Big shifts and what they mean for Africa and Kenya

Can Africa claim the 21st century? When the World Bank’s Africa department published this book in April 2000, most observers were doubtful that African countries would ever be in a position to become emerging markets. That year, The Economist called Africa “The hopeless continent” and global attention was focused mainly on Africa’s problems: HIV/Aids in Southern Africa; the relentless war in Somalia; and, droughts in the Sahel—which gave the pessimists plenty of ammunition. 

But over the last several years, something remarkable has happened: Africa’s fragile and conflict-affected countries remain a major development challenge, but besides these, a Stable Africa has emerged. Most of this Stable Africa has experienced continued high growth for a decade, and major improvements in social indicators. Africa is becoming an investment destination, and there is hardly a week which goes by without a major investor dropping by my office, to discuss the region’s economic fundamentals.

How has Africa changed over the last decades?

I still vividly remember my first visit to Kenya in 1990.  At that time, the world was a very different place. The Berlin wall had fallen, but apartheid had not ended. It was also the last time that Germany won the World Cup. I had flown to Africa on a one-way ticket to Johannesburg, and on my way to Cairo, I spent a few days in Kenya: I had a precious visa for Somalia, and wanted to make use of it before I lost the opportunity [this was just a few months before the country descended into complete chaos]. Coming from Tanzania, I spent two nights in Nairobi, before proceeding to Garissa and Liboi, at the Kenya-Somalia border. 

Even for a backpacker, conducting basic business was a big struggle in East Africa. Think of communications: Whenever I wanted to call home from Dar es Salaam, I had to go to an Indian-Tanzanian merchant, who was one of the few people with a telephone that could—theoretically—connect you to other parts of the world. I often waited for at least an hour, and if I was lucky enough to get through, I had to pay US$ 4 per minute (about US$6.50 at today’s prices). On one occasion, I wanted to know the results of Germany’s “Bundesliga” and a friend of mine sent me a copy of a newspaper article by mail. The letter arrived three weeks after the game had taken place! Today, our children, including those who live in Garissa and Liboi, would probably have a hard time to comprehend why I simply couldn’t use a cell phone or get the results online—in real time—from my smart phone. 

Since 1990, a number of big shifts have occurred. The transformation starts with demography and leads to economics. First, we are more people in the World. The World had 5 billion people then; today we are more than 7 billion: Kenya had 23 million people; today it has almost doubled to 41 million. In my own lifecycle, dramatic changes have occurred: when I was born there were some 670 million Europeans for 370 million Africans, so roughly, two Europeans per African; when I retire in 2030, there will be almost 1.7 billion Africans for some 680 million Europeans. So there would be more than two Africans per European (the early 1990s were the moment when Africa overtook Europe demographically). 

Second, the global economic architecture has been undergoing a dramatic shift. I am sad to say this, but the big loser in these shifts is Europe, while the big winners are the emerging markets, especially in Asia. Today, the main economic news is not Africa’s challenges; it is that Greece is bankrupt and China may bail out Europe. Predicting such a scenario 20 years ago was more or less equivalent to anticipating that Nigeria might bail out China 20 years from today! In fact, today Europe could learn a lot from Africa, in terms of good economic management. 

There have been three recent markers in the World’s economic fortunes. Since the 1990s, developing countries have been growing faster than rich countries. Following the global crisis (2007/08), the total world growth has been driven by developing countries. In a few years, developing countries will have the same economic weight as what used to be for the West. 

In short, the last two decades have shown that development is possible on a large scale, and much faster than was previously thought.  Countries can Turn the Tide, even in these turbulent times.  What is new is the fact that Africa is now part of this momentum.

(This article is based on a speech by Wolfgang Fengler at the Annual Gala of to the Petroleum Institute of East Africa. The second part of the article will look at the factors that can drive Africa and Kenya’s emergence.)

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