Ten years on - a review of the trends driving Africa's allure
Trend 1: A larger, younger and more affluent population
- A decade ago, amidst profound general optimism around Africa’s ‘rise’, we published a series of reports detailing what we believed to be the five structural drivers behind Africa’s renewed and long-term economic promise. These trends looked at demographic (and income) changes; urbanisation; technological leapfrogging; the broadening of financial access and the abundance of the continent’s untapped (and primarily agricultural) resources.
- The time that has passed since this series was published has been marked by a varied pattern of change and progress across the continent. Since 2010 Africa’s collective GDP has grown by 55%; its average growth rate has exceeded the global average; and a broad range of institutional and political measures indicate a deepening of post-2000 momentum. Yet, weaknesses remain pronounced: Africa’s largest economies have mostly underperformed since 2010, hindering broader progress. Meanwhile, the shape of conflict and instability has shifted, particularly in those countries affected by the Arab Spring, deepening institutional precarity in several key regions. Clearly, the COVID-19 crisis will also impose severe restrictions on the continent’s medium-term prospects.
- It is with these (and other) issues in mind that we now return to the trends that informed our original series. Our intention in doing so is two-fold: first, we hope in this assessment to measure the progress that African economies have achieved in these areas over the past decade, using this to evaluate the robustness of our original thesis. Second, we use updated data to better chart the likely future course for the continent, bearing in mind the enormity of the impact of COVID-19 on its more immediate trajectory.
- We begin now – as we did then – by considering the challenges and opportunities that emerge from the seismic demographic changes taking place across Africa. There are three broad sections to this report: (1) general population trends since 2010; (2) rising incomes, and the continent’s maturing middle class; and (3) the institutional progress necessary for Africa to benefit from a demographic dividend.
- (1) Africa’s population has continued to rise – and at an even swifter rate than was anticipated a decade ago. Today Africa’s total population is estimated at 1.3bn, up by 300m people (almost the size of the population of the United States) since 2010. Today, Africa accounts for 17% of the world’s population, up from 15% in 2010. Looking ahead, the UN expects that Africa will be home to almost 2.5bn people by 2050 (this up from its expectation a decade ago that the continent’s population would stand at around 2bn by 2050). Over the past decade, one-third of global population growth has taken place in Africa, while between 2020 and 2050 half of all global population growth is expected to be driven by Africa. This naturally amplifies the various risks and opportunities that are emerging (or could emerge) from demographic change in Africa.
- (2) Broader income growth has been impressive (if unevenly distributed) since 2010. The pace of per capita income gains that marked the first decade of this century has cooled in the second, in large part as a result of substantially slower average growth in some of the continent’s largest economies. However, various data points still suggest a compelling base of consumer opportunity on the continent: according to the World Bank, total consumer spending in Africa totalled USD3.62tr in 2019 and is expected to reach USD5.32tr by 2030. Further, income growth has been meaningful across a range of economies in East and West Africa that have flourished over the past decade: between 2010 and 2018 per capita GDP in Ethiopia lifted by 125%; in Kenya by 80%; in Ghana by 70%; and in Côte d’Ivoire and Tanzania by just over 40%.
- A maturing middle class. By our measurement, the middle class in 11 key SSA economies has grown from 5.4m households (HHs) in 2010 to over 12m HHs today. Growth in the lower middle class has been even more significant: today, roughly one in five HHs in these selected economies are either middle class or lower middle class, up from one in ten a decade ago. The World Bank estimates that the 180m middle class individuals in Africa today account for over half of the continent’s total consumer spending and that, between 2020 and 2030, Africa’s combined middle-class population is expected to increase by over 100m people, with its total spending power lifting from USD2tr (per year, in 2020) to around USD3.2tr per year in 2030.
- Yet, despite evident progress, still over 80% of African HHs are low income. Further, it is expected that around 11m Africans will fall out of the middle-class category this year, in large part as a result of the economic crisis brought on by COVID-19. At least, consumer spending growth across Africa is expected to outpace population growth between 2020 and 2030, with 18 economies on the continent expected to register consumer spending growth of more than 5% per year over the course of the next decade.
- (3) A demographic dividend. Over the past decade Africa’s working age population has increased by 180m, to 750m. Given that Africa’s population growth continues to outpace the global average, the continent’s share of the world’s workforce has swelled from 11% in 2010, to 15% today. By 2050 Africa’s total working age population is expected to total 1.5bn, one-quarter of the global total.
- Fortunately, there have been clear improvements in the underlying social and institutional progress necessary for African economies to benefit from their bulging workforces. Life expectancy rates are increasing (from 57 a decade ago, to 63 today); while infant mortality and fertility rates continue to decline. In some countries these alterations have been particularly impressive: Botswana, eSwatini, Rwanda, Malawi, Rwanda, Zambia and Zimbabwe have all seen life expectancy rates improve by more than 15 years since 2010. And, since 2010, Kenya’s economic growth rate has averaged 5.9% per year; its life expectancy rate has lifted by almost 15 years; and fertility rates have virtually plummeted from 4.6 to 3.5.
- Of course, this general trend masks wide disparities in institutional progress across Africa over the past decade. Indeed, and as we outline in this report, while virtually all countries are seeing material population growth, not all are providing the requisite economic and institutional support to manage such seismic changes. Over the past decade discrepancies in progress across the continent have arguably become more pronounced: as some have excelled, others have flat-lined, or even regressed. This merely serves to amplify a known reality, which is that there is no single narrative that is capable of encapsulating the complexity of Africa’s unfolding trajectory.
- With this said, the general tide remains positive – and the future pace of change (as far as we can reliably tell) will continue to broadly map the continent’s ongoing post-2000 transformation. Looking ahead, progress in harnessing demographic opportunities will be determined in large part by the degree of institutional and social change that accompanies the economic advances that have been, and are being, made.