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The Boom of Economic Growth in East Africa

economic growth in East AfricaIt is no surprise that the COVID-19 pandemic has dampened growth momentum worldwide. Nonetheless, it is expected for Africa to recover and experience continued economic growth. The launch of the 2021 African Continental Trade Area already shaped a very promising economic future for Africa that can amount to a $450 billion income gain by 2035. Contributions to this growth can be credited to the robust economic dynamics of East Africa. In terms of economic growth, Africa is expected to maintain a stable positive percentage. In 2019, East Africa remained the continent’s fastest-growing region with an average growth of 5%. Projected GDP growth in East Africa before COVID-19 was forecasted above 5%. The economic growth in East Africa is positively contributing to development in Africa overall.

East African Economies

Economic growth can be evidently demonstrated by looking at annual GDP in the last decade. Some of the main economic players of the region show steep upward directions. Notably, of the world’s top 10 fastest-growing economies in 2020, three are East African countries including Rwanda, Ethiopia and Tanzania. In the year 2019, Ethiopia and Rwanda placed second and third respectively. Ethiopia averaged a 10.3% growth as Africa’s fastest-growing economy from 2007 to 2017. For the same period, Rwanda followed closely with an average of 7.5%.

Increased Foreign Investments

In 2019, East African Foreign Direct Investment (FDI) inflow increased from $5.7 billion to $11.5 billion in just a year. Inflows to all East African countries except Tanzania increased during this time period. This 103% increase is largely due to China as East Africa’s largest investor. Chinese investment accounts for almost 60% of FDI inflow in East Africa. Investment is going into the technology, manufacturing and services sectors. FDI inflows created 89,877 jobs in 2018 and 211,084 in 2019. Employment increased in Uganda, Tanzania, Rwanda, Kenya, Burundi and South Sudan.

Economic Development Initiatives

Investment within the region has also increased from $152.7 million to $724.6 million. The number of projects supported by these investments increased by 23.3%. To take advantage of the high investment flow in the region, the East African Community (EAC) has placed incentives for development in related markets. The six-member countries of the EAC account for a sizable market of consumers for agricultural raw materials and other extracted goods. Additionally, the EAC provided necessary information and technology to increase opportunities for investment in the financial and banking sectors.

Looking Ahead

Income distribution, inflation and poverty conditions remain concerning for the region and were worsened by the COVID-19 pandemic. This means that to maintain growth and counter these chronic economic conditions, the region must implement policy that utilizes the available resources and supports economic growth.

The African Development Bank Group suggests accelerating structural transformation and strengthening the macroeconomic policy approach. This would address issues such as inflation and increase financing and trade. Another important policy recommendation is to invest in human capital. Developing a skilled workforce by starting with education for the youth and technology training will further promote innovative economic growth in East Africa and the African continent overall.

– Malala Raharisoa Lin
Photo: Flickr

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Wakanda Today: Black Panther Inspires Africa

Black PantherWhen Black Panther graced the big screen in 2018, it altered the landscape of the Marvel Cinematic Universe. Fans marveled at the rise of T’Challa, played by the late Chadwick Boseman. He claimed his birthright amid civil dispute and protected his people from colonization. Fans from every background admired their new hero and shouted “Wakanda Forever” upon leaving the theater.

In the wake of Chadwick Boseman’s death, Black Panther’s influence moved to the forefront of public conversation. At the same time, Marvel fans mourned the loss of their beloved hero and debated possible replacements for the title character, Black Panther-inspired Africa, to reassess its development strategies. Wakanda might be a fictional country, but the World Economic Forum claims it represents a technologically driven and socio-economically responsible vision for Africa.

An Ideal Africa

Wakanda embodies the United Nations 2020 Sustainable Development Goals as it presents an Africa with gender equality, no hunger, no poverty, good health, well-being and clean energy sources. While Africa cannot thrive on the fictional substance of “vibranium,” the World Economic Forum believes it can realize Wakanda’s “4.0 Globalization” by investing in its people, industries and governments. Here are three ways Black Panther is inspiring Africa’s development.

Youth Employment Opportunities

Like Black Panther, African communities see younger people as a developmental asset. T’Challa believed in youth, like his sister Shuri, and the African Development Bank Group does as well.

A 2019 study by the African Development Bank Group found 420 million unemployed young people in Africa, making them a valuable, untapped resource. The World Economic Forum suggested that Africa create over 130 million jobs for young people, doubling the number of opportunities currently available to spur economic growth across the continent. Indeed, the working-age population could increase productivity in industries, ensure economic prosperity and lower poverty rates.

Government Support of SMEs

Wakanda’s economy rivaled that of the most developed countries in our world. Again, “vibranium” will not stabilize African economics as it does not exist. However, the World Economic Forum believes that creating government-backed investment funds might ensure Africa’s economic prosperity.

African governments seem to be getting on board with this plan. They are investing in technological businesses as well as smaller SMEs, like startups. African governments already invested in SMEs within the agricultural industry, like FaLGates rice farms. They also funded healthcare SMEs, like Jamii Africa’s micro-health insurance group.

The World Economic Forum believes that investing in smaller companies could recycle and increase the African nation’s capital. The capital might never meet Wakanda’s gold standard, but it will improve Africa’s poverty rate and stimulate technological advancements.

Protecting Public Interests

Black Panther depicted an idealized version of politics. The film presented T’Challa as a leader who valued his citizens’ feedback and acted on their best interests. However, our political world does not always operate in this way, and corruption often surfaces.

The World Economic Forum claims that one-fourth of Africa’s GDP goes to “disguising” corruption. It suggests that governments become transparent about their programs and practices. Like Wakanda, African governments are fighting corruption and putting their people’s needs first. They are supporting medical programs and clean energy projects.

Black Panther projected a bright future for the African continent: one without poverty, disease or corruption. It also gave hope to a new generation of comic book fans. Chadwick Boseman’s passing once again prompted fans to cry, “Wakanda Forever.” However, Africa’s youth employment opportunities, SME investments and public interest projects will help it realize Wakanda today.

– Kyler Juarez
Photo: Wikimedia Commons

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African Development Bank Group’s Global Strategies

African Development Bank Group's Global StrategiesA large part of poverty strategies is implementing some kind of spur in economic growth. This kick-start can be a gateway to social and economic reform in some of the poorest countries in the world, eventually leading to self-sustainability. The African Development Bank Group has made it their mission to place poverty reduction back into the hands of Africans and to create a stimulus that can enable the extremely poor in reducing their poverty scores.

The African Development Bank Group was born out of three different economic groups in Africa. It has set a plan that began in 2013, targeted to reach major benchmarks by 2022. The group has recognized that Africa has begun a transformative journey and progressed greatly over the last decade, yet this progress remains markedly uneven in some areas of the continent. This particular organization relies on a few major objectives to help lift regional member countries out of poverty, while staying congruent with ideals and values. The group first aids by mobilizing and allocating a country’s resources, then provides advice and guidance on technical aspects for development efforts. The African Development Bank Group has also laid out 17 sustainable development goals in order to achieve its mission. These goals include food security measures, sanitation, healthcare, sustainable energy use and procurement, social equality across gender and age gaps, economic growth and stability and ecological preservation plans.

The holistic approach to poverty reduction through economic growth and sustainability is what sets apart the African Development Bank Group. While taking advantage of models such as the World Bank and Multilateral Development Banks, The African Development Bank Group is able to remain primarily domestically-reliant and position itself in such a way as to gain more traction as the 2022 goal nears. Balance sheet optimizations have been a key focus in doing so, as projects continue to be carried out in both the private and public sectors through multilateral funds involving developed countries. The group’s procurement procedures – unlike other bank methods – involve strict standards. These include investments in member countries whose approval processes ensure that procurements are in line with the values and mission of The African Development Bank Group.

– Casey Hess

Photo: Flickr