Geographies in Depth

10 reasons to watch Africa in 2016

The future is looking bright for Africa. Image: REUTERS/Zohra Bensemra

Caroline Kende-Robb
Senior Adviser, African Center for Economic Transformation (ACET)
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In 2016, the world faces uncertainty and volatility – as well as huge opportunities for significant progress. Africa stands not just to gain from these major shifts, but also to lead some of them.

The global landscape is certainly challenging, with the political and economic news dominated by slowing growth, rocky stock markets, falling commodity prices, risks in emerging markets (especially China), increasing numbers of refugees, geopolitical tensions and the threat of violent extremism.

However, 2016 may not see the catastrophe some are predicting. The markets are most likely overreacting. The IMF is predicting growth of 3.4% in 2016 and 3.6% in 2017, up from 3.1% in 2015. Behind the gloom of the 24-hour news cycle, there are many reasons to be optimistic.

Whereas 2015 was the year of agreements, 2016 will be a year of transformations – in energy, finance, technology and global partnership. These will have profound effects on Africa.

Here are 10 scenarios that we see unfolding in 2016 for Africa:

1. Climate gains

COP 21 in Paris was an unambiguous success. The expectations of many were surpassed and the direction of travel was identified. In 2016, the challenge will be the speed of that travel. We need to move faster. At COP 21, African nations seized the chance to shift the climate narrative from one of dependence to one of opportunity and transformation. The year 2016 will see Africa making advances in low-carbon energy while defending its right to exploit fossil fuels. With the cost of solar falling rapidly (by over 10% each year) huge opportunities exist.

2. Private sector momentum

The private sector will emerge as a critical catalyst for achieving global climate targets, especially ensuring that carbon emissions peak within the next five to ten years. The year 2016 will see more CEOs demanding a carbon price. With its growing population, increasing consumer demand, and massive infrastructure needs, Africa is ideally placed to benefit from this new catalytic private sector.

3. Energy transformations

Africa’s energy challenge is substantial. The Africa Progress Panel, chaired by Kofi Annan, is calling for a ten-fold increase in power generation in Africa by 2030. Over the past year, the political ambition across Africa to radically transform the energy sector has increased substantially. The global context is also shifting in the light of COP 21. This year will see greater global and regional political engagement on Africa’s energy access. The African Development Bank’s New Deal on Energy for Africa will encourage a broad coalition to seize the momentum of 2015 and achieve quick wins by 2020. Key partners include the UK’s Department of International Development and USAID’s Power Africa.

4. Building the new multilateralism

In 2015, Africa received the global attention it deserved at top-level international meetings on financing for development, new global development goals and climate change. At these meetings, governments across the world showed they could look beyond their own borders. Now this year is about full and fair implementation. Citizens will play a key role by holding their leaders to account against the targets they have set themselves.

5. Falling commodity prices will drive diversification

Resource-rich African economies such as Angola, Nigeria, Ghana and Zambia face a serious threat from falling commodity prices. These countries need to find alternative sources of finance. China will continue to be a key player in this respect, but in 2016, India will be a strong competitor. Falling commodity prices may also offer some African countries the opportunity to diversify their economies and cut fuel subsidies that have exacerbated inequality.

6. Africa’s green and blue revolutions

For many countries, the story about falling commodity prices will transform into a story about Africa’s green and blue revolutions: to diversify their economies, these countries will focus on agriculture and fisheries. African farming will no longer be seen as a development problem but an exciting business opportunity. Smallholder farmers across Africa have an unrivalled capacity for resilience and innovation and could feed rapidly growing urban populations and generate exports to meet demand in global markets. An immediate priority will be promoting import substitution to cut Africa’s $35 billion annual food import bill. This will require measures to cut tariffs and non-tariff barriers to regional trade, eliminate transport cartels, and develop marketing infrastructure. Increased investment in infrastructure and research will begin to dramatically raise farmers’ yields and incomes.

7. Africa and the Fourth Industrial Revolution

Significant investments will be made in new technologies led by the private sector and supported by the international community. As neatly described in Klaus Schwab’s book, The Fourth Industrial Revolution, it is the fusion of new technologies and their interaction across the physical, digital and biological domains that make this Fourth Industrial Revolution fundamentally different from previous revolutions. Venture capital funds are ready and waiting to invest across Africa. The next step is to bring together the public and private sectors to drive the deals as quickly as possible. In 2016, rapid technological changes have the potential to create new industries, reduce inequality and drive structural transformation.

8. Financing forward

A lack of available finance continues to be a key constraint for Africa. But 2016 will see significant investments as big finance moves to tap the potential of the 80% of citizens who are excluded from the financial system. Mobile technology will be pivotal in addressing this unmet need. Local banks will begin to function more as "real" banks serving the demands of small and medium-sized enterprises, many of whom are dynamic "agropreneurs". Mobilizing domestic savings will be crucial. Pension funds will be increasingly seen as an essential and exciting means to provide long-term capital.

9. Managing migration

Migration out of Africa will continue to feature on the international policy and news agendas. In 2016, some African leaders will begin to tackle the underlying forces driving this trend. At the same time, the global dialogue related to the movement of people from Africa to Europe will start to shift from being seen as a crisis to a potential win-win if managed more proactively.

10. Global influence

Africa’s dynamism, voice and presence will increase across international arenas. Africans, especially the millions of young people, will continue to explore novel opportunities related to booming new technologies. As a result, many African countries will find themselves at the forefront of global innovation across many sectors including technology, creative and cultural industries, and sports.

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