Africa in 2019: The music was back on, but the party did not start

This has been the year of elections galore, with more than 20 nations holding one form of election or another.

There were presidential elections in Tunisia, South Africa, Nigeria and Mauritania; parliamentary elections in Cameroon, Mali and Guinea; and council elections in Niger and other countries.

This is a great story for Africa, given our history of coups and military dictatorships which have bled and battered our continent since independence from colonial rule.

Post-election conflicts, however, are always a worry, which is why African Union election envoys and other credible international election observers played such a big role in ensuring that post-election conflicts were minimised by independently verifying the credibility of elections.

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This process was not without its faults, but it was largely successful.

Peace and stability have always been a major concern for most African countries, particularly because both conditions are prerequisites for financial and social stability.

There can be no trade and investments, no sustainable business, and no livelihood in times of conflict. 

Countries which remain the main concern for Africa with regards to peace and stability since 2017 are Libya, Somalia, South Sudan and Nigeria.

It was great to witness much-needed interventions in South Sudan and some stability in Nigeria.

Burundi and the Democratic Republic of the Congo, although somewhat better than two years ago, remain a great concern.

But there were other countries which became politically unstable, including Algeria and the greater Sudan.

Egypt is also not out of the woods yet.

The biggest focus, however, has been the continent's economic outlook.

Africa's economy was on the rise throughout the year, after almost three years of little growth.

The International Monetary Fund and the World Bank projected African growth for 2019 and 2020 to be 3.1% and 3.9%, respectively, while the African Development Bank was more generous, projecting 4.1% and 4.3%, respectively.

Parts of the continent which carry the bulk of this growth are east and west Africa, with Tanzania, Ethiopia and Rwanda projected to grow at more than 6%.

Ghana, Senegal and the Ivory Coast are also expected to show strong growth.

Sub-Saharan Africa, although full of untapped potential, remains a drag, with growth for 2019 sitting at 2.6%, 0.6% higher than the previous year.

This is particularly worrying, considering that the biggest African economies – South Africa, Angola and Nigeria – are struggling with economic recovery, placing great burden on the overall continental growth. 

These growth projections could fail to materialise if commodity prices do not rise as expected, and it will be difficult to maintain these numbers if African economies don't entrench business-friendly policies to attract investments.

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The continuous dependence of African countries on commodities such as oil, and their inability to diversify at the required speed, continue to pose investment and growth risks in the region.

The biggest threat to this projected growth, however, has been rising debt.

It is said that the number of African countries considered in debt stress has risen sharply in recent years.

According to scholars Chukwuka Onyekwena and Mma Amara Ekeruche, in 2017, 19 African countries exceeded the 60% debt-to-GDP threshold set by the African Monetary Cooperation Program for developing economies, while 24 countries surpassed the 55% debt-to-GDP ratio suggested by the International Monetary Fund.

This worrying trend means that African countries are trying to finance growth through massive debts.

The problem is that there is no growth which would help offset the effects of rising debt and interest.

When a country is highly indebted, especially a developing country, it has less money to invest in much-needed infrastructure and to provide social services because a huge chunk of its national income goes to serving debt.

It also means that in the event of an economic shock or social disaster that country would not be fully equipped and resourced to respond effectively.

There are fears that Africa may go back to the era of heavily indebted poor countries, as was experienced in the 1960s, and may well require the Multilateral Debt Relief Initiative to get it out of its debt hole.

In the 1960s, newly liberated African countries went on a spending spree to build infrastructure and industrialise, which was not only necessary to expand economies that were previously working to serve the minority colonial masters, but was also motivated by a commodity boom.

Because Africa is so well endowed with natural resources, the temptation to spend on the back of booming commodity prices was inevitable.

However, instead of cutting back on spending during periods of sharp declines in commodity prices, African countries continued and even increased national spend.

After African debt was reduced and even scrapped off completely by rich countries, it took only 30 years – until the 1990s – for the continent to find itself again drowning in debt, requiring another round of debt relief.

With leaders like Nelson Mandela now out of prison and holding a high moral ground, it was not difficult for world leaders to listen once more and scrape continental debt to give Africa another opportunity to get its house in order.

Of course, the rich countries may have felt partly responsible for an Africa that was struggling to be economically independent. 

The reason that Africa is now back in debt emanates from the 2008 financial crisis.

After that crisis, as with the rest of the world, African states engaged in counter-cyclical spending to compensate for depressed private sector spending.

There was also continued expenditure on infrastructure and other social services.

However, the straw that broke the camel's back was the commodity price shock decline in 2014, particular oil prices.

More spending and less money coming in from Africa's main revenue base meant that debt could only spiral.

The African story is one of heavy dependence on commodities and basing economic and social spend on hopes of commodity boom, and during periods of depressed commodity prices debt spirals.

Although there have been efforts to diversify national economies, those efforts have not been quick enough and there has not been a shift.

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There are certain things that Africa needs to do to break this debt cycle and commodity dependency.

For the continent to enjoy much higher levels of growth, the integration of its economies must be made a priority.

New research shows that if African economies were to fully integrate, they could add $134 billion into the continental growth.

This would require the continent to streamline its rules, ensure national and continental transparency as well as mobility of the labour market.

It would also require complete removal of both bilateral tariffs and non-tariff barriers.

This would ensure that trade among nations is smooth, fast and efficient.

The continent would also have to negotiate trade deals with other regions as a bloc to enjoy favourable trade terms.

Each African country,  however, needs to manage its debt, inflation, deficits, political and regulatory uncertainty, and economic fragility.

Ultimately, all these efforts are about getting more people into jobs and out of poverty.

More than 400 million Africans are said to be living below the poverty line; that is almost half of the continent's population.

Our efforts in growing our economies and creating jobs are more than economic and political imperatives; they are moral obligations.

It is an indictment for any African to die of hunger and want of basic needs in the 21st century.

As beautifully said by broadcaster and financial journalist Gugulethu Mfuphi, “the music is back on; the party hasn’t yet started”.

In other words, the return of growth is encouraging, but much more needs to be done to speed up this growth and widen the reach of its benefits so that the economic wave can lift all Africans.

Yonela Diko is a social commentator

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