ABIDJAN, Cote d’Ivoire – According to a recent report from the African Development Bank, one-third of African countries now have GDP growth rates of 6% or higher, while the costs of starting a business in Africa have decreased by more than two-thirds over the past seven years. The continent’s economy is now the fastest growing of any other continent, attracting investors across the globe.
Delays for starting a business have also been halved in recent years, eliminating barriers that prevented Africans from becoming entrepreneurs. The continent’s middle class is growing exponentially, containing roughly 350 million people who earn between $2 and $20 a day. The proportion of Africans living below the poverty line has fallen from 51% in 2005 to 39% in 2012.
Africa’s collective gross domestic product per capital reached $953 last year, and the number of middle-income African countries increased to 26 out of 54 total. AfDB’s report attributes this increase to the private sector, which reportedly “improved economic governance” and created a “better business climate.”
Higher levels of trade and investment also accompany the recent growth of the African economy. Foreign investment has increase fivefold since 2000, and continued improvements in areas such as the continent’s infrastructure and access to finance will facilitate growth in future years.
While the AfDB report remained optimistic about Africa’s growth, it pinpointed inadequate infrastructure development as a “major constraint” to further economic growth. Africa invests only 4% of its collective GDP into its infrastructure, while China invests 14%.
As Africa’s economy continues to grow, there remain inequalities between rural and urban populations along with instable states that have not seen the benefits of the growing economy.
Many Westerners remain hesitant about investing in Africa, fearing that its “golden age” has been overestimated. According to the Economist, nine out of 11 countries that are at “extreme risk” of experiencing a food crisis are African.
Regardless of the discrepancies that remain between Africa’s economic growth and its countries’ infrastructures, it is clear that Africa is on the economic rise. World Bank economist Wolfgang Fengler projects that “most of Africa will be middle-income by 2025,” positioned to become as alluring to investors as India and China were a decade ago.
– Katie Bandera
Sources: BBC, The Economist
Photo: Global Post