Economic Development

Economic growth indicators in Sub-Saharan Africa and their future expectations are positive

90% of the economy

African women maintain 90% of the informal economy. African women work and, increasingly, take the initiative. However, their contribution to economic growth, which is usually made through the so-called informal economy, is not visible and therefore not appreciated. Women do not get equal access to resources, technology and training. According to the FAO, simply overcoming the gender gap in agriculture would lead to a reduction of over 100 million fewer people going hungry.

Improving society

Strengthening women's entrepreneurship, promoting entrepreneurial networks, setting up training centres and promoting women's access to formal employment will be sources of growth for the whole of society.

According to the World Bank (WB), in 2012 the whole region grew by 5.3% (the world average was 3.3%) and Africa could be about to see a similar economic takeoff as in China in the 80s. The International Monetary Fund predicts that in the coming years, 7 of the 10 economies with most growth in the world will be in this region.

This economic growth is sustained largely by wealth in terms of minerals and hydrocarbons (oil-exporting countries grew by 6.7% in 2012) and in the high prices for raw materials, fuelled by demand from China and other emerging powers. It is estimated that Africa, and in particular Sub-Saharan countries, accounts for 30% of global mineral resources. In the case of uranium, platinum, diamonds and gold, the estimates are over 50%.

China has become a key player, with progressively more influence on various African economies. China’s energy and mineral resource requirements act as the engine of a strategy with no political conditions. This results in soft loans of billions of dollars to numerous regimes in the region in exchange for supplying energy, minerals and infrastructure development, among other aspects. China has become the largest trading partner: in the last decade, trade with African countries rose from 11 to 166 billion dollars.

According to the WB, economic growth in Sub-Saharan Africa has led to a significant reduction in poverty: between 1996 and 2010, the percentage of Africans living on less than $ 1.25 went from 58% to 48.5%. The countries that have grown faster thanks to oil and minerals have worse rates of poverty reduction than those that do not have such a large amount of these resources. This is the case in countries such as Equatorial Guinea and Nigeria, where there has also has been a corresponding increase in socio-economic inequalities. In other countries, such as Gabon and Angola, there has even been an increase in extreme poverty, in contrast to their economic growth.

The massive flight of capital and revenues to tax havens by multinationals are two crucial factors for these countries’ economies. By some estimates, for every dollar of Official Development Aid, there are another $10 leaving these countries in the aforementioned ways. Instability and conflict (as in Mali and the Central African Republic today) also determine the possibilities and potential for sustainable growth.

On the other hand, the growth data continues to contrast sharply with human development indicators:

the UNDP HDI places 34 Sub-Saharan countries among the last 40 countries in the world (not including South Sudan, for which there is no data). And there are the huge inequalities: the region is home to 6 of the 10 countries in which there is the greatest inequality in the world (with its economic giant, South Africa, at the top). Infrastructure is also crucial. Although some progress has been made (with China as a major player), the deficits are enormous. Moreover, despite its huge wealth in terms of energy, including great potential for renewable energy, Sub-Saharan Africa (with over 800 million people) has a power generation capacity - with poor supply in many countries and high prices - equivalent to that of Spain (with 45 million inhabitants).

Despite the good expectations from international players with liberal economic approaches, who base their expectations on GDP growth, macroeconomic improvements and increased trade, many experts are warning that sustainable economic development urgently requires a reduction in inequalities, proper management of revenue from natural resources to benefit the population, and a form of industrialisation that brings added value to Sub-Saharan economies through processing and manufacture.

The African Development Bank also warns that the growth is excessively concentrated on commodities and extraction industries, without creating employment opportunities for most of the population, especially young people (70% of the population are under 30), considering the urban growth.

Many voices are also being raised against trade liberalization. Coalitions of developing countries, such as the G33 and NAMA11 in the World Trade Organization, are demanding later deadlines for dismantling tariffs and a greater margin for their customs policies. The Africa Progress Panel (led by Kofi Annan) has expressed concern over the Economic Partnership Agreements put forward by the European Union, which involve the removal or reduction of tariffs affecting 80% of African imports from European countries.

The path for economic growth measured by GDP will not generate sustainable growth and widespread prosperity for the whole population if measures are taken that exclude some people, or policies that are not equitable, or basic social services are not substantially improved or jobs are not created (in addition to the aforementioned measures regarding development in terms of industry and infrastructure, among others). In 2030 it is estimated that 50% (37%, according to 2009 data) of the population will live in urban areas (whose size is expected to be three times the current size by 2040). This data needs to be taken into account with the fact that 70% of the current population is younger than 30 years of age, with a very high unemployment rate.

 

The Situation of African Women

In this context, African women’s contribution to the household economy, systems of food production, and national economies in general, is being increasingly recognized. Women continue to predominate in the informal sector, where they cover a wide range of activities, particularly those relating to trade. They constitute 70% of the people implementing transnational trade activities, generating about $18 billion annually in the Sub-Saharan African economies. However, most of the policies implemented by governments have ignored these contributions, so that the women who do these tasks work with little or no institutional support.

More than half of the employed women work in agriculture, particularly subsistence agriculture on small plots. The role of women is crucial as regards food security, since women produce 80% of the food in Sub-Saharan Africa. However, their access to land, training or tools and agricultural technology is still very limited.

In the official economy of Sub-Saharan Africa, women are usually found in export industries (textiles and clothing), as well as in food production. In the service sector, they do jobs such as nursing, teaching or secretarial work, while they are still underrepresented in technical occupations such as engineering or information technology.

Access to credit is very limited for women working in the informal sector, doing activities that are not usually covered by official demand. In addition, women do not usually have property that meets the requirements of the financial institutions when granting loans. Thus, various international institutions (UN Women, the World Bank, etc.) and NGOs are working on a regional and national level to promote women's economic empowerment: business training programmes, micro-credit programmes, financial aid, etc. These institutions also work to remove other barriers such as trade policies and regulations that hinder women's access to markets.

Women's contribution to economic development in Sub-Saharan Africa cannot be employed to its full unless government policies and their instruments (fiscal, monetary, etc.) take these activities into account and address them taking gender into consideration.

 

 

Author: African Studies Group at the Autonomous University of Madrid