Africa Was Twice as Rich as Asia in 1950 and Africa Rising Requires Good Policies

Today people see the economic success of China and Asia and see the terrible poverty but many do not know that Africa was ahead of Asia for over a century in terms of per person wealth.

Asia was at its worst in the early half of the 20th century with many wars and communist leadership in China. In 1950, Africa had almost two-thirds of the per capita income of the global average. The global average was much less than it is today, but it would take until 2008 before the average people in Asia reached two-thirds of the global income average.

Japan, Taiwan, Hong Kong, Singapore and South Korea adopted pro-growth policies first and achieved economic success. China and Malaysia have been following. Finally India, Philippines and other countries in Asia have copied pro-growth policies and been able to contain and limit corruption to a level where growth is not crippled.

Asia per capita wealth increased and passed Africa in the mid-1980s when they both had about half of the global income average.

Africa had a relatively low population compared to Asia. Africa has a lot of oil, gold, diamonds and other resources.

Getting aid from Bill Gates and other countries can help African and developing countries to target specific health and sanitation problems. However, achieving and sustaining high growth rates requires having stable leadership that adopts good economic policies. Wealth re-distribution schemes will not eliminate poverty and build a global middle-class in Africa.

Many countries in Africa have had about 5% per year GDP growth since 2000. The share of extremely poor people living on less than US$1.9 per day (PPP) in Africa has decreased from 56% in 1990 to 43% in 2012. Many dimensions of well-being have improved: literacy rates, life expectancy, the reduction of chronic infant malnutrition, and the number of deaths from politically motivated violence.

Ethiopia is Maintaining High Economic Growth Rates

Ethiopia is a country that has had 8-10% GDP growth for many years and has been following the China development model. Ethiopia has been recovering for the past 25 years from a civil war and a completely devastated country. They have reached about $550 per person in per capita GDP on an exchange rate basis and $1730 in per capita GDP on a purchasing power parity basis. They are projected to have 8.5% GDP growth in 2019. Ethiopia has a population of about 112 million.

Ethiopia could achieve over $1000 per person in per capita GDP by 2025 and would be classified as a global middle-income country.

Since the end of the civil war in 1991, Ethiopia has quadrupled primary school enrolment, halved child mortality rates, and doubled the percentage of people with access to clean water.1 Ethiopia has also achieved the most rapid increase in access to improved sanitation facilities of any African country since 1990, moving from just 2.5% access to roughly 29% in 2016.2 During the same period, it has combined improvements in service delivery with the third most significant decline in fertility rates and third-largest decline in undernutrition rates of any African country.

Despite a reduction in poverty of roughly 45 percentage points over the past 20 years, approximately 25% of Ethiopians – about 25 million people – still live in extreme poverty (defined as living on less than US$1.90 per day). On its current trajectory, Ethiopia is expected to reduce the percentage of the population living in extreme poverty to 10% by 2030, but that progress would still leave nearly 15 million people living in extreme poverty.

Ethiopia is Copying China’s Development Zones and Industrial Parks

Ethiopia has invested about 1.3 billion U.S. dollars in the construction of around a dozen industrial parks, plans to increase the number of operational industrial parks from the current five to around 30 by 2025. Image courtesy: AP

Ethiopia wants to be a light manufacturing hub and lower-middle-income economy in the same period.

Chinese companies are buidling large energy projects in Ethiopia, including a high voltage electric transmission line to a 6,450 MW hydro dam currently under construction on Blue Nile river, the 51 MW Adama I and 153 MW Adama II wind farm projects and the 300 MW Tekeze hydro project.

Ethiopia is currently undertaking massive energy projects which it hopes will increase the electricity generation capacity of the country from the current 4,300 MW to 17,300 MW by 2020.

Africa Needs Strong Ethiopia-China Style Growth

If Africa only has an average of 5% GDP growth then in 2060 Africa will reach about $5600 per capita GDP. This would be a fantastic improvement over where things are today and it would be difficult to sustain stability and consistent growth at that level. However, it should be possible for other countries to copy Ethiopia and achieve 8-11% per year GDP growth. High growth levels means that Africa could reach South Korean levels of per capita income in 2060.

Ghana and Sudan have over 4% per capita GDP growth.

Sudan has about 40 million people and per capita income on an exchange rate basis of about $2000 per person.

Ghana has about 28 million people and per capita income on an exchange rate basis of about $2000 per person.

Egypt can have decent economic growth but it has not been consistent.

SOURCES- African Development Bank Group, Brookings Institute, World Bank

Written By Brian Wang,