-saharan Africa
The demographic dividend
50
55
60
65
7019
60
196
5
1970
1975
198
0
198
5
199
0
199
5
200
0
200
5
2010
2015
2020
2025
2030
2035
204
0
204
5
2050
Working Age Population (% of total population)
World Sub-saharan Africa
By 2050 Africa’s population of 2bn > India (1.6bn then) and China (1.4bn). One in 5 people and 1 in 4 workers globally will be African; and its population younger than all other regions. Already 19.7 African median age (29.2 Asia, 36.8 US, 40.1 Europe).
DRIVER TWO: Growth & Differentiation
Much has been achieved – - 40+ democracies - Range of donors and allies - Governance improved - Growth over 5% - More honest inward scrutiny - Commodities revival …
Much has been achieved – - 40+ democracies - Range of donors and allies - Governance improved - Growth over 5% - More honest inward scrutiny - Commodities revival …
Differentiation important phenomenon
Much has been achieved – - 40+ democracies - Range of donors and allies - Governance improved - Growth over 5% - More honest inward scrutiny - Commodities revival …
Much has been achieved – - 40+ democracies - Range of donors and allies - Governance improved - Growth over 5% - More honest inward scrutiny - Commodities revival …
Growth matters …
DRIVER THREE: Democracy & Conflict
0
5
10
15
20
25
Sub-Saharan African Conflicts
Conflicts
The potential
for social
destabilisation
exists
GDP Growth and Employment Trends
Despite the best growth decade on record, labour participation rates remained largely flat
Source: World Bank and International Labour Organisation
50
55
60
65
70
75
-1
0
1
2
3
4
5
6
7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
La
bo
r F
orc
e P
art
icip
ati
on
Ra
te
Gro
wth
(%
)
GDP Growth GDP Per Capita Growth
Labor Participation Rate (ALL) Labor Participation Rate (YOUTH)
50
55
60
65
70
75
-1
0
1
2
3
4
5
6
7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
La
bo
r F
orc
e P
art
icip
ati
on
Ra
te
Gro
wth
(%
)
GDP Growth GDP Per Capita Growth
Labor Participation Rate (ALL) Labor Participation Rate (YOUTH) 41
GDP Growth and Employment Trends
42
0
10
20
30
40
50
60
70
80
90
1998 1999 2000 2005 2006 2007 2008 2009
% V
uln
era
ble
Em
plo
yme
nt
Bo
th S
exe
s Vulnerable Employment by Region
Developed Economies inc EU
Europe Non-EU and CIS
East Asia
South-East Asia & Pacific
South Asia
Latin America & caribbean
Middle East
North Africa
Sub-Saharan Africa
World
GLOBAL PER CAPITA INCOME (PPP) & INCOME INEQUALITY
GLOBAL PER CAPITA INCOME (PPP) & INCOME INEQUALITY
‘The inherent vice of capitalism is the unequal sharing of blessings, the inherent virtue of socialism is the equal sharing of miseries.’
WINSTON CHURCHILL
Stressing
fragile
peace
More than 50% of post-conflict countries slide back to conflict within ten years
DRIVER FOUR: Resources
Africa’s Globalisation Link
Asian production &
savings
Commodity demand
Western consumer
demand
AFRICAN
COMMODITIES
BOOM
0
100
200
300
400
500
600
700
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Feb
-02
Jul-
02
Dec
-02
May
-03
Oct
-03
Mar
-04
Au
g-0
4
Jan
-05
Jun
-05
No
v-0
5
Ap
r-0
6
Sep
-06
Feb
-07
Jul-
07
Dec
-07
May
-08
Oct
-08
Mar
-09
Au
g-0
9
Jan
-10
Jun
-10
No
v-10
Ap
r-11
Sep
-11
Feb
-12
African Exports Track Commodity Prices
Africa total exports (USD milion) Commodity prices (CRB, 1967=100, Right scale))
0
100
200
300
400
500
600
700
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Feb
-02
Jul-
02
Dec
-02
May
-03
Oct
-03
Mar
-04
Au
g-0
4
Jan
-05
Jun
-05
No
v-0
5
Ap
r-0
6
Sep
-06
Feb
-07
Jul-
07
Dec
-07
May
-08
Oct
-08
Mar
-09
Au
g-0
9
Jan
-10
Jun
-10
No
v-10
Ap
r-11
Sep
-11
Feb
-12
African Exports Track Commodity Prices
Africa total exports (USD milion) Commodity prices (CRB, 1967=100, Right scale))
70+% African exports still oil & other minerals
0
100
200
300
400
500
600
700
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Feb
-02
Jul-
02
Dec
-02
May
-03
Oct
-03
Mar
-04
Au
g-0
4
Jan
-05
Jun
-05
No
v-0
5
Ap
r-0
6
Sep
-06
Feb
-07
Jul-
07
Dec
-07
May
-08
Oct
-08
Mar
-09
Au
g-0
9
Jan
-10
Jun
-10
No
v-10
Ap
r-11
Sep
-11
Feb
-12
African Exports Track Commodity Prices
Africa total exports (USD milion) Commodity prices (CRB, 1967=100, Right scale))
70+% African exports still oil & other minerals; 90+% Nigerian exports
DRIVER FIVE: Food
This is how she
has to cope
‘A hungry man
is an angry
man’.
Raila Odinga
Angola Ethiopia Niger
Benin Gabon Nigeria
Botswana Gambia Sao Tome and Principe
Burkina Faso Ghana Senegal
Burundi Guinea Seychelles
Cameroon Guinea-Bissau Sierra Leone
Cape Verde Kenya Somalia
Central African Republic Lesotho South Africa
Chad Liberia Sudan
Comoros Madagascar Swaziland
Congo, Dem Republic of Malawi Tanzania, United Rep of
Congo, Republic of Mali Togo
Côte d’Ivoire Mauritania Uganda
Djibouti Mauritius Zambia
Equatorial Guinea Mozambique Zimbabwe
Eritrea Namibia
Africa’s net food importers
Angola Ethiopia Niger
Benin Gabon Nigeria
Botswana Gambia Sao Tome and Principe
Burkina Faso Ghana Senegal
Burundi Guinea Seychelles
Cameroon Guinea-Bissau Sierra Leone
Cape Verde Kenya Somalia
Central African Republic Lesotho South Africa
Chad Liberia Sudan
Comoros Madagascar Swaziland
Congo, Dem Republic of Malawi Tanzania, United Rep of
Congo, Republic of Mali Togo
Côte d’Ivoire Mauritania Uganda
Djibouti Mauritius Zambia
Equatorial Guinea Mozambique Zimbabwe
Eritrea Namibia
Africa’s net food importers: 39 of 49
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000 Cereal Yields (Kg/Ha) in Developing Countries
East Asia & Pacific
Latin America &
Caribbean
Middle East & North Africa
South Asia
1961 2005
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000 Cereal Yields (Kg/Ha) in Developing Countries
Sub - Saharan Africa
East Asia & Pacific
Latin America &
Caribbean
Middle East & North Africa
South Asia
1961 2005
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000 Cereal Yields (Kg/Ha) in Developing Countries
Sub - Saharan Africa
East Asia & Pacific
Latin America &
Caribbean
Middle East & North Africa
South Asia
1961 2005
Just 20% of Africa’s 400m ha arable land currently cultivated
DRIVER SIX: Competitiveness, Skills & Technology
2000-2011: African internet usage in Africa grew 2,500%; global growth rate ten times less. In Nigeria, internet users went from 200,000 to 44 million during this time.
2000-2011: African internet usage in Africa grew 2,500%; global growth rate ten times less. In Nigeria, internet users went from 200,000 to 44 million during this time. Kenya’s M-Pesa service 14 million users in 5 years, moving 20% of value of GDP.
Result: Africans, natural connectors, will
increasingly have their lives shaped by global
and regional information and financial
exchange
What does this mean for Africa?
• Impact on expectations
• A linked diaspora
• Avenue to globalisation, good and bad
• Premium on skills …
The uneducated fall behind [picture of skills premium point]
Skills Premium
0
20
40
60
80
100
120
140
1970 1975 1980 1985 1990 1995 2000 2005
%
Gross primary enrollment
East Asia & Pacific
Latin America and Caribbean
Middle East and North Africa
South Asia
Sub-Saharan Africa
0
20
40
60
80
100
120
Net Enrollment Rate
Minimum Mastery
77
So, what’s the future look like?
78
Three Scenarios for Africa
79
Boom Times Continue High Commodity Prices Here to Stay
80
Boom Times Continue - China only $4000 pc income; domestic
demand – e.g. cars 1/10th of US levels.
- Chinese increased demand for copper 700,000t annually: same as Zambia.
- China raw material investments $340bn last five years, only $88bn mining.
81
The Cycle Turns Commodity Prices Cool
82
The Cycle Turns: Commodity Prices Cool
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
19
00
19
04
19
08
19
12
19
16
19
20
19
24
19
28
19
32
19
36
19
40
19
44
19
48
19
52
19
56
19
60
19
64
19
68
19
72
19
76
19
80
19
84
19
88
19
92
19
96
20
00
20
04
Selected Commodity Prices(1998 US$)
Iron ore
Oil
Copper
The Pattern of Cycles …
84
85
Boom Times Continue: High Commodity Prices are here
to Stay
86
Double-whammy …? US energy demands fall – through increased domestic supply and efficiencies, while China’s growth falls …
87
Double-whammy …? US energy demands fall – through increased domestic supply and efficiencies, while China’s growth falls … and/or … other new technologies appear altering demand for traditional resources.
88
Double-whammy …? US energy demands fall – through increased domestic supply and efficiencies, while China’s growth falls … and/or … other new technologies appear altering demand for traditional resources.
At nearly 8mb/d, the US is the world's largest importer of oil, ahead of China (6mb/d) and Japan (4.5mb/d). But down from nearly 13mb/d in 2006 due to …
89
Double-whammy …? US energy demands fall – through increased domestic supply and efficiencies, while China’s growth falls … and/or … other new technologies appear altering demand for traditional resources.
Lower demand (40% of reduction) plus increased domestic production: 1.5mb/d to 6.5mb/d since 2006.
90
Boom Times Continue: High Commodity Prices are here
to Stay Double-whammy …?
US energy demands fall – through increased domestic supply and efficiencies, while China’s growth falls … and/or … other new technologies appear altering demand for traditional resources.
Lower demand (40% of reduction) plus increased domestic production: 1.5mb/d to 6.5mb/d since 2006.
91
Africa’s Third Liberation? The Politics of Job Creation