Africa Leaps Forward

Africa can seem hopeless. The continent's 850 million people are poorer today than they were 25 years ago. Largely due to AIDS, average life expectancy and the rate of infant mortality steadily worsen. Even nations like Zimbabwe and Ivory Coast, which thrived after European powers pulled out in the 1960s, have fallen apart. Who can gainsay British Prime Minister Tony Blair, who has made aid to Africa a centerpiece of the G8 summit of industrial powers this week, when he calls Africa a scar on the world's conscience?

Behind the headline chaos, however, there is a more promising reality. Democratic elections have swept Africa. Thirty years ago the continent had only three elected heads of state; now there are 30. The International Monetary Fund says a core group of 25 nations representing three quarters of the continent's population has been steadily moving ahead economically, and asks, "Is Africa turning the corner?" The IMF predicts overall growth this year of 5.4 percent (chart), driven by often painful economic reforms that began more than a decade ago in South Africa and have since spread widely among its neighbors. "We've got a critical mass of countries, and we need to concentrate on that," says Trevor Manuel, South Africa's Finance minister.

In short, Africa is not sitting still, waiting for the West to help. Last Saturday, billions worldwide watched 10 simultaneous Live 8 concerts; this Wednesday, Blair will place Africa at the top of the international agenda at the G8 summit in Scotland. But the only practical result of the summit is likely to be the ratification of a plan to write off the debt of 18 poor nations, 14 of them in Africa. While this helps, the forgiven debt wasn't being paid anyway, and amounts to just $14 billion of the continent's $300 billion total debt burden. Beyond that, Blair's international Commission for Africa has proposed doubling annual foreign aid to Africa to $25 billion by 2010, and to $50 billion by 2015. But France, Italy, Germany and Japan are raising objections, and U.S. President George W. Bush has his own aid plan. So far, Africa has received more pledges than aid. And last week a new IMF study threw cold water on the whole premise of the summit, saying there's no good evidence aid works to promote growth in poor countries.

That only raises the pressure on Africa to pursue its homegrown recovery, which has its roots in the end of the cold war. Until the mid-1980s, the superpower rivalry made communism attractive to Africans, and set off a U.S.-Soviet duel to aid their proxies on the continent. Both sides were prone to wink at waste and theft committed by strongman allies. But South Africa's emergence from apartheid in the early 1990s set an important example to the rest of the continent. Although Nelson Mandela spoke of nationalizing white-owned industry on his emergence from prison, he quickly tacked right and accepted protecting property rights as part of the new constitutional order. His economic policy and that of his successor, Thabo Mbeki, alienated members of their coalition, notably the South African Communist Party and the Congress of South African Trade Unions. Yet fiscal discipline paid off with steady growth and investment, turning South Africa into an engine of growth for the continent.

As South African companies began spreading investment across the region, the idea of reform spread, too. There was no other game in town. Angola reunified and thrived on investment in oil. Kenya threw off a president-for-life and began to modernize, aided by South African money. Uganda, a one-party state, continued its 20-year march back from the tyranny of Idi Amin. The capital, Kampala, grew a skyline. Mozambique emerged from a devastating war to register the world's fastest growth rate in 2000, and is still going strong. In the past five years, sub-Saharan Africa has reversed a long-term decline in per capita GDP, and has started to grow again.

No question, the current boom is in part the product of record-high oil prices. Oil exporters grew much faster than importers last year, by 6.2 percent compared with 4.7 percent, and the IMF expects that gap to widen this year. Angola's economic growth rate is nearing 14 percent, the fastest in Africa. But the emergence of relatively strong growth in non-oil states, too, led by South Africa, is testimony to the spread of macroeconomic reforms that are stabilizing inflation rates, raising currency values and encouraging private-sector investment.

The most striking success story may be Tanzania, which also has no oil. Never riven by war, the East African nation slowly settled into poverty after independence in 1961 because of bad economic policies and political stagnation. The country's revered first president, Julius Nyerere, suppressed the ethnic tensions that wrecked other African nations by insisting that all Tanzanians speak Swahili, and preaching the value of a secular state. But his brand of "African socialism" wreaked economic havoc. The first glimmer of change came when his successor, Ali Hassan Mwinyi, moved to bring in foreign investors in the early 1990s.

Taking office in 1995, current president Benjamin Mkapa vowed to move Tanzania into the middle rank of the world's economies by 2025. He pushed reform forward, most importantly by dismantling the moribund state mining company and offering tax and other incentives to private firms. The result was a boom in the mining of gold, diamond and tanzanite, albeit with a frightening rise in dangerous, privately owned mines. Still, by last year, mining had surpassed agriculture as the nation's leading export industry, bringing in $652 million and powering GNP growth to 6.7 percent this year, up from 4.2 percent in 1996. Tanzania is now among Africa's fastest-growing economies. Foreign reserves are healthy. Inflation stands at a modest 4.2 percent. Government tax revenues have quadrupled to more than $1.7 billion.

Only five years ago, the capital city of Dar es Salaam boasted only two billboards--for rival foreign cell-phone companies. Expats complained that the only local beer usually arrived with a layer of sludge. Now the old Arab trading port is awash in advertising for consumer goods, many imported from South Africa. Gone is the Mao-style suit of the Nyerere era. What sells are Western cosmetics and clothes. Tanzanian rap fills the airwaves.

In releasing his Commission for Africa report, Blair boasted that, with British aid, Tanzania now can offer universal primary education. The government has revitalized slums by granting squatters title to the plots where they live. That's virtually cost-free, and as tax revenues rose when the economy began to revive, the government began to plow more money into social spending. More than half the budget now goes toward alleviating poverty. "Africa is changing, and for the better," Blair concluded.

Still, there's a long way to go. Sub-Saharan Africa is still growing too slowly to meet the United Nations' goals of raising half the world's most poor out of poverty by 2015. According to the IMF, the region could grow 1 percent faster by opening up its still-protectionist trade regimes as fast as emerging Asian nations have. Since 2000, capital flight from the region has been reversed, and private investment is expected to hit $15 billion next year, but those swings undermine steady growth. The IMF figures that Africa could raise growth another half a point by lowering investment volatility to the same level as Asia's.

That's not easy. It means creating a climate investors trust, in part by tackling endemic corruption. The effort is on in places like South Africa, which alone accounts for more than half of all economic activity on the continent; last week authorities charged a former vice president, Jacob Zuma, with two counts of corruption. Before an Africa tour last month, the newly installed World Bank president, Paul Wolfowitz, called corruption "the worst threat to democracy since communism." But after visiting Nigeria, Burkina Faso, Rwanda and South Africa, he was striking a more positive note: "Everywhere I found people who had a real willingness to work hard, intelligence, energy and a can-do attitude. Africa is a continent on the move."

It is, no matter what the G8 does. Still, there are critical measures the West could take to help. Though Blair's call for dramatic foreign-aid increases appears dead on arrival, he will continue to crusade for fairer agricultural policies in rich countries whose price supports block Africa's most important exports. Having forgiven a fraction of Africa's debt, the industrial powers might consider what to do about the remaining $286 billion.

Importantly, Blair's plans would encourage Africa's growing tendency to help itself by making debt relief and foreign aid contingent on good government, including using aid to invest in education, health care and improving the lot of women. All are foundations for long-term growth. Manuel argues that nations of the region need to promote trade not only with the big powers, but with one another. "Africa developed its oil and diamonds and platinum and not much else," he says. "We're falling short on interaction." Still, after so much bad news, it's a relief to know that Africa just might be turning the corner.