The Next Big Thing? The Changing Face of Africa and its Implications for Australia

1
The Next Big Thing?The Changing Face of Africa
and its Implications for Australia

• Scott Featherston
• 17 November, 2010
• Lowy Institute, Sydney, Australia

2
Why are people now excited about Africa?
3
Strong Economic Growth
GDP and GDP/Capita Growth Rates for Sub-Saharan
Africa 1960-2011
forecast
20 lost years
A New Africa?
Early optimism
Source World Bank Development Indicators, IMF
4
Growth that is Diversified
Compound Annual Growth Rate ()
Sector Share of Change in Real GDP, 2002-07 (100
US235 billion)
6.9
7.3
8.7
5.9
7.5
3.9
8.0
4.6
7.8
5.5
6.8
7.1
Source McKinsey Global Institute
5
Middle Class Growing, Poverty Reducing
Forecast Family Annual Incomes (2000 2020)
163m
196m
244m
Families
Global (gt20,000)
Middle class (gt10-15,000)
350m new global, middle class, and emerging
consumers between 2000 to 2020 (285m people to
634m)
Emerging middle class (gt5-10,000)
Basic consumer (gt2-5,000)
Destitute (lt2,000)
60m pulled from extreme poverty from 2000 to
2020 (277m people to 220m)
Source McKinsey Global Institute
6
Demographic Trends Growing and Young
Working Age Population (15-64 years
old) (Percentage of total population, 2000-2050)
Population Growth Projections (1950-2050)
Africa
India
China
Europe
North America
Source United Nations World Population Prospect
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Whats driving this growth?
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Wars and Civil Unrest 1970 to 2010
Libya War with Chad, 1980-87
Chad Civil War, 1965-1979
Central African Republic Civil War, 1980s and
1990s
West Sahara Moroccan War, 1975-1991
Sudan Civil Wars, 1955 - present
Eritrea War of Independence, 1958-1991
Burkina Faso Sankara Coup, 1980s
Ethiopia Civil War, Wars with Neighbours,
1977-2000
Senegal Casamance War, 1982-2004
Somalia Civil War, 1991-present
Sierra Leone Civil War, 1990-2002
Uganda Anti-Amin/The War in the Bush,
1971-1985
Liberia Civil Wars, 1989-2003
Kenya Tribal Conflict, 2007
Cote dIvoire Civil War, 2002-present
Rwanda Civil War and Genocide, 1991-1996
Nigeria Civil War/Unrest Delta, 1966-present
Congo (Brazzaville) Civil Uprising, 1997-1999
Burundi Civil War, 1993-2005
Zimbabwe Civil Unrest, 1965 - present
DRC Civil War, 1998-present
Angola Civil War, 1975-2002
Mozambique War of Independence and RENAMO War,
1964-1992
Namibia War of Independence, 1964-1990
South Africa Anti-Apartheid, 1948-1994
1970 1975 1980 1985 1990 1995 2000 2005 2010
Active Wars 8 11 13 14 15 12 12 6 5
Source GlobalSecurity.org
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Wars and Civil Unrest Today
Sudan Civil Wars, 1955 - present
Somalia Civil War, 1991-present
Cote dIvoire Civil War, 2002-present
Zimbabwe Civil Unrest, 1965 - present
DRC Civil War, 1998-present
Source GlobalSecurity.org
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Improving Macroeconomic Conditions
Inflation ()
Public Debt ( of GDP)
-28
-64
Public Budget Deficits ( of GDP)
Labour/Productivity Growth ()
60
Source McKinsey Global Institute
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Microeconomic Reform
Share of African Countries Improving the Business
Environment (percent)
Acceleration in Real GDP, 2000-08 versus
1990-2000 (percent)
2.1
Source McKinsey Global Institute
12
Growing and Diversifying Capital Inflows
Composition of Private Financial Flows (US
billion)
Concentration of Gross Private Inflows ( of
total and excluding South Africa)
Sub-Saharan Africas share of total global flows
6.0
4.1
Source IMF, Regional Economic Outlook
13
Improving Political Rights and Civil Liberties
of Free, Partially Free, and Not Free States in
Sub-Saharan Africa
Political Rights and Civil Liberties
in Sub-Saharan Africa
Europe PR 1.1 CL 1.2 Middle East PR 5.7 CL
4.9 Americas PR 2.2 CL 2.4 Asia-Pacific PR
3.5 CL 3.4
world comparison
32
22
46
Source Freedom House
14
Improving Corruption? Perhaps.
of People Who Reported Paying Bribes (2005
versus 2009)
of People Who Felt Their Governments
Anti-Corruption Efforts to be Effective (2007
versus 2009)
Not recorded
Source Transparency International
15
Is Africa the Next Big Thing?
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Not Compared to Other Big Things
Average Growth Since Initial Take Off for
Previous Big Things (Maximum 20 years, Percent)
Time it Takes to Progress, Depending on Average
Growth per Capita Achieved (Years)
1961-1981
1950-1970
1980-2000
1966-1986
1992-today
1995-today
1995-today
1995-today
Source World Bank Development Indicators, Growth
Commission
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The Next Big Thing?The Changing Face of Africa
and its Implications for Australia

• Scott Featherston
• 17 November, 2010
• Lowy Institute, Sydney, Australia

18
Human Capital Education
Secondary Schooling developing countries only,
apart from OECD (Gross enrolment, Percent)
Tertiary Education developing countries only,
apart from OECD (Gross enrolment, Percent)
Source World Bank Development Indicators
19
Human Capital Health
Life Expectancy developing countries only,
apart from OECD (Years)
Infant Mortality developing countries only,
apart from OECD (deaths per 1,000 infants born)
Source World Bank Development Indicators
20
The Next Big Thing?The Changing Face of Africa
and its Implications for Australia

• Scott Featherston
• 17 November, 2010
• Lowy Institute, Sydney, Australia