Is Sub Saharan Africa Positioned to be the Fifth BRIC-A?

Inspiring remarks by Ngozi Okonjo-Iweala, Managing Director of The World Bank can be found here .

new ideas include:

1. Infrastructure remains a major constraint in Africa and to finance infrastructure development projects, Africa should securitize development aid. Hence instead of donors disbursing small amounts of aid cyclically, they could  issue African Development Bonds in New York, with a yield that matches the US 30-year treasury bond rate, currently averaging around 4.5% per year.  excerpt "Infrastructure spending needs for Sub-Saharan Africa (capital plus operations and maintenance) are estimated at $93 billion per year; deducting the amount governments actually spend and raising efficiency leaves a net funding gap $31 billion a year, mostly in the power sector. Therefore, a $100 billion bond could go a long way in filling the gap for a few years. Most importantly, issuing a bond like this could change perceptions overnight about Africa as a place to do business. Faced with secure financing of $100 billion, private firms across the world would line up to provide infrastructure in Africa".

2. Volatility: Sub Saharan Africa suffers from domestic and external volatility with the former requiring rigorous internal governance systems in order to manage volatility emanating from bad policies, social conflict, institutional weaknesses in fiscal, financial, terms of trade and judicial sectors. excerpt" Two things can be done to cushion Africa against the harmful effects of externally-driven volatility. First, donor resources can be used more aggressively as countercyclical instruments—as indeed was done with IDA and IBRD resources during the global financial crisis, with IDA front-loading country allocations to help low-income countries. Second, steps can be taken to eliminate the costs associated with aid volatility".

3. Skills: Progress has been made in primary education however gross tertiary education has fallen short hence affecting the cognitive skills necessary for innovation and technology diffusion. excerpt "The finding on the importance of cognitive skills for long-run growth should be a wake-up call for Africa, with questions being raised about the quality of the education now being provided. New tests show that in Mali, 94 percent of Grade 2 students cannot read a single word; in Uganda, half of grade 3 students fail this simple test.  The good news is that rate of return to skills is high in Africa. What is therefore needed is a big push on quality education and skills, as Korea and other East Asian countries did to underpin their growth miracles. For this, partnerships among industry, government and perhaps even civil society in vocational and tertiary education should be formed".

In conclusion- Africa is one of the youngest continents with a population of 820 million in 2008, that will soon rival that of China and India. Therefore the youth especially need to seize the opportunity to change the destiny of this rapidly growing continent.  Hence its only a matter of time before Africa  will position itself as the fifth BRIC alongside Brazil, Russia, India and China.


My take: while the title sounds ambitious, there is concrete evidence that Africa has made great strides in recent years. However some of the proposed solutions are centred largely on donor funds, an aspect which is outside of the continent's control especially with the current financial crisis- most recently in Europe. According to Africa Economic Outlook, in the OECD/DAC report of February 2010,  expected overseas development aid levels to developing countries will reach record levels in 2010, in dollar terms, increasing by 35% since 2004.  Africa, however is likely to get only about USD 12 billion of the USD 25 billion increase envisaged at Gleneagles Summit in 2005. This shortfall is due in large part to the under-performance of some European donors who give large shares of ODA to Africa