The Rise of Optimism in Africa

The Rise of Optimism in Africa

The Rise of Optimism in Africa

For many decades, Africa has been regarded as the poorest continent in the world. Although significant challenges face the future development in Africa, a rise of optimism in several countries in the continent support the development and vision that the continent holds.

A study conducted by the Pew Research Center demonstrated that there is a rise of optimism and hope for future generations in Africa, especially in terms of health care and education. The conclusions were supported by a survey asking respondents whether the next generations will grow in better or worse conditions than the previous ones.¹

Although quantitative figures such as the slower GDP growth rate in Africa can portray a very different picture about the continent’s future economic state, its overall economic outlook is better than that of Europe and the Middle East.

The optimist views reported in African nations correlate with the sustained growth that the continent has been experiencing over the past 14 years. Although the growth rate has been lower between 2010 and 2015 (3.3% per year) compared to the period from 2000 to 2010 (5.4% per year), 40% of Africa’s GDP has been generated by economies with accelerating yearly GDP growth.²

The sustained growth and advancements that Africa has been experiencing in the past decade started in the 90s. African countries implemented several macro-economic and political reforms that led to a change in the political, economic and regulatory environments.

The heathier macro-economic situation in many parts of Africa has significantly decreased budget deficits, foreign debt and inflation. Moreover, these macroeconomic policies focused on increasing Africa’s international trade, with its largest trading partners being China and the EU.³

Economic and political reforms in the continent, such as the strengthening of the legal system and the increasing privatization of state-owned companies, have also played a major role in improving the regulatory environment for doing business. These structural changes stimulated markets and commerce and led to an increased level of investment and willingness to do business in Africa, a substantial increase in disposable income, and a developing tertiary sector. All of these factors and positive changes could explain the optimism observed among African citizens.³

Furthermore, evidence suggests that there is a positive future ahead for Africa in the next 50 years. A report published by the African Development Bank provides insights about the potential growth Africa is most likely to experience in the coming years based on the improvements and reforms made in the past decades. With the continent having abundant natural resources, combined with the economic reforms and improved political state, many African nations are attracting emerging economies such as China and Brazil that have spotted the investment potential in the continent. These advancements suggest that Africa will profit from its dynamic social and economic conditions, which would go in line with its projected positive future.⁴

Additionally, from a different standpoint, research indicates that the citizens’ optimism and positive views about their country’s future, positively correlates with economic growth. An article published by Bloomberg argues that pretending to be optimistic is still better for the economy than being pessimistic about a country’s long-term prospects, suggesting that optimistic people work harder, are more confident and live longer, which in turn positively affects business decisions.⁵

Despite many predictions supporting uncertainty in Africa, the circular causation between the effect of growth on increasing optimism and optimism on furthermore increasing economic growth, suggests that Africa’s future seems in good hands and holds opportunities for development. One might argue that exact predictions would be hard to guarantee, however, it is undeniable that Africa is on the road to change.

Sofia Hazim, Analyst at Infomineo. Learn more about Sofia. 

Sources:

[1] Katy Scott, Optimism is rising in Africa, here’s why, (Dec 2016)

Link: http://edition.cnn.com/2016/12/16/africa/optimism-in-africa/

[2] Georges Desvaux and Acha Leke, Africa’s future? There’s a case for optimism, (Sep 2016)

Link: http://www.iol.co.za/capetimes/business/africas-future-theres-a-case-for-optimism-2068354

[3] Ernest & Young, Africa 2030: Realizing the possibilities, (2014)

Link: http://www.ey.com/Publication/vwLUAssets/EY-Africa-2030-realizing-the-possibilities/$FILE/EY-Africa-2030-realizing-the-possibilities.pdf

[4] African Development Bank, Africa in 50 Years’ Time, The Road Towards Inclusive Growth, (Sep 2011)

Link:https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Africa%20in%2050%20Years%20Time.pdf

[5] Charles Kenny, How Optimism Strengthens Economies, (Jan 2015)

Link: https://www.bloomberg.com/news/articles/2015-01-08/how-optimism-strengthens-economies