A stronger Africa would mean a stronger world, economists believe, as business leaders look to develop stronger relationships with developing African nations. The ongoing Euro zone crisis has shown that western markets have reached a wall, with unemployment and failing currencies taking their toll. New trade partnerships with African governments looking to spread their resources could spur growth, as there is an increasing demand for Western goods within the continent.
“50-150 million Africans are classified as economic elites with spending power similar to working-class citizens in the West,” global business consultant Vijay Mahan told Project Syndicate. Almost half a billion Africans are in households with stable jobs, and the McKinsey Global Institute has listed Africa’s consumer class as having a spending power of over $800 billion. At the current rate of growth, that figure will break $1.4 trillion by 2020, and Africa’s population will reach two billion by 2050. Such a large percentage of the world’s consumer base cannot be ignored.
China has already stepped in to help develop Africa’s infrastructure, pledging billions in support to growing nations. The European Union has an opportunity to collaborate on similar projects within the continent, without abusing or exploiting developing states. The World Bank believes that Africa will need over $35 billion in investments annually to support infrastructure growth. Nigeria, with its population of 150 million, is a perfect example of the need for investment. The country is capable of generating just 5,000 of the 100,000 megawatts necessary to provide stable electricity to its people. Nigerian Finance Minister Ngozi Okonjo-Iweala believes that the country’s economy could see growth of 8-12 percent annually if its power needs were met. Using a rate of $1 million per megawatt, a stream of $100 billion in exports could be established easily, while opening job opportunities in both Europe and Nigeria.
The International Money Fund expects Africa’s rate of growth to overtake Asia’s within the next five years, making a long term relationship even more valuable. Meanwhile, as the European Union struggles to right itself financially, Africa’s most progressive nations are already looking to China and India to provide needed investments.