The strong growth in Africa in recent years needs to be put into perspective. Indeed, the continent’s demography and unequal distribution of wealth undermine the expected impact. This growth does, nevertheless, generate a surplus. Its conversion into sustainable development now needs to be optimized by sound investments, as well as global, proactive and coordinated balancing strategies.

© Carsten ten Brink
© Carsten ten Brink

Population growth: a barrier to economic takeoff?

According to the World Bank, in 2012, Burkina Faso, a Sahelian and landlocked country, recorded a real GDP growth rate of 9.54%, giving rise to hope and enthusiasm. This figure is also in line with the acceleration of growth gains in Africa since the early 2000s and therefore confirms a promising trend, provided the political environment remains favorable and stable.

However, GDP is not the only aggregate to have seen a long-term increase. Population growth has also accelerated in a number of countries where the demographic transition has only started recently. Consequently, half of the growth gains between 2004 and 2013 have been absorbed by the population increase in Burkina Faso.

Based on the assumption that the capacities of the State increase in proportion to its GDP, it is indeed recognized that the economic growth consumed (in the form of public expenditure) must be on a par with population growth in order to provide the current services to new users with a constant quality (demographic investments). The surplus can then be earmarked for improving living conditions. Compared to a scale of 50 years, this difference, which is equivalent to the GDP per capita growth rate, stands at approximately 2% a year.

 

By way of comparison, in order to achieve the level of activity that it generates today, China experienced an annual GDP per capita growth of 7.92% over half a century.

Quantitatively, while population growth has accelerated, economic activity has proportionately increased more rapidly, especially since the 1990s. There is nevertheless the pervasive risk that any decline in growth will be synonymous with impoverishment if there is no demographic transition. Conversely, at the same level of growth, a more effective control over demography would generate a greater differential to devote to development (demographic dividend), as was the case in Asia.

 

Qualitatively, while Asian countries have recorded a GDP per capita growth about twice that of Burkina Faso over the last 50 years, the increase in the Human Development Index has been 2.5 times higher – or even more, as it is difficult to generate an HDI point when you approach the highest ranking. Consequently, at equal capacities, Asian countries appear to have used their growth differential more effectively in order to bring about an improvement in living conditions.

 

The initial question brings out 4 strong trends:

  • Africa, studied from the angle of Burkina Faso, generates growth that is conducive to its development
  • The level of economic activity remains too constrained by population growth for the development to be as rapid as in Asia
  • The prerequisites for economic takeoff are to maintain strong growth rates and control the population increase
  • These conditions are, however, still insufficient without a wise use of growth gains in order to convert them into sustainable development

 

Population benefits unequally from growth gains

Faced with the imbalances between territories, public policies struggle to react in a proportionate manner to needs. They neglect action on the root causes of problems and opt for superficial reforms. If governments do not take the profound and rapid changes experienced by Africa into account, they run the risk of exacerbating tensions between communities and of squandering the hard-won growth gains.

The large capital cities would indeed appear to be the main beneficiaries of economic growth and Foreign Direct Investments, without all urban dwellers necessarily seeing an improvement in their living conditions. In cities, buildings spring up and infrastructure constructions follow on one after the other. Yet this strong activity is conducted at the expense of a massive rural exodus, which is higher than the capacity and budgets of cities. It cuts the lifeblood of rural areas, which become less attractive, thus increasing the cycle of exodus.

For example, the population of Conakry is increasing at an extremely rapid rate of 6% a year, double the national population growth. Investments cannot keep up with this pace due to the lack of sufficient management capacities, assuming funds are available. 50% of the population is concentrated in 1% of the territory of Guinea, to the extent that the Urban Planning Department has estimated that 250,000 housing units are needed (and as many related facilities) in Conakry for the next 5 years.

 

Urban concentration is also not synonymous with economies of scale. The developments that need to be designed in a saturated territory require complex technical studies and consultation with the territorial authorities, which consume a lot of resources and time. The urgency of the situation in the economic capital is consequently the focus of attention and budgets, and in order to maintain the pace, constructions are often poorly built or inappropriate. In addition, there are only meager resources left for the regions, which are relatively less constrained by population growth, but are traditionally less equipped with infrastructure.

There is a similar paradox from a social perspective: lack of human resources and shortages in rural areas, despite the wealth of the land, mass unemployment and unhealthy sanitary conditions in cities.

In addition to these observations, there are, of course, problems of corruption, political instability and decisions that run against priorities, which deviate resources from the use where they would be the most effective.

 

How tobalance development”?

Halting the momentum requires planning medium-term rebalancing investments via the following courses of action:

  • Develop a forward-looking strategy for land-use planning, striking a balance between population dynamics and economic potential promoting the emergence of complementary territorial centers:
    • Atraction of investments in the regions (growth poles, establishment of free trade zones)
    • Incresed value-creation by local communities (planning and development of local land in order to increase production, productivity and employment)

Recently, governments have been able to raise considerable amounts of money from the international community by asserting a clear and coordinated vision of their territorial development: Burundi, Guinea, Ivory Coast…

  • Empower economic actors in remote areas: development of complementary activities to the agribusiness value chain, facilitation of entrepreneurship, support to mesofinance solutions, decentralization of administrative services, provision of education and training based on the needs of SMEs and entrepreneurs…
  • Capitalize on diasporas. The regions of exodus have lost workers who have left them, but can benefit in return from a considerable diaspora. The resulting remittances are, however, mainly used in a non-productive manner, whereas all economic opportunities sometimes need is a small start-up capital and/or the return of experienced entrepreneurs.

The distribution of growth gains must promote inclusive development in Africa, reaching all territories and all generations, in order to ensure a stability that will continuously support this momentum. The emergence of a middle class suggests that incomes are generally increasing, but do they have sufficient dissemination and growth to prevent inequalities from widening?

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