Africa is experiencing a slightly slow economic growth compared to the past 10 years, this according to a recent economic outlook by McKinsey Global Institute. However, the future of the continent is much brighter.
According to the survey, the economy of 11 countries in which accounts for 60 percent of the continent’s GDP declined sharply due to fluctuating oil prices but the remaining economies generating 40 percent of African GDP accelerated their annual growth rate from 4.1 percent in 2010 to 4.4 percent in 2015
Even so, the future of Africa’s economy shines brighter in the world, thanks to growing human resource, high consumer market and unexploited natural resources.
“Our new research shows how in coming years Africa will benefit from strong fundamentals including a young and growing population, the world’s fastest urbanization rate, and accelerating technological change”
These according to the study will help drive rapid growth in consumer markets and business supply chains, and will offer opportunities to build large, profitable industrial and services companies.
According to the study, consumer and business spending in the continent is expected to grow from the current $4 trillion to $5.6 trillion by 2025, indicating a whopping 40 percent growth.
Household consumption is expected to grow by 3.8 percent a year to 2025 to reach $2.1 trillion. Spending on discretionary items is likely to grow fastest, reflecting an expanding African consuming class.
Boasting of 70 percent under 20 years population, Africa has the biggest workforce in the world. According to McKinsey, the continent will have a staggering 1.1 billion of working population by the year 2034, larger than India or China.
Perhaps more exciting is the continent’s richest reserve of natural resources. The survey indicates that Africa has 60 percent of the world’s unutilized but potentially available cropland, and the largest global reserves of vanadium, manganese, and many others
The survey challenged governments in the continent to focus on industrialization, a sector that has the potential to step change productivity and create 6-14 million jobs in the next 10 years.
The report further shows that Africa has an opportunity to nearly double its manufacturing output from current $500 billion to $930 billion in 2025. This, according to the survey will cut on import and accelerate export portfolio.
Currently, Africa imports one-third of food, beverages, and similar processed goods it consumes.