Beyond China: Why Africa Matters
Second, a related and more consequential factor will be the rise in productivity. Even discounting any possibilities of technological innovation or great investment (capital formation remains a challenge in Africa with most of its savings fleeing the continent), the simple demographic factor of falling Dependency Ratio should lead to this. At the current 80% Dependency Ratio, there are 80 people either in Under-15 or above-64 age groups for every 100 working age people, Only 56% of Africa's population is working age (compared to 67% in Europe today). But this dependency ratio will start falling dramatically from now on, reaching 70% by 2030 and 60% by 2050 (implying 62% working age population), resulting in, by simple maths, 1.3 billion working age people, up from today's 550 million. Combine with this the rapid urbanisation that we are seeing in some parts of Africa, and one gets the picture of a rapid rise of a vast consumer economy.
Indeed, Africa has enormous challenges, and I spoke about three of these. First is Agriculture, as Africa is the only continent which did not have a green revolution and it only uses a tiny fraction of its arable land. This is an urgent need, because depending on imported food when the population is doubling is a sure recipe for disaster. The second challenge is electricity, as 5% of Africa's GDP every year gets wiped out by electricity shortage. Africa can do it cheaply and sustainably, given its vast reserves of renewable energy sources, but it needs to be done to support its growing middle class population and urbanisation. And finally, Education - an essential ingredient to turn the population burden into demographic dividend - where the efforts in Africa remains fragmented. Indeed, the scare word here is 'vocational training': This has so far been a disaster wherever one chose to create this artificial category divorced from education. Yes, one needs to create professional skills at multiple levels in Africa, but we don't need one of those 'vocational training' drives which have come to mean modern workhouses to contain the poor.
So, this, in summary, was my view of Africa, a vast, rising continent, with exciting possibilities and potential tragedies cuddled together in a formation. This is the big one for the coming generation, as China has been for us.