So Long, Asia: Africa is Now Fastest-Growing Continent

At  midyear 2013, IMF bloggers declared Africa to be the second-fastest growing region in the world after (developing) Asia. Fast-forward a couple of months and it now has the distinction of being the world's fastest-growing region outright. Given that Africa has unfortunately lagged behind other regions in terms of growth during the past few decades, this occurrence is a welcome one, and this Asian certainly bears no grudges in seeing our African peers outperforming. Well done!

However, this distinction being bestowed by the African Development Bank, the AfDB unsurprisingly asks for more of the "good governance" agenda it has championed for quite some time alike its other regional development bank counterparts as well as the World Bank. It is still very much in vogue in development circles:

Africa is now the fastest growing continent in the world, the African Development Bank’s Annual Development Effectiveness Review 2013 [ADER] states. The report, just published, says this growth has been driven mainly by improved economic governance on the continent and the private sector. “Africa’s economic growth could not have happened without major improvement in economic governance.

More than two-thirds of the continent has registered overall improvement in the quality of economic governance in recent years, with increased capacity to deliver economic opportunity and basic services,” it says. 

What kinds of improvements in governance are we talking about here? The AfDB centers on another chestnut of these institutions, the ease of doing business. Instead of having to pay bribes to various officials working in different government agencies to start up a (formal) business, African nations are supposedly reducing such opportunities for petty corruption and making it easier for entrepreneurs to get started:

The report says the costs of starting a business, for instance, have fallen by more than two-thirds over the past seven years, while delays for starting a business have been halved. It says the private sector has become the main engine of growth as the continent continues to improve its business climate. This growth is increasingly driven by internal demand.

“This progress has brought increased levels of trade and investment, with the annual rate of foreign investment increasing fivefold since 2000. For the future, improvements in such areas as access to finance and quality of infrastructure should help improve Africa’s global competitiveness,” the report states.

Better yet, the growth seen in recent times should continue into the medium term:

According to the ADER, growth in the continent’s low-income countries exceeded 4.5 per cent in 2012 and is forecast to remain at above 5.5 in the next few years. Africa’s collective gross domestic product (GDP) reached US $953 while the number of middle income countries on the continent rose to 26, out of a total of 54.

“Strong economic growth has made major inroads into income poverty. The share of the population living below the poverty line has fallen from 51 per cent to 39 per cent. Some 350 million Africans now earn between US $2 and US $20 a day, and the middle class is increasingly becoming an active consumer market,” the report says.

Some good news amidst doom and gloom in the developed world.