Africa's Rising Star
After proving that it can compete with the best at this year's soccer World Cup, can sub-Saharan Africa level the economic playing field?
June 27, 2002
Defeating France was quite an achievement for the second-poorest country to qualify for the World Cup. And just as Africa's star is rising in soccer, its economic star may slowly be in the ascent as well.
Now as never before, investors are taking notice of opportunities in Africa. The Johannesburg Stock Exchange — with its 90% share of sub-Saharan market capitalization — has been one of the best performers in the world this year.
The mineral and bank-heavy exchange is up 30% to the end of May. Botswana's bank-dominated exchange — with 16 companies worth $1.5 billion — has gained 43% in the year to April.
African leaders are also optimistic that they will be able to persuade Westerners to renew their commitment to the continent at this year's G8 summit.
Recently, U.S. President George W. Bush proposed to double spending for an initiative for education in Africa to $200 million over five years. That is less than the $225 million that Americans spent on golf shoes in 1999 alone. But the continent’s leaders have upped the ante.
They've proposed a program so ambitious that it has been touted as a Marshall Plan for Africa. The plan foresees $65 billion in debt relief, investment and trade opportunities for the continent each year. That's little more than American consumers spend annually on soft-drinks.
The leaders plan to devote the lion's share of resources to their fight against HIV/AIDS and to much-needed improvements in primary education. They plan to halve poverty by 2015.
To pull this off, they've joined together to form the New Partnership for African Development, or Nepad. The Nepad plan aims to attract investment through a continent-wide commitment to good governance.
However, even as African leaders ask for help at this year's G8 summit, there are serious obstacles to overcome. For starters, trade barriers against agriculture and other imports are estimated to cost Sub-Saharan Africa $2.5 billion in lost exports annually.
In fact, Sub-Saharan Africa now accounts for only 2% of world trade. And with a GDP of $470 per head, Senegal's income is only a fraction of France's — which stands at $22,000.
Senegal may have closed the gap on the sporting field. But sub-Saharan Africa still has a long way to go before leveling the economic playing field.