Economic Growth Prospects For Africa Business Research Paper

ECONOMIC GROWTH PROSPECTS FOR AFRICA
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* Introduction
The discussion of economic development in Africa has been a major debate, conducted by many scholars across the globe. The economic prospect for Africa registered a stabilization of 3.4% in 2019, with projections by the end of 2020 being 3.9% and 4.1% in 2021. According to the report “African Economic Outlook 2020: Developing Africa’s workforce for the future" by African Development Bank (2020), Africa has also continued to register an increase and an improvement in its growth fundamentals, with a positive reflection in its investment and exports, which is a shift from the normal private consumption. Africa has registered 50% of the economic growth from investments, with 33% only being registered in private consumption. However, the content continues to face major challenges, which include the elimination of poverty and the enhancement of inequality in majority of the countries. Africa has continued to have a positive transition in its process of delivering better education systems and the generation of more skills from its population for the workforce within the countries. However, the education sector and the process of skill generation continue to face major challenges, as the continent continues to lag behind other regions and countries across the world, where the education sector and the skill generation rocs have evolved. It continues to face major challenges that emanate from the mismatch between education and skills provided by the education system. The continent's low growth process has been contributed by the low expansion of economies in countries such as Algeria, Egypt, Morocco, Nigeria, and South Africa. In 2019, Africa increased its current and future productive base, which led to the improvement of the production process of Africa's workforce. There has been a tangible development in the continent's fundamentals, with gradual improvement and expansion in the investments and net exports. Studies have indicated that the economic outlook for Africa continues to be brighter, with countries such as Rwanda, Ethiopia, Côte d'Ivoire, Ghana, Tanzania, and Benin registering the highest level of growth by the end of 2019. This study analyzes the economic growth prospects for Africa, by analyzing the current state of the economy, prospects, and the areas to be rectified for better economic development.
* Economic Growth Prospects For Africa
The African economic outlook has presented positive results after many years of economic downfall and struggle. According to the study “Renewable energy consumption and economic growth nexus: A fresh evidence from West Africa" by Maji et al, (2019), the region has witnessed an increased level of economic development. According to the authors, the growth fundamentals in Africa have been growing with an increase in investment levels and a reduction in private consumption. However, the growth rate in the African economy has not been inclusive, since a majority of the people and countries continue to experience high levels of poverty and inequalities. According to the report, "Developing Africa’s Workforce for the Future" by Outlook (2020), there are many ways through which Africa can enhance its economic inclusivity. Some of the major strategies of enhancing inclusivity include; the process of developing deeper reform structures, enhancing diversification on the production base, enhancing economic resilience of the region, adopting climate-smart agricultural techniques, and also developing better risk-sharing platforms for households. Jena & Sethi (2019) in their text, “Foreign aid and economic growth in sub-Saharan Africa", argue that Africa also needs to develop a better fiscal space, which would lead to the expansion of social safety within the society and also help to increase efficiency of existing programs, and also focus onremoval of all obstacles which hinder prosperity of the worker's movement. Productive opportunities within and across countries should also be developed as a way of ensuring that there is inclusivity among members of society. Bandura & Dzingirai (2019) in their text, “Financial development and economic growth in Sub-Saharan Africa: The role of institutions" also argue that Africa’s economic growth depends on effective development of human capital and the ability to create more jobs for its people in the highly productive sectors. African nations should ensure that there is development of better education integration processes and development of better economic development plans, expansion of education, and better training programs. There should also be development of better worker employability and firm strengthening programs within African countries.
Figure SEQ Figure \* ARABIC 1: Adegoke, Y., (2020). African economies will outperform global growth in 2020 despite a lag from its biggest countries. Quartz Media, Inc. Retrieved from https://qz.com/africa/1783714/african-economies-to-watch-in-2020-debt-and-climate-crisis/
According to the chart above, the economic growth in Africa has not been uniform, with certain counties registering a higher level of economic growth than others. According to the chart, the performance has been as follows: South Sudan (8.2%), Rwanda (8.1%) Côte d’Ivoire (7.3%), Ethiopia (7.2%), Senegal (6.8%), Benin (6.7%) and Uganda (6.2%). Other counties which have registered tangible economic growth include; Kenya, Mozambique, Niger and Burkina Faso, with all the counties having an expected economic growth rate of 6%.
* Progress towards higher living standards
According to the study, “Foreign direct investment, sectoral effects and economic growth in Africa” by Opoku et al., (2019), Africa has faced major challenges in the development of its per capita GDP. According to the authors, for over 10 years, Africa experienced long periods of per capita GDP stagnation. According to the study, Africa has experienced serious effects of commodity price downturn, which happened between 2014-16 and which led to the increase in the output losses, and failure to eradicate poverty across Africa. According to the study, the continent has experienced lower levels of average real incomes, between 2014 and 2019. A majority of the sub-Saharan African countries have continued to experience an increase in poverty level.
Figure SEQ Figure \* ARABIC 2: Adegoke, Y., (2020). African economies will outperform global growth in 2020 despite a lag from its biggest countries. Quartz Media, Inc. Retrieved from https://qz.com/africa/1783714/african-economies-to-watch-in-2020-debt-and-climate-crisis/
According to the table above, the projections for the economic growth in Africa, projects that, the economic growth for different counties will change within a period of five years, from 2020. The chart project that, Senegal will have a growth of (8.3%), Rwanda (7.9%), Niger (7.3% ), Uganda  (7.2%) and Mozambique (6.9%).
Aladejare (2020) in the study, “Macroeconomic vs. Resource Determinants of Economic Growth in Africa: a COMESA and ECOWAS Study" agrees with the sentiments by Opoku et al., (2019). Aladejare (2020) argues that the process of reducing poverty across Africa will need a boost in the levels of inequality reduction strategies. According to Aladejare (2020), there are many variations in the African economic growth across various regions, with East Africa registering the fastest level of economic growth. By 2019, North Africa was registering the highest rate of GDP growth in Africa and also contributed as the highest economic contributor across the continent. According to Aladejare (2020), a majority of the African countries, especially the ones that focused on the export of products to other countries across the world, such as oil, have gained greatly from the export business. Africa continues to experience high levels of inflation, even with the enhancement of macroeconomic stability and the monetary credibility across the continent. According to Seyram et al., (2019) in their text, “External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries", the African economic growth has mainly focused on physical capital accumulation. Seyram et al., (2019) argue that human capital plays a major role in economic growth and it should be used as a complementary role to the physical capital accumulation for better economic growth and development processes.
* GDP growth as a component of sustainability and well-being
The continent has also experienced major challenges in its GDP growth. However, the GDP growth in Africa has not focused more on the aspect of the people’s wellbeing (Chitonge, 2015). Africa continues to experience major problems with its climate crisis, the increased rates of inequalities among the people, with many people experiencing increased rates of food insecurity and many cases of malnourishment, which has continued to affect the wellbeing of a majority of the people across the continent. Africa also faces low levels of prioritization strategies set to address the issue of investment in sustainable development projects as a way of promoting the continent's education, renewable energy, and resilient infrastructure (Rafindadi & Ozturk, 2017).
Figure SEQ Figure \* ARABIC 3: Kanos, D., & Heitzig, C., (2020). Figures of the week: Regional heterogeneity in Africa’s economic growth predicted to subside. The Brookings Institution. Retrieved form /blog/africa-in-focus/2020/07/30/figures-of-the-week-regional-heterogeneity-in-africas-economic-growth-predicted-to-subside/
According to the table above, East Africa has registered the highest growth rate of 5%, with South Africa registering a drop in its growth margin, from 1.2% growth rate to 0.7%. From the report, counties like South Africa and Nigeria rely majorly n the exportation of commodities to other counties, and their GP has been affected by the drop of product prices, especially during the Covi-19 pandemic.
The East African region attained an estimate of a 5.0% growth rate in 2019, becoming and maintaining the leading positing as the fastest-growing region in the continent. The increase in oil production in South Sudan increased from 0.5% in 2018 to 5.8% in 2019, due to the increase in the country's oil production levels and the establishment of peace agreement in September 2018 (Jena & Sethi, 2019). Kenya, on the other hand, experienced a decline in its economic growth, from 6.5% to 5.9%, while the North African region has been recorded as the second-fastest-growing economic region in Africa, indicating an average of 4.1% in 2019. Egypt recorded an increase in its economic growth from 5.3% to 5.6% in 2019, due to the adopted economic reform programs and the gas extraction in the Zohr field. However, various countries such as Angola and Zimbabwe recorded major economic declines in their GDP between 2018 and 2019.
The African GDP growth has also been characterized by an increase in the demand for use of human capital. The African worker’s productivity is highly dependent on capital formation, and human capital development is highly dependent on physical capital investment (Oluitan, 2012). The African economic growth inclusivity has only been reflected in about a third of African countries. The inclusive growth in African countries has only been attained incountries which have better education and which have well-established structures for change. The issue of eliminating poverty in a majority of the African countries is a major problem for most countries in Africa. The reduction of poverty by the year 2030 is a goal of many African countries, which is only attainable through the adoption, and the implementation of inequality-reducing policies. The structural reforms should be deepened to enhance better chances of inclusivity and diversification, while also expanding the productive base and also unleashing the growth potential (Mlambo, 2019). The improvement of the financial management is an important process in the attainment of macroeconomic sustainability, while the process of strengthening the domestic capacity helps to cushion the countries’ economy from extreme weather events. Africa needs to ensure that it addresses issues such as various obstacles which relate to labor mobility and expansion of social safety across societies.
* Challenges in the Macroeconomic and stabilization policy
The sleeping giant continues to face major challenges with its process of establishing a viable macroeconomic and stabilization policy across the regions. Although the continent has continued to experience a decline in its levels of inflation, the issue remains a major financial challenge (Gupta et al., 2006). In the last four years, Africa has witnessed an improvement in its macroeconomic stability, with the average rate of inflation moving from 11.2% in 2018 to 9.2% in 2019. However, the levels of inflation ranged between various countries based on the specific economic status of each country. At least 32countries have fully eliminated the issue of inflation between 2017 and 2019, while 22 countries have registered an increase in their rates of inflation between 2017 and 2019. Africa has experienced an increase in the stabilization of the energy prices the food prices, which have continued to fall due to increase in levels of agricultural production, which has significantly reduced levels of inflation (Kherallah et al., 2002). Countries such as Angola, Sudan, Zambia, and Zimbabwe have experienced an increase in their levels of fluc...