In Tandem with Africa and Asia
How Exciting is Africa's Potential
This is a question that anyone with more than a passing interest in Africa would like to know the answer to and one that I hope to understand more during my journey. Before I set off, what better place to start than asking the man who coined the famous BRICs acronym...
Jim O'Neil is Chairman of Goldman Sachs Asset Management and its chief economist. He coined the acronym BRICs (Brazil, Russia, India & China) in a 2001 research note "The World Needs better Economic BRICs". It has subsequently become a symbol of the shift in global economic power away from the developed economies towards the developing world.
With the growth of these four big economies now well established, economists have been looking for the next wave of economies pushing to catch up. Some would argue that South Africa deserves to become the 'S' in BRICs but there has also been growing interest in the growth potential of the rest of the continent, especially given the boom in commodity prices. Can countries like Nigeria take advantage or this or will they continue to suffer the 'resource curse'.
In an excellent note, Jim and fellow economist Anna Stupnytska use the same methodology that they employed back in 2001 and more recently when forecasting the growth of the N-11 ('next 11 countries after BRICs) to consider Africa's path to 2050. Whilst individually, African countries are unlikely to get close to the BRICs, collectively, the biggest 11 African economies are estimated to be bigger than both Russia and Brazil by 2050 but not as big as China or Russia, or indeed the US. Political conditions sadly remain the biggest constraint on development.
As well as looking at GDP, Jim and Anna also look at consumption patterns and the potential growth of the middle class in Africa, something that has only just begun. Interestingly, by 2050, they estimate that this middle class, defined as population with income per capita of $6000-$30,000 in 2007 PPP terms), could be bigger than that of China. Thanks to a young population, there is also little sign of this peaking over the forecast horizon. Global consumption patterns was a theme I researched myself whilst at Citi back in 2008, concluding that the emerging middle classes are likely to be the dominate market for global retailers to service. Africa has the potential to be part of this growth but growth could continued to be frustrated by politics: As Jim concludes, 'Transparency and an environment conducive to business are what African leaders should be concentrating on. Otherwise, the dream of an African BRIC will remain just that - a dream'.
Jim explains how exciting Africa's potential is to me...
Teachers can read all about it on Tutor2U in September