The last 15 years have been good in Africa. Conflict reduced, regional integration deepened, governance improved and economies grew, in part due to diversification of Africa's trading partners.
China's re-emergence as a great power has profoundly impacted Africa. As the workshop of the world, China has an enormous appetite for Africa's resources, has paid well for them and returned other benefits --infrastructure financing and geopolitical cover for those who request it. (see NA March Cover Story) The economic engagement of China, now Africa's largest trading partner, has sustained and helped Africa's middle class to grow. This remarkable development took place under the radar at first while our traditional partners distracted themselves with wars in the Middle East.
The surplus and space created by Chinese and other new trading partners, allowed the young to become talkative and creative. In the new buzz, we even adopted The Economist-inspired "Africa Rising" slogan. But as fast as it rose, the meme is already in danger due to the strong headwinds in the global economy.
The collapse in oil and other commodity prices is impacting significantly on some of the biggest economies on the continent, such as Nigeria, Algeria, Angola and South Africa. These commodity producers are experiencing reductions in the value of their currencies as prices fall. The US Federal Reserve's winding up of its quantitative easing (QE) policy also adds to downward pressure on African currencies. QE's massive injection of liquidity into US markets sent capital abroad seeking a higher yield. Now the money is going home, increasing the strength of the dollar.
The next two years or so will be more difficult for most African countries than the previous fifteen. However, the underlying fundamentals are still sound. An engaged population is beginning to dream of what "Made in Africa" might look like. Lessons are being learned faster and actioned earlier. Competence and innovative thinking are the new focus. To paraphrase Deng Xiaoping, we are at the point where the colour of the cat does not matter, as long as it catches mice.
Deng and his successors' cat have helped catch one of the most significant mice for...