Friday, 19 December 2014

Winds of change

Big economic and political changes are emerging in Africa after a decade of strong Asian demand for its resources and the highest growth levels since the 1960s. That economic strength has allowed many governments to buy off discontent in the cities without fundamental policy changes. As revenues fall and budgets tighten, shaky governments will face the wrath of the street. The mass demonstrations that forced Burkina Faso’s Blaise Compaoré from office could prove a powerful warning.

Slumping oil and gas prices – bad news for Algeria, Angola and Nigeria as well as East Africa’s aspiring producers – will be good for other economies on the continent. It may also force reforms, such as subsidy cuts and more accountability in state energy companies. Wider trends – including the rebalancing of China’s mammoth economy and a new buoyancy in the United States – will also push African governments to change course as mineral and crop prices continue to fall. Resource nationalism may look an increasingly attractive option but finding the investment to develop the continent's reserves will become harder still.

For the biggest economies, Egypt, Nigeria and South Africa, that means redoubling efforts for structural change, big investment in power and communications, and relaxing political controls on business. That is, reining in some of the most venal and short-termist crony capitalism. Smaller economies will have to speed up regional integration.

More generally, the risks and horrors of sidelining public health investment are highlighted by the Ebola crisis in West Africa. Less stark but just as significant is Africa’s deepening deficit in education and training compared to its Asian and South American counterparts.

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