Africa's rapid economic transformation

Thirty years ago, Africa was synonymous with war, famine and poverty. That narrative is clearly outdated. The living standards of Africans are rising remarkably fast, also thanks to the country’s agricultural growth and the development of rural-urban value chains. Our authors are convinced that improving education and entrepreneurship will ensure that the region’s progress is irreversible even as it confronts COVID-19.

 

Participants of a training at the Digital Transformation Center Kigali, Rwanda. © Mali Lazell, GIZ
Participants of a training at the Digital Transformation Center Kigali, Rwanda. © Mali Lazell, GIZ

Thomas Jayne

Thomas Jayne is University Foundation Professor of Agricultural, Food, and Resource Economics at Michigan State University. Jayne is a Distinguished Fellow of the Agricultural and Applied Economics Association (AAEA) and the African Association of Agricultural Economists. His research identifies emerging trends driving transformation in African agrifood systems. Over the past decade, he has received six research excellence awards, including the 2009 Outstanding Article Award in Agricultural Economics and the 2017 AAEA Bruce Gardner Memorial Prize for Applied Policy Analysis. In 2019/20, Jayne serves as senior advisor to the President of the African Development Bank.

Adesoji Adelaja

Adesoji Adelaja is Professor in Land Policy at Michigan State University (MSU). His research span the areas of Agricultural Development, Land Policy, Regional Development, Food Policy and Renewable Energy Policy. He founded and directed several research centers and institutes, including the Food Policy Institute (Rutgers) and the Land Policy Institute (MSU). On leave from MSU, Adelaja recently spent five years as Special Adviser on Economic Intelligence at the Nigerian Presidency. Adelaja is a fellow of the Agricultural and Resource Economics Review  and has been active on corporate boards in the food, agriculture, pharmaceuticals, investment banking and information technology sectors.

Michigan State University

Richard Mkandawire

Prof. Richard Mkandawire is a Socio-economist and a Rural Development expert. He is currently the Africa Director of the Alliance for African Partnership (AAP), and Chairperson of the Malawi Planning Commission. Before joining AAP, he worked as Vice President of the African Fertilizer and Agribusiness Partnership where he led a team of experts in driving innovative interventions for efficient and effective delivery of fertilizers among smallholder famers in Africa. In 2012 the University of Pretoria appointed him as “Extra-Ordinary Professor” for his contribution to spearheading agriculture transformation in Africa. Prof Mkandawire has over the years published extensively in agriculture development policy and related areas.

Alliance for African Partnership

This article first appeared in Rural21 Vol. 54 No. 2/2020 on: Employment for rural Africa and is part of a media cooperation between weltohnehunger.org and Rural 21.

 

In the 1980s, most Africans lived in rural areas that were socially and economically isolated from the rest of the world, had no more than primary school education, and were mostly engaged in semi-subsistence farming. Poverty and malnutrition were rampant and life expectancy was under 50. It is almost mind-boggling how rapidly Africa’s conditions have changed. Today, 48 per cent of Africans have a secondary school education, and 10 per cent of college-aged Africans are attending universities. Poverty rates have declined significantly since 2000. The share of people in sub-Saharan Africa (SSA) living on less than 1.90 US dollars (USD) a day declined from 58 per cent in 2000 to 41 per cent in 2015. Over the same period, the proportion of Africans making more than 5.50 USD per day rose from 10 per cent to 15 per cent, as recent World Bank figures suggest. Most Africans are now engaged in off-farm employment that provides considerably higher living standards than farming (Tschirley et al., 2015; Yeboah and Jayne, 2018).

 

For the majority of the region’s population, living standards have clearly risen. Girls have experienced remarkable improvements in primary and secondary education. Women have become considerably more active in labour markets and are gaining greater influence over household resources in many areas (Oduro and Doss, 2018). Nutritional indicators also show gradual but clear improvement (Masters et al., 2018). Of all regions, SSA gained the most in average life expectancy, which is now 64 years. Governance has improved, albeit unevenly across countries.

 

Agriculture and agrifood systems are powering Africa’s transformation

Agricultural growth enabled SSA’s labour force to gradually diversify into off-farm employment. Since 2000, sub-Saharan Africa has achieved the highest rate of agricultural growth of any region throughout the world. According to the World Bank Developing Indicators, SSA experienced an annual inflation-adjusted increase of 4.6 per cent in agricultural growth between 2000 and 2018, roughly double that of the prior three decades. When agriculture grows, its extensive forward and backward linkages with agri-value chains and non-farm sectors expand employment and income growth more broadly. Since 2000, SSA has been the world’s second-fastest growing regional economy, exceeded only by Asia. The region’s per capita GDP increased during this period by almost 35 per cent in real terms, doubling in some countries (Barrett et al., 2017). These trends have fuelled employment opportunities in off-farm stages of the agrifood system, and especially in non-farm sectors, creating more diversified regional economies.

 

The next generation of African billionaires will be farmers.

 

Africa’s agricultural growth has been catalysed by a growing class of commercialised, entrepreneurial and relatively well educated African farmers (Jayne et al., 2019). Parts of sub-Saharan Africa are witnessing profound changes in farm size distributions. “Medium-scale” farm landholdings of five to 100 hectares now account for 30 per cent or more of national area under cultivation in many African countries, and this share is rising in countries with substantial unutilised land (Jayne et al., 2016). Over roughly a decade starting in the early 2000s, the value share of national marketed crop output accounted for by medium-scale farms rose in Zambia from 23 per cent to 42 per cent, in Tanzania from 17 per cent to 36 per cent, and in Nigeria from 7 per cent to 18 per cent (see Figure on page 16). Of the additional value of national crop output during this period in Ghana, Tanzania and Zambia, medium-scale farms accounted for at least 45 per cent of growth in each country (Jayne et al., 2019). Perhaps ironically, the amount of land acquired by this category of African farmers since 2000 far exceeds the amount of land acquired by foreign investors (Jayne et al., 2014a). This might be considered a surprising development, but in retrospect, perhaps it should not have been. The dramatic rise in global food prices after 2007 initiated major foreign investment in African farmland. Why shouldn’t African investors have done the same?

 

Agricultural growth has also synergistically coevolved with the rapid development of value chains that link farmers to Africa’s growing urban areas. The wealthiest African today built his fortune on the back of agriculture by pioneering large-scale production in sugar, flour, beverages and other food products. No wonder the President of the African Development Bank, Dr Akin Adesina, recently predicted that the next generation of African billionaires will be farmers. Powered by rapid population growth, rising incomes and urbanisation, the size of Africa’s agrifood systems by 2030 will reach 1 trillion USD. Not surprisingly, small and medium-scale enterprises in agrifood systems are an important part of the region’s development. And unlike in prior decades, it is educated, savvy and capitalised Africans who are leading the charge.

 

How sustainable?

At the same time, the pace of transformation has been highly uneven across the region. Valid questions arise regarding whether the transformation narrative will falter, whether it has been sustained by primary commodity price booms, and whether transformation is occurring without industrialisation or poverty reduction. Indeed, some countries’ performance may justify these concerns, while many others do not, highlighting the widely varying pace of transformation in the region.

 

To assert that Africa is rapidly developing is not to assert that life is rosy for everyone. Sub-Saharan Africa remains the poorest region of the world. But at least most key indicators of livelihoods have consistently moved in the right direction for several decades now. So, as Africans mobilise to tackle the region’s many sobering challenges, it is not constructive to hold on to the “doom and gloom narrative” from the 1980s and 1990s, especially when Africans themselves have never been more optimistic about the future and vibrancy of the region, as the latest Africa Youth Report states.

 

While these trends point to SSA’s remarkable development progress over the past several decades, one might question how sustainable they are. We believe that Africa’s long-term progress is irreversible for three interrelated reasons: an increasingly savvy and informed work force, driven by rising levels of education, the explosion of readily accessible information, and improving governance and political accountability.

 

A more entrepreneurial workforce and informed electorate

Rising levels of educational attainment is the main reason that Africa’s rise will be sustained. The percentage of Africans over 25 years of age who completed lower secondary school has climbed from 23 per cent in the 1980s to 43.7 per cent in 2017, and is over 75 per cent for both men and women in rapidly developing countries such as Ghana (World Bank, 2019). Student enrolment in tertiary education grew from 1 per cent in the 1970s to 10 per cent in 2014 (Darvas et al, 2017). Quality of education has declined over the past several decades as universities have strained to accommodate rapidly growing numbers of students. But in 2006, the most recent year for which data is available, African countries’ average public expenditure per university student was 2,000 USD per year – more than twice as much as non-African developing countries  invested  in tertiary education. There is also growing diversity in the fields covered by these institutions, including greater focus on technical education and entrepreneurship. The pace of educational improvement in Africa is more rapid than any other region of the world has experienced. While decades behind the rest of the world, Africa is starting to catch up.

 

A more educated workforce means that decision-making in the private sector, which includes millions of micro-entrepreneurs, is becoming more effective and competitive in the global workplace, thereby contributing to economic growth. It also means more informed public policy-making. Rising education levels are driving Africans’ demands for better governance, too. In the early 1980s, we were struck by how most Africans looked to governments for protection, for employment, and for ensuring access to cheap food. They viewed markets with suspicion. They bought the narrative that governments were looking out for their welfare after decades of foreign colonial rule. As Africans have become more educated, they have become more politically astute and active. It is hard to fool or oppress educated people. Today, most young Africans demand greater accountability from their governments and view markets as their source of opportunity and livelihood. A recent study from Kenya found that wealthier and more educated people were more likely to support democracy and vote for the opposition. Today’s African youth are transforming the continent, not because they are young but because they are more educated, more entrepreneurial, more savvy, more technically skilled and better able to utilise global information than any other generation of Africans before them.

 

Young people in Ethiopia look for job offers in daily newspapers. © Thomas Imo, GIZ
Young people in Ethiopia look for job offers in daily newspapers. © Thomas Imo, GIZ

The digital divide is being narrowed

Especially when combined with a more educated workforce and electorate, the rapid rise of publicly accessible Information and Communication Technology (ICT) and phonebased information even in the most remote rural areas of Africa will almost certainly have profound pro-development impacts. A recent special section of "World Development" shows that information can indeed improve development outcomes when users perceive it as relevant, and when they have both the power and the incentives to act on that information. Rising education levels will therefore contribute to more effective utilisation of the rapidly expanding supply of information and its conversion into improved livelihoods.

 

A special issue of "Foreign Affairs" documents the rapid growth in Africans’ use of mobile banking and software-based provision of information and services. Former Netscape founder Marc Andreessen predicted recently that almost every African would own a smartphone by 2025; in anticipation, software providers are feverishly working to meet this growing market for digital services. As governments and businesses move deeper into the information age and digitise many of their processes, opportunities are rapidly emerging for the growing number of African information technology (IT) firms. With the rapid development of new communication technology, important aspects of the economy such as banking, payment systems, government revenue collection and online education are becoming increasingly digitised, especially in urban areas. The alarming digital divide that Africa faced three decades ago is gradually being narrowed.

 

Digital transformation has enabled Africans to connect with the global community in a manner that was not the case two decades ago.

 

In parallel to the transformational effect of digital technologies on business practices in developed countries, African farmers are gaining access to information that improves their decision-making and makes them more competitive. New digital technologies are slowly emerging for farm management practices, rural transport services, market price information, buyer opportunities, electricity payments, input purchases and social welfare benefits transfer. Digital technologies hold great potential to reduce, if not overcome, the historical link between remoteness and poverty, and even to redefine what remoteness means. Digital transformation has also enabled Africans to connect with the global community in a manner that was not the case two decades ago. Millions of Africans now have access to global news and know-how in ways that would not have been possible decades ago.

 

Governance improving

Governance conditions are clearly improving for the region as a whole. Conditions for any given country may improve or decline in the short run, but the long-term trend is unmistakable. In the 1980s, most African governments were repressive. Coups d’etat were common. African big men ruled by iron fist and imposed horrible policies on their people. Free presses were rare. This situation describes only a few of SSA’s 45 countries today. Macro-economic management has improved dramatically in the post-structural adjustment period. Gone are the days of Idi Amin forcing finance ministers to print money; today, most Ministries of Finance are run by professionals who are committed to a market economy and adhere to global guidelines. Since 2000, there have been few cases of African countries falling into massive debt, requiring bailouts from international financiers, or experiencing hyperinflation or rapid currency depreciation. The majority of African countries have stabilised their macro-economies over the past 20 years, and this has attracted massive foreign direct investment and improved economic performance in the region.

 

Improved governance and cooperation have also aided freer movement of capital across boundaries in Africa and expanded intra-African trade (Songwe, 2019). Four decades ago, foreign banks controlled the banking sectors of African countries. Today, a number of indigenous banks dominate Africa’s banking sector. Many of these banks now operate regionally. As investment opportunities have emerged across the continent, investment and private equity firms from the more advanced African countries are investing in less advanced ones (Silici and Locke, 2013). For example, many Nigerian banks operate across Africa. Entrepreneurship, agro-enterprises, women-owned business and food enterprises are increasingly the focus of emerging private equity funds. The Tony Elumelu Foundation has committed 100 million US dollars towards creating 10,000 entrepreneurs, 1 million jobs and 10 billion US dollars in new economic activity within ten years and has leveraged co-financing from international organisations.

 

Parliamentarians and government officials are mirrors of their society and constituents. And fortunately for Africa, as education levels continue to improve, the quality of governance will become more open, more egalitarian and more responsive to constituents. This doesn’t mean that there won’t be major hiccups along the way – one can point to setbacks and worrying developments in any country – but what matters is whether the cumulative impact of the positive developments outweigh the negative ones. On net, the governance trends in African are generally moving in the right direction, and this has been the case for at least three decades.

 

Conclusions

Thirty years ago, Africa was synonymous with war, famine and poverty. That narrative is clearly outdated. A middle class has started to emerge in Africa, propelled by agricultural growth, economic diversification, digitisation, entrepreneurship, labour mobility and urbanisation. Africa’s rise has much to do with broadly improving education, greater access to information and opportunities, the spread of democracy and greater rule of law. Virtuous cycles are being initiated: as the more educated and informed classes raise their voices in demanding clean and accountable governments, the quality of public services, infrastructure and economic opportunities will continue to improve as it has over the past several decades, but at a faster pace. While Africa’s positive trajectory is unmistakable, it will be at least several decades before most of its countries are firmly middle class. Compared to other regions of the world, that is a remarkably short period, even though millions of poor people will understandably regard it as painfully slow.

 

It is difficult to accurately predict how COVID-19 will affect the region, but certainly it will kill many,  create great pain especially for poor households, and arrest the region’s development at least temporarily. COVID-19 will also almost certainly set in motion great pressures for governments to invest in water, sanitation and health facilities and galvanise the region’s efforts to strengthen its own capacity to address pandemics and other types of shocks, and meet its citizens’ basic human needs. These investments will reinforce Africa’s long-term development trajectory.

 

Former hockey player Wayne Gretzky quipped that a good hockey player plays where the puck is, but a great hockey player plays where the puck is going to be. Because change is occurring so rapidly, Africa’s future is best understood not by overly focusing on its current position – which can easily blight one’s vision – but by considering where the trajectory of its many long-term trends is pointing.

 

This article first appeared in Rural21 Vol. 54 No. 2/2020 on: Employment for rural Africa and is part of a media cooperation between weltohnehunger.org and Rural 21.

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Small farmers in developing countries must modernise their farming methods, but poorly understood reforms could exacerbate poverty instead of alleviating it.

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Uli Reinhardt/Zeitenspiegel

Enough of being poor

By Marcellin Boguy

In western Africa a new middle class is emerging. Their consumer behaviour is determining the demand for products – home-produced and imported goods, on the internet or at the village market. The people of Ivory Coast in particular are looking to the future with optimism.

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A new attempt at Africa's industrialization?

By Helmut Asche

Afrika is about ready. There are promising approaches for a sustainable industrialization. However, the path poses challenges to the continent.

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Hunger must not be a consequence of the epidemic!

By Michael Brüntrup (DIE)

Even though COVID-19 poses a threat to the health of humanity, the reaction to the pandemic must not cause more suffering than the disease itself. This is particularly relevant for poor developing countries, where the impact of the corona crisis on food security is even more severe!

 

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More than just a seat at the table

By Welthungerhilfe

Africa is home to the world’s youngest and fastest growing population. For many young people, agriculture could offer a job perspective. But to improve the living conditions and job prospects of young people in rural areas, political reforms and investments are desperately needed, as these people will be at the centre of agriculture and agricultural development in the future.

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Global responsibility: Tackling hunger is the only way forward

By Lisa Hücking (WHH)

Chancellor Merkel has begun an ambitious European political programme: Striving for compromise in budget negotiations, an orderly Brexit as well as an appropriate response to the corona crisis. Unfortunately, one of her positions that she previously held is nowhere to be found: Africa's prosperity is in the interest of Europe. 

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"The virus does not need visa"

Interview by Dr. Ahmed Ouma (CDC)

Countries across Africa coordinate their efforts in the fight against corona by the Centre for Disease Control (CDC) of the African Union in Addis Abeba. Until now, the curve of new infections has been successfully flattened – why? Dr. Ahmed Ouma, Deputy Director, explains the work of CDC in an interview with Tilman Wörtz.

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Building our food systems back better

By Jes Weigelt and Alexander Müller

What is required to make food systems provide sufficient, healthy food while not harming the planet? How should food security be maintained given the threat posed by climate change? Our authors look at some aspects of tomorrow’s food systems against the backdrop of the corona crisis.

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(c) Welthungerhilfe

5 questions to F. Patterson: Why is there more hunger?

Interview with Fraser Patterson

Every year in October, the "Welthungerhilfe" aid organisation, with the Irish "Concern Worldwide" NGO, publishes the Global Hunger Index, a tool with which the hunger situation is recorded. What are the trends - and what needs to be done?

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“We have to prepare for the unexpected”

Interview with Dr Maria Flachsbarth (BMZ)

In August, Germany’s development ministry set up a division concentrating on One Health topics. Parliamentary State Secretary Maria Flachsbarth on knowledge gaps at the human-animal-environmental interface, the link between One Health and food security, and lessons learnt from previous pandemics.

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How Smallholders Became Commodity Suppliers

Small farmers are often left behind in African agriculture. Access to markets and improved competitiveness can only be achieved if the small farms join forces. But those affected in partner countries are often at a loss as to how to implement cooperative models. Here, the BMZ provides support through the SEWOH ONE World – NO Hunger initiative and the Social Structure Promotion (Sozialstrukturförderung).

A project by Deutscher Genossenschafts- und Raiffeisenverband e. V.

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The state of food security in Cape Town and St. Helena Bay

A study by Markus Hanisch, Agustina Malvido, Johanna Hansmann, Alexander Mewes, Moritz Reigl, Nicole Paganini (SLE)

Post-Covid-19 lockdown: How food governance processes could include marginalised communities - an extract of the results of an SLE study applying digital and participatory methods.

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"Without peace, there will be no development"

Interview with Karina Mroß 

What contribution does development cooperation make to conflict prevention? What can it do for sustainable peace? Political scientist Karina Mroß talks to Raphael Thelen about post-conflict societies and their chances for peaceful development.

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(c) Kate Holt / Africa Practice

Leveraging investment impacts

By Heike Baumüller, Christine Husmann, Julia Machovsky-Smid, Oliver Kirui, Justice Tambo

Any initiative whose aim is to reduce poverty in Africa should focus first on agriculture. But what kind of investment has the greatest impact? The use of scientific criteria provides some answers.

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(c) Simon Veith

The Big Bang is possible

Interview with Joachim von Braun

Happy youngsters in rural areas, green development and the connection to the digital age – professor Joachim von Braun believes in this future sceneraio for Africa. For three decades the agricultural scienties has been researching how politics can create prosperty on the continent. 

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Freed from trade? Towards a fairer EU Trade Agenda

By Dr. Jan Orbie

‘Fair’ and ‘sustainable’ are key words in Germany’s EU Council Presidency. At the same time, Germany pursues ‘modernization’ of the WTO and ‘rapid progress’ on free trade agreements. Are these goals really compatible? Can we be concerned about fairness and sustainability while continuing with ‘business as usual’?

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Ms Rudloff, what are the benefits of a supply chain law?

By Jan Rübel

The Federal Government is fine-tuning a law that would require companies to ensure human rights – a supply chain law. What are the consequences for the agricultural sector? Dr Bettina Rudloff from the German Institute for International and Security Affairs (SWP) discusses linking policy fields with added value.

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Uli Reinhardt/Zeitenspiegel

No dirty dealing

Von Marlis Lindecke

Shit Business is Serious Business: A successful cooperation between research and the private sector.

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(c) Christoph Püschner/Zeitenspiegel

Slaves do not produce quality

By Tilman Wörtz

Every child in Germany knows Ritter Sport – but most of the children harvesting cocoa on western African plantations have never even eaten chocolate. Can a chocolate manufacturer change the world? Conversation with Alfred Ritter about the power and powerlessness of a businessman.

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(c) Privat

Small Farms, big money

By Agnes Kalibata

Africas economy can only grow sustainably, if also small-scale agriculture is seen as opportunity.

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(c) Simon Veith

A fresh opportunity

Interview with Lutz Hartmann

By leasing a three hundred hectare fruit plantation in Ethiopia, Lutz Hartmann has realised a long-cherished dream: to run his own business in Africa. Now he has a personal interest in the issue of Africa’s development.

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Debate: Pesticides – a blessing or a curse?

By Jan Rübel

What are the consequences of using synthetic pesticides in agriculture? Where do they help, where do they harm? Lena Luig, expert for the development policy organization INKOTA, and science journalist Ludger Weß discuss this controversial topic of international scope.

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Support for sustainable start-ups

Companies in Africa that need financing between $20,000 and $200,000 find relatively few investors, as this sector is too large for microcredit and too small for institutional investors. This creates a "gap in the middle" where companies have limited options. A project of the World Resource Institute provides a remedy with the Landaccelerator 2020.

A World Resources Institute project

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Controversy: Do supply chains need liability rules?

Discussion about the potential supply chain law

The German government is struggling to pass a supply chain law. It is intended to address violations of human rights, social and environmental standards. What would the consequences be for business? A double interview with Veselina Vasileva from GEPA and economics professor Andreas Freytag.

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