At the end of May in Mozambique’s capital city of Maputo, the International Monetary Fund (IMF) and government of Mozambique hosted a two-day conference involving leaders from a broad spectrum of government, non-governmental organizations, and the private sector, with attendees hailing from across the continent and globe. The theme of the conference — “Africa Rising” — sought to highlight the continent’s economic growth since a similar conference occurred five years ago in Tanzania during the shadow of the global financial crisis. The issues discussed during the Africa Rising conference provide insights into how global leaders — particularly at the IMF — view the continent’s economic strengths and weaknesses, as well as the key data points that help to inform their perspective.
In her keynote address at the conference, the IMF’s Managing Director, Christine Lagarde, observed that more than two-thirds of sub-Saharan African countries had achieved a decade or more of interrupted growth, a noteworthy feat given the backdrop of the 2008 global financial crisis. Ms. Lagarde also emphasized the continent’s increasing appeal as an “investment destination,” adding that in 2014, Africa expects to benefit from more than $80 billion in investment across its emerging and developed economies. Playing off the “Asian tiger” theme that emerged in the 1990s to describe the rapidly expanding economies in South Korea, Singapore, Hong Kong, and Taiwan, Ms. Lagarde characterized Kenya, Uganda, and Botswana as “Africa’s lions.”
Ms. Lagarde contrasted this core evidence of growth with potential hurdles, both near- and long- term. After noting that the continent still has an “unacceptably high” poverty rate of 45%, Ms. Lagarde identified three near-term hurdles to continued economic growth in Africa: “ slower growth in advanced economies . . . ;  lower prices for some commodity prices; and (3) tightening external financial conditions and potentially increased market volatility as monetary policy is normalized.” These three areas confirm that Africa is inextricably linked to the broader, global economy, and to issues such as Europe’s continued slow economic growth and the Federal Reserve’s treatment of interest rates.
With respect to the longer-term challenges to economic growth, Ms. Lagarde pointed to three core areas: demographic, technological, and environmental. Of these, the data underlying Africa’s demography are most striking — by 2040, Africa is projected to have the world’s largest labor force (one billion), which will be “more than India and China combined.” This enormous pool of human capital has the potential to serve as an engine for economic growth — with Ms. Lagarde later citing a study that a one percentage point increase in the working age population can boost GDP growth by 0.5 percentage points — or civil unrest.
Finally, Ms. Lagarde identified three opportunities for maintaining and creating economic growth. First, she pointed to the need to build Africa’s infrastructure, and particularly its “energy, roads, and technology grids.” The following examples illustrated her point: Africa’s economy has grown significantly over the past decade (an overall rate of 5.5% since 2009), but its per capita output of energy has failed to keep pace (remaining flat); and less than 20% of the continent’s roads are paved, as compared to almost 60% in Asia. Ms. Lagarde identified a number of countries that are devoting resources to infrastructure — including energy investments in Mozambique and Ethiopia, for example — but noted that the region required total yearly infrastructure investment of $93 billion. Second, Ms. Lagarde called for a continued commitment to building Africa’s institutions — namely, “governance, transparency, and sound economic frameworks.” She framed her discussion on this point around the mining sector and the fact that Africa is home to 30% of the world’s mineral reserve. Ms. Lagarde sounded a familiar theme when she observed that this natural wealth offered an “unparalleled opportunity for economic growth and development,” but too often had been captured by the few instead of benefitting the many. And third, Ms. Lagarde reframed the long-term demographic challenges by stressing the need to build the continent’s people, and particularly its women. Here, the intersection of data and broader trends in development was noteworthy — Ms. Lagarde explained that less than one-fifth of Africans work in the “formal sector,” but that technological advances were improving opportunities to do so. In Kenya, for example, more than 75% of the population currently has access to financial services due to the prevalence of mobile banking using the country’s broad cell phone network.
The next five years will determine whether the Africa Rising theme from this year’s conference sticks or if intervening events dictate a new moniker.