The good Africa stories keep coming, battling against “old” Africa with its civil wars and people threatened with famine.
Over the next 20 years, some estimates project that Africa will have at least two billion people. Of these, 1.2-billion people will be living in urban cities, and 300-million of that urban population potentially earning $20 a day. If these statistics become reality, Africa could be a $2-trillion market annually.
This paints a picture of a continent whose economic activity is on the rise. Six of the world’s 10 fastest growing economies of the last decade have been in Africa, hence the “Africa rising” catchphrase that has dominated economic reporting and discussion about the continent.
While the economies of countries like Rwanda, Kenya, Mozambique have been growing like they were shot on steroids, with GDP growth rates averaging 7%, the question is they can they keep up this pace of economic growth for the next 20 years? What if another country bucked the trend and emerges as the continent’s richest country by 2035? Could it be far-fetched for a country currently considered a lost cause to turn the tables and emerge as Africa’s richest nation by 2035?
The commonly accepted measure of determining a country’s wealth is Gross Domestic Product Purchasing Power Parity (GDP PPP) per capita. This method looks at a country’s GDP, converts it to international dollars using purchasing power parity rates and finally divides purchasing power parity by population size. At nearly $10,218.95 basing on 2013 data, currently South Africa is the richest nation in Africa – though Nigeria might be the largest economy.
Enter the Democratic Republic of Congo (DRC). It is still recovering from the aftermath of years of brutal conflict that has internally displaced as many as 2.75-million people according to Oxfam. Inevitably, the Central African country`s economy has taken a beating over the years. Unemployment, high inflation and low human development indicators all point out to the effects decades of conflict and over 30 years of dictatorship by the corrupt Mobutu Sese Seko who was ousted in 1997, have had on DRC’s economy.
Be that as it may, could the DRC potentially rise to be the richest country on the continent by 2035? Consider the following:
With a population of nearly 70-million, it has the potential upside to grow driven by a large domestic market. The African Economic Outlook report recently released by the African Development Bank (AfDB) listed high domestic demand as the main catalyst for Africa’s current economic growth especially. With an estimated 40% of the DRC’s relatively youthful population Living in urban areas, it is in good stead to achieve high growth rates in the future as urbanisation and the levels of affluence rise in line with continental trends.
Growth in low-income countries, including what may be considered fragile states, continues to outpace that of middle-income countries. AfDB data shows real GDP growth rates of African countries by analytical groupings such as low-income countries and countries in fragile states - a bill that the DRC fits - have seen strong performances in their GDP numbers.
For instance, looking at the low-income countries’ metric, African countries in that bracket registered an average real GDP growth rate of 6.2% from 2010 to 2013 whilst the DRC recorded an average growth rate of 7.1% over the same period. If these growth trends are sustained, then the country could very well likely emerge as a major economy on the continent.
Spared from debt
Furthermore, the DRC has been spared from facing a debt burden it cannot manage. In July 2010, the country became eligible for irrevocable debt relief assistance under the IMF and World Bank’s Heavily Indebted Poor Country (HIPC) initiative, as it became the 36th country to reach the completion point of the programme. Under this initiative it will benefit from total debt service savings of around $12.3-billion. Consequently the DRC will not face debt-servicing pressures on its revenue flows and foreign exchange resources in the future.
With this, social spending on critical drivers of growth and public debt management could be improved, thereby giving room for greater growth prospects for the country.
In addition, DRC has tremendous resources that, in the hands of a reformist and effective government, could work near-miracles. Its total mineral wealth is estimated to be worth a mind-boggling $24-trillion, more than the GDP of Europe and the US combined. It holds more than 70% of the world’s coltan, used to make vital components of mobile phones, 30% of the world’s diamond reserves and vast deposits of cobalt, copper and bauxite. Additionally, the DR Congo contains huge quantities of gold, platinum, oil, tin and uranium — indeed, of nearly every other precious mineral on the planet.
The planned Grand Inga Dam on the Congo River, delayed by incompetent and corrupt rule in Kinshasa and years of war, if implemented will not only be nearly seven times bigger than Ethiopia’s Renaissance Dam, it will be almost double the size of the Three Gorges Dam across the Yangtze River in China, currently the world’s biggest hydroelectricity plant.
DR Congo’s Inga dam has the potential to supply Egypt, Ethiopia, and half of Africa.
Admittedly, all this seems too optimistic, and could even pass as being hopeless out of touch with foreseeable economic prospects. The DRC does not immediately come to mind when one thinks of rich nations today or in the future. After all, an estimated 70% of its people still live in poverty, and the country has large infrastructure deficits, an economic environment that is not favourable for investment, as well as a fragile political situation.
But is it really that hard to fathom? Earlier this year, the Bill and Melinda Gates Foundation released a 25-page report in which they predicted that there would almost be no poor countries left in the world by 2035, using today`s World Bank classification of low-income countries, even after adjusting for inflation.
Long-term projections into the future are never easy, as too many variables are at play. However, as history has shown, over a relatively longer period, economies can grow rapidly. Take Botswana for instance; in 1967, it had less than 5 kilometres of tarmacked roads and only three secondary schools! Today, after 47 years, it is a middle-income country.
Thought the DRC seems too dark a horse in the race for economic supremacy, if the necessary reforms are made in policy and the right crop of leadership emerges to guide the country on a path of growth and stability, then the nation could likely be one of the richest on the continent in the next 20 years. The jury is likely going to be out on this one for some time, but this black swan possibility for DRC is, well, a black swan.
•The author is a Finance student at the National University of Science and Technology (NUST) in Zimbabwe. Twitter:PMunzwembiri