Current State

Abiy’s government that refused to comment in the early stages of the conflict, recently asserted that its troops have successfully conquered territories, winning key battles, and are now marching undeterred towards Mekelle, where the TPLF has a stronghold and battle-hardened history. The war has pitted the central government against one of the most heavily militarized states that constitute Ethiopia. The TPLF occupied the helm of power for a long time within the Ethiopian political system, up until power was assumed by the current Prime Minister Abiy Ahmed two years ago. While commenting on its recent actions the government claimed that the TPLF has turned renegade and is holding power in Tigray illegally, while both sides have blamed the other for an unconstitutional assault on rights, and creating a situation that has stirred up a global humanitarian situation.

Countries in the African region in the past week have expressed their concern that the current situation could set off a spark that may result in an all-out civil war, which could play a highly destabilizing role, affecting the Horn of Africa, which is the continents most fragile regions. The Tigray who leaders have been blamed for plotting against the government and subsequently purchasing heavy machinery in an effort to prepare for a war with Ahmed’s government have voiced their discontent with the central government, in saying that the Tigray population has been unfairly treated, ousted from top government jobs while being used a scapegoat for Ethiopia’s failures under the current administration. In an attempt to break free of the autocratic shackles of the government, Tigray held its elections in September in defiance of Abiy’s government. However, the following move did not yield the results that the Tigray leaders were expecting, instead, it acted to bolster the belief of Abiy Ahmed’s government, towards the need to bring the entire region under their control, leading them to vote in favor of establishing a temporary government in the region.

Refugee Crisis

As the war continues an obvious result of the instability and uncertainty has been the increasing number of Ethiopian citizens fleeing the conflict in the Northern region of the country and moving into Sudan. With numbers reaching close to 10,000, aid officials providing services on the ground believe that the numbers are going to significantly increase in the coming days. The gravity of the situation and the poor conditions prevalent in the region were described by the Sajjad

Mohammad Sajid, the United Nations Humanitarian Chief in Ethiopia, in what he described as long lines appearing outside bread shops of hungry children and women, while supply laden trucks are stuck at the border. Considering that such movement of refugees hasn’t been recorded in the region in the last two decades, and also recognizing the lack of resources in the hands of governments, the United Nations High Commission for Refugees has issued an official warning for a humanitarian crisis.

More than 27,000 have now crossed into Sudan through the Hamdayet border in Kassala State, the Lugdi in Gedaref State, and a new location further south at Aderafi border where Ethiopian refugees started crossing over the weekend. Recent ground reports indicate that refugees have been pouring into Sudan, exhausted from the long trek. The UNHCR along with partner agencies is moving to support the Sudanese government in its response, ramping up humanitarian assistance at the borders as the need continues to grow at an exponential rate. In the last week itself, the UNHCR has relocated close to 2,500 refugees, and with this constant and immediate need to keep relocating refugees, there seemed to have emerged a shortage of spaces or sites where these vulnerable refugees can be relocated to.

In Tigray, the lack of electricity, telecommunication, and no access to food and cash has been a major roadblock in delivering humanitarian assistance in the region. After nearly two weeks of conflict, reports of larger numbers of internally displaced grow daily, while the lack of access to those in need, coupled with the inability to move goods to the region, remain major impediments to providing assistance. The current Ethiopian crisis has been a major cause for the Eritrean refugee population of nearly 100,00 in Tigray, who are majorly reliant on assistance from UNHCR and partners. The potential for further displacement of refugees inside the country is increasingly a real possibility. The humanitarian situation as a result of this crisis is growing rapidly. UNHCR reiterates its call for peace and urges all parties to respect the safety and security of all civilians in Tigray.

What next?

The pandemic and the postponement of the general elections acted as a blessing for the Ethiopian government, who were able to use these unusual circumstances to sideline opposition leaders while also cracking down on critics, and most importantly producing an election environment that they can be comfortable with. For now, it seems, that Ahmed’s government will try and keep a lid on future confrontations with the Tigray leaders, while simultaneously try and curtail the budget of the region, in an attempt to squeeze out, what the government has termed as a rogue.

Featured Image Source: Google Images | Image By: CSIS

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Background of the coup

Mali, a Francophone country, has not for the first time experienced an unconstitutional transition of power. The year 2012, has been a watershed moment in the country’s political history. The coup in 2012 led to the election of the just-deposed President Keita. Once in office, Keita’s true colors started to surface, and he was soon regarded as an ineffective leader, who had failed to provide the economic stability and physical security that the country needed. Mali’s almost decade long experience of political upheaval started with the coup in 2012, as it created a power vacuum, which was effectively exploited by Islamic fundamentalist groups, by aligning themselves with ethnic militias and capturing territories in the North of the country. The country’s civilian and military leadership have spent the better half of the decade keeping a check on rising Islamic tendencies. Unfortunately, the violence has only risen over the years, resulting in mounting casualties and forced internal and external displacement of people. 

The country has also noted a manifold increase in contentious activities, most common of them being protests in large cities. One of the immediate causes leading to a string of protests around the country was the decision by the constitutional court to overturn the provisional results of March’s legislative elections, which led to Keita’s party winning 10 more seats in Parliament. What is astonishing is that unlike coups, in general, the Junta seems to have the support of the country’s citizenry. Looking back at the last decade and the political and economic struggles that the people have endured, such a trend is to be expected. However, less enamoured by the coup is the United Nations that had 15,000 peacekeeping troops in the country, France which has about 5,000 military personals in the country, and the ECOWAS, which has taken drastic decisions to impose border restrictions and halt all financial and monetary dealings with the country. 

Effect on Peace and Security

Apart from the obvious domestic ramification that followed the recent transition of power in the country, one of the greatest concerns is regarding the future of peacekeeping operations in Mali. The country under the reign of Keita was home to several international troops from France, America and at the same time, transnational bodies such as the United Nations Peacekeeping force. In the case of France, the new developments offer a dilemma, whether the French government will find a favourable partner in the new Malian leadership or whether they will choose to conduct their operations independent of the Junta’s control and influence. However, what has got international actors and scholars worried about is America’s redefined role in Mali’s future. America has been the linchpin of all counter-insurgency operations in Mali. By law, the US is not supposed to provide military assistance in the form of aid and troops to any government formed as a result of a coup d’etat. This raises questions as to whether the superpower will cease all efforts to assist Mali, or will bypass its laws to ensure an end to rising Islamic fundamentalism. 

The greatest impact of the events that unfolded on the 18th of August has been on the G5 Sahel Joint Force, which is made up of troops from Burkina Faso, Chad, Mali, Mauritius, and Niger. The member states are considering placing sanctions on Mali and following in the footsteps of the ECOWAS. The current situation has also made us reflect on the refugee situation. Mali houses close to 45000 refugees and has recorded an internal displacement of about 250000 citizens. How the country develops and strengthens its relationship with partner nations in Europe and Africa will be instrumental in deciding the manner in which Mali will deal with its vulnerable population. For European nations, Mali’s security and stability is important as it curtails refugee flows to the southern borders of the continent. However, no concrete decision can be taken until the provisional government highlights its plan for future engagement with countries. 

Conclusion and what is next in store for the country

As the clouds of uncertainty gather over the republic, there is an air of uncertainty. There is widespread disagreement, regarding the reinstatement of Keita as the head of state. His ineffective leadership skills have led many to believe that a move of the following nature, will only plunge the country into further chaos. However, of late many have pointed towards Mahmoud Dicko, the leader of the protests as the next in line to lead the country. His widespread support among the civilians and his far-reaching influence over the politics of the country have resulted in him being the de facto ‘kingmaker’. The military leadership that initiated the coup has highlighted its three-year plan to shift to democratic rule and have requested international stakeholders such as the United States and France to continue aiding the country through this difficult time. Countries find themselves in a moral dilemma, as to whether to help the African nation or not. Many have emphasized the point that it is in the best interests of nations to assist Mali, because the last time the country underwent an unconstitutional transition of power, it provided Islamic fundamentalists with a chance to sow the seeds of discord and instability. 

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With that framework, the minority population established segregation among housing, education, and all spheres of life, creating three nations: one of the whites [comprising of people groups essentially of British and Dutch [Boer] family line, who battled for ages to increase political supremacy, a battle that arrived at its violent peak with the South African War of 1899–1902); one of the blacks (comprising of such people groups as the San hunter and gatherers of the north-western desert, the Zulu herders of the eastern levels, and the Khoekhoe ranchers of the southern Cape districts); and one of “Coloureds” (blended race individuals) and ethnic Asians (Indians, Malays, Filipinos, and Chinese).

The politically-sanctioned racial segregation system was despised and even fervently opposed by much of the world, and by the mid-1980s South Africa ended up among the world’s pariah states, the subject of financial and social blacklists that influenced pretty much every part of life. In the need compelled to stand up to the unsound idea of ethnic separatism in a multicultural land, the South African government of F.W.de Klerk (1989-94) started to rescind politically-sanctioned racial segregation laws. That procedure thusly set moving a change towards universal suffrage and true electoral democracy, which finished in the 1994 election which the appointed the long-imprisoned leader Nelson Mandela. This change witnessed the nation gaining social equality in a brief timeframe. South Africa has three cities that serve as its capital: Pretoria (executive), Cape Town (legislative), and Bloemfontein (judicial). 

ECONOMY

The economy of South Africa took a drastic turn in the late 19^th century when jewels and gold were found there, followed by large investments from foreign capitals. In the years after World War II, the nation formed a much-developed manufacturing base and encountered exceptional development rates, and at that time its development rated were most noteworthy in the world.

However, South Africa has encountered economic problems since the late 1970s because of the apartheid policies which led may countries to holdback investments and to impose international restrictions against it. South Africa’s economy didn’t quickly bounce back in the mid-1990s while apartheid was being disassembled, as capitalists held on to perceive what might occur. After the 1994 democratic elections, the investments poured in. Post-apartheid South Africa was then confronted with the issue of incorporating the recently disappointed and mistreated greater part into the economy.

In 1996 the legislature made a five-year plan—Growth, Employment, and Redistribution (GEAR)— that concentrated on privatization and the evacuation of trade controls. GEAR was successful in accomplishing a portion of its objectives yet was hailed by some as establishing a significant framework for future financial advancement. The government additionally executed new laws and projects intended to improve the monetary circumstance of the underestimated larger part. The Black Economic Empowerment (BEE) was introduced, it aimed to increase employment opportunities for those who were characterized under apartheid as black, coloured, and Indians, enhancing their working skills and incomes. This strategy was further extended through the Broad-Based Black Economic Empowerment (BBBEE) Act of 2003, which attended to gender, social and racial inequality.

RESOURCES AND POWER 

South Africa is plentiful in an assortment of minerals. Other than diamonds and gold it also has a reserve for iron ore, platinum, manganese, chromium, copper, uranium, silver, beryllium, and titanium. Despite the fact that manufacturing has provided employment for decades, contributing towards the Gross Development Product (GDP) than mining, the mining segment keeps on shaping the centre of the South African economy as it holds companies to invest in other economic activities. Gold remains the most significant mineral—South Africa is the world’s largest producers—and stores are enormous; in any case, creation is gradually declining, and costs have never risen to their stupendous highs of the mid-1970s.

EDUCATION 

Since 1994, South Africa has made incredible walks in understanding the right to education, quickly fabricating an effective, available and quality education system for youngsters and youths. This outstanding advancement has been recorded over the three parts of fundamental training in youth improvement, primary and secondary education. However, notwithstanding these accomplishments, the possibilities and openings stood to kids in South Africa are still generally dependent upon which side of the inequality they were born. Poverty and Inequality stay cruel determinants, forestalling such huge numbers of kids from getting to the fundamental education that they deserve.

From birth to the last year of high school, kids born in poor family face a lot of challenges, which their co-students coming from a wealthy background may not. While access to ECD centres has expanded, the nature of learning and development programmes remain at test. An underqualified workforce paired with the poor implementation of the learning programmes sways ECD results. While giving quality learning and basic education has its difficulties, keeping youngsters in school to finish their education is another. A little more than a fourth of South Africa’s total children drop out of school before the finish of Matric – most of whom are from helpless territories and defenceless against various boundaries to education. This disparity of access is compounded by a sexual orientation imbalance that impacts little youngsters particularly.

SOUTH AFRICA AND ITS DIPLOMATIC RELATIONS

The Ministry of Foreign Affairs is answerable for South African foreign policy strategies. The Department of Foreign Affairs (DFA) inside the Ministry of Foreign Affairs conducts contact with foreign governments and international associations on all issues influencing official relations. These relations are led through foreign government authorities, through representatives licensed to South Africa, and through South Africa’s authorized embassies, departments, and different missions abroad. Until the mid-1990s, the DFA and the conciliatory corps went up against various counter-establishment “strategic administrations” run by antiapartheid associations in a state of banishment, particularly the ANC. The point of these equal correspondence channels was to disconnect the South African government inside the global network as a method for forcing Pretoria to abrogate apartheid. 

After the abrogation of apartheid and the initiation of the democratically chosen Government of National Unity, South Africa’s foreign relations significantly transformed. The nation’s discretionary segregation finished, and existing relations with different nations and with international associations improved. South Africa restored discretionary and trade relations with numerous nations, especially in Africa, and set up new relations with some previous approvals “hardliners”, for example, India, Pakistan, Bahrain, Malaysia, Jordan, Libya, and Cuba. A few provincial and international associations welcomed South Africa to join or to renew its membership, including the Organization of African Unity (OAU), the Southern African Development Community (SADC), and the United Nations (UN).

In addition, South Africa participated in international and bilateral sport, academic, and scientific activities, often for the first time in decades. Relations with the nations of the previous Soviet Union, Eastern Europe, and Central Europe improved. South Africa had full political binds with thirty-nine nations in 1990; that number expanded to sixty-nine out of 1993, and to a maximum of 147 in 1995. Various foreign policies were brought into action before Nelson Mandela was appointed as President in 1994, for example, in mid-1994 de Klerk and Mandela, alongside the leaders of Botswana and Zimbabwe, interceded a conclusion to a military revolt in neighbouring Lesotho. In mid-1994, South Africa gave its first help to a UN peacekeeping activity when it provided medical clinic hardware for Rwanda. Likewise, in 1994, President Mandela consented to help settle the unmanageable common war in Angola, although he advised against unrealistically high expectations in this and other profound established political and ethnic clashes.

INDIA- SOUTH AFRICA RELATIONS

India’s relationship with South Africa is both fundamental and remarkable, going back a few centuries and is tied down in common ideals, ideas, interests, and icons – like Mahatma Gandhi and Nelson Mandela. In any case, their respective relationship stayed stressed for quite a while because of South Africa’s apartheid government. After its independence, India began its struggle for the position at international associations like United Nations (UN), Commonwealth, and Non-Aligned Movement (NAM), and was the main nation to have trade relations 1946, and in this way forced political and financial assets. Following a hole of four decades, India restored exchange and business ties in 1993, after South Africa finished its standardized racial isolation. In May 1993, a Cultural Centre was opened in Johannesburg. In November 1993, strategic and consular relations were re-established during the visit of then South African Foreign Minister Pik Botha to India. The Indian High Commission in Pretoria was opened in May 1994. In 1996, India opened its permanent Office of High Commission in Cape Town, which was re-assigned as Consulate General of India in 2011.

India and South Africa’s shared basic encounters and aggregate quality have formed how the two of them see the world together. As two countries who have shared their battle to independence, the obligation to improve the lives of others is inserted inside India and South Africa’s consciousness. After South Africa established democracy in 1994, it was the Red Fort Declaration on Strategic Partnership among India and South Africa, marked in March 1997 by then PM Shri Deve Gowda and Nelson Mandela, which set the boundaries for a revived relationship. The twentieth commemoration of marking of the revelation was honoured by an India-South African social spectacle involving music and dance performances, and an occasion composed by High Commission of India, Pretoria on April 9, 2017. This Strategic Partnership between the two nations was again re-certified in the Tshwane Declaration (October 2006). Both these announcements have been instrumental components that have contributed in the past to both South Africa and India for accomplishing their national objectives.

List of MoUs signed during the 10^th BRICS Summit, signed between India and South Africa were;

• Memorandum of Understanding between the Indian Council of Agricultural Research, New Delhi, India and the Agricultural Research Council, Pretoria, South Africa on Agricultural Research and Education.
• Memorandum of Understanding between Government of the Republic of South Africa and Government of India regarding the setting up of the “Gandhi Mandela Centre of Specialisation in Artisan Skills” in South Africa.
• Memorandum of Understanding between Indian Space Research Organisation and the South African National Space Agency on Cooperation in the Exploration and Uses of Outer Space for Peaceful Purposes.

South Africa can use its diplomacy not only at governmental but also as a non-governmental level. Utilizing scholastics and specialists outside of government to “include” information and ability to South African discretion, have gotten progressively normal. It is to be trusted that this training will proceed to help give what is expected to compelling interest in an inexorably intricate world. Thorough training of professional diplomats is, however, not unimportant either, and such persons should be retained for the foreign service to establish an ever-growing pool of experience in the DFA. These are on the whole parts of the “small scale level” of strategy and fundamental if the nation is to prevail at the global level. 

Moreover, thought should be given to the decision of various types of diplomacy and their blend; an inappropriate decision can have genuine results, as the Nigerian debacle would delineate. The topic of what balance ought to be kept up among respective and multilateral discretion has been raised; summitry should be utilized wisely; a fitting job for innovation in diplomacy should be discovered; the degree to which the nine areas or locales in South Africa can be permitted to lead their foreign relations should be considered; and, troublesome decisions should be made in regards to accentuation on various regions. Prioritising in diplomacy appears to be unavoidable as the conceivable outcomes are practically unfathomable, though the assets are quite restricted. This isn’t a difficult extraordinary to South Africa. 

The South African government is no world-exhausted system which has seen everything previously, but a youthful, excited organization anxious to show its gifts and beliefs. The government believes in the excellencies of relationship, co-activity and human qualities. It has understood that the present chiefs should be acceptable ambassadors who can adjust domestic and international pressure, who can make arrangements, and resolve debates, characterizing the interests of their states in harmonious manners.

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Past Challenges

The economic and social exploitation of the continent’s resources for decades along with horrendous violence and poor administration by corrupt leaders leading to widespread poverty and untimely deaths, which could have been prevented, has greatly contributed to its present economic scenario of Africa. Africa has witnessed one of the biggest cruelties of humanity, slavery. African slaves were supplied to American plantations which not only led to the loss of welfare due to denial of basic Human Rights but also hindered progress due to scarcity of labour in Africa. The anti-slave legislation solved the problem of scarcity and brought about a major change in the continent that led to the expansion of tropical agriculture in the economy.

However, that did not guarantee good days for Africa because, soon, they came under Colonial Control. The colonizers plundered their resources, worked them to death, impeded growth and development, and projected Africa as an economically weak continent in the global economy. They employed Africa’s necessary resources in the production and export of cheap primary commodities and raw materials only, which forced them to import the expensive manufactured goods which caused unequal trade transactions and greatly increased the trade deficits. The colonial rule has had serious long-term consequences on the economy of Africa and has greatly contributed to the underdevelopment of the continent.

Africa’s commendable growth potential is evident from the way it has bounced back from decades of torture and exploitation and maintained a somewhat average growth rate of 5% since 2000 in the Sub-Saharan region. This shows that Africa has the capability to increase and sustain its growth despite facing adverse conditions.

Present Scenario Due to the Pandemic

Despite not achieving the desired growth in 2019, forecasters were hopeful about the acceleration of growth at a stable rate, with an increase to 3.9% in 2020. However, due to the sudden onset of the pandemic, all prior forecasts have been rendered futile. New predictions state a sharp contraction in the Real GDP by 1.7% in 2020, indicating a 5.6% fall from the previous forecasts. These predictions are valid only for the short-term impact of the virus. If it were to last beyond the first quarter of 2020, then GDP would contract by 3.4%, i.e., a 7.3% fall from the previous predictions. This fall in GDP is accompanied by a 5% sharp rise in headline inflation due to supply-chain disruptions, thus, putting the economy in a state of stagflation. However, there is scope for the internal stability of the inflation rate due to immense fall in aggregate demand.  

Challenges Being Faced

Effect on Fiscal Deficits

The pandemic will lead to a great cyclical increase in fiscal deficits in Africa. It will happen in a two-fold process of decreasing government revenues and increasing fiscal expenditures to boost demand in the economy. In 2020, the deficits have been predicted to rise to 8% – 9% of the GDP, depending on the severity of the situation.

From the pandemics and other crises of the past, it has been noted that government revenues fall more rapidly than economic activity. Situations are more likely to worsen and be volatile to COVID-19 shocks due to the ineptitude of the administration in successfully implementing proper policy reforms to ensure smooth flow of government revenue.

Effect on Poverty

If there is a continuation of the prevailing trends, Africa will not be able to do away with extreme poverty by 2030, as planned before.  Taking into account the current scenario, there have been estimations that poverty will only fall to 24.7% in 2030 from 33.4% in 2018, which is still way above the 3% Sustainable Development Goal Target. Figures in the Economic Outlook of Africa (2020) indicate that the number of poor people will merely fall by 8 million, from 429.1 million in 2018 to 421.2 million in 2030. Only North Africa is expected to somewhat meet the 3% target by 2030.

However, the process of eradication can be sped-up by accelerating growth and development in the continent and taking measures to increase the social well-being of the people. Aggregate personal consumption needs a massive boost, of about 10% per annum, to help achieve the target by 2030. If these measures are not implemented properly then poverty eradication will remain a distant unachievable dream for the continent.

Other Challenges

There are other challenges being faced by Africa at the moment like increases in the debt burdens and fall in remittances and Foreign Direct Investment (FDI). Several countries in Africa have high debt-to-GDP ratios which are projected to drastically increase in the onset of COVID-19 and possess the risk of transforming to a sovereign debt crisis if not dealt with properly. In addition to it, remittances and FDI which constitute a dominant financial flow to Africa have been falling during the pandemic. This poses serious threats to the African economy and makes it vulnerable to economic instability.   

Policies to Ensure Stability

The African Economic Outlook (2020) suggests a few actionable policies to not only improve the quality of growth in Africa but also combat the impact of the pandemic. They are as follows:

• The government should ease the main constraints to productivity like poor infrastructure, uneducated and unskilled labour, poor administration, and others. Relaxing these constraints through adequate policy will guarantee growth revival.
• Governments across the continent should take adequate measures to not only stop the spread of the coronavirus but also economic stability by formulating and implementing a variety of combined fiscal and monetary policies.
• The fiscal and monetary policies should work hand-in-hand to collectively help in the revival of the economy. The fiscal policy should keep the debt buildup in check and provide a massive boost to aggregate demand and the monetary policy should work towards maintaining a stable inflation rate and minimizing exchange rate fluctuations. 
• There must be a shift from low-productivity informal sectors to high-productivity formal sectors which would help utilize the untapped resources of the economy.
• Despite the moderate growth of Africa over the past few decades, the quality of growth has been far from inclusive. Only a combination of rigid structural reforms by policymakers can accelerate Africa’s growth and improve its quality and inclusiveness. 
• Even if there is reduced scope for increased gains, policymakers should implement measures to sustain the gains already achieved in the past few years including macroeconomic stability, minimum fluctuations in exchange rates, and others.
• The government should increase the welfare of the people amidst the pandemic by providing proper healthcare benefits to labourers in the form of paid sick leaves and ensure income safety to those sick or quarantined and ensure job security to all who are suffering to check the increase of unemployment.
• The government should also facilitate Universal access to financed health services for everyone irrespective of their sector or employment status.

Conclusion

The Global Health Security (GHS) Index shows that 33 African countries are inadequately equipped to deal with the threats of the pandemic from a clinical perspective. However, Africa might stand a chance to stay strong in this adversity if proper arrangements can be made for rampant testing across the continent at affordable costs.

The future conditions of the economy depend on the competency of the governments to deal with the issue at hand. If the economies can uphold their resilience at this time, there is hope for a speedy revival and acceleration of the growth of Africa. This resilience can be maintained via effective structural reforms, to keep high debts and deficits in check, and minimal vulnerability, in the form of external reserves, to be able to finance imported advanced medical consumables and to make them available to the public. Thus, there has emerged an urgent need for policymakers to implement drastic reforms to strengthen resilience to be able to withstand shocks at all levels, be it macroeconomic, microeconomic or household levels.

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Agriculture

Agriculture is one of the top sectors in Africa with immense growth potential. The sector contributes to over 15% of Africa’s GDP and has shown a good growth rate due to prior government policies that prioritise the sector to retain its sustainability and competitiveness. The top-earning agricultural products are coffee, cocoa, maize and wheat with Ghana, Nigeria, South Africa, Ethiopia and Uganda as the top producers.

Large areas of arable land, increasing use of technology, massive youth dividend, increasing government support and a large demand base make agriculture an attractive sector for investment despite the problem of erratic rainfall pattern in some places.

By the year 2050, it has been predicted that Africa’s population will almost double with a growth rate of 2.7% per annum. To meet the growing needs of the population, substantial investment from its global peers is absolutely necessary. That will also help the sector to grow and enhance its status as a global competitor, help in economic diversification and also mitigate the prominent problems of undernourishment, poverty and hunger that exist in the region.

Manufacturing Sector

Africa possesses an abundance of raw materials that can be easily turned to manufactured products for greater reliance on local products and increased exports of the same. The top three manufacturers in Africa are Egypt, South Africa and Morocco.

The growth of manufacturing can greatly drive economic growth and development in Africa. However, the sector faces challenges like lack of skilled-workforce, infrastructure gaps including low power supply and inadequate regulatory measures to address the prominent challenges. The import to export ratio of manufactured products in Africa is very high as Africa mostly exports unprocessed commodities. The growing manufacturing sector is making great advances in this aspect. It has already increased the total export goods from 18.7% in 2012 to 35.6% in 2017 and caused a significant decrease in imports implying greater importance to domestically manufactured products.

There has also been a shift in the focus of FDI projects from the dominant extractive industry to consumer-facing industries like retail, technology, media, etc. This trend is expected to continue in the near future.

Retail Sector

The African Development Bank is expecting the current 350-million-strong middle class to grow to under one billion by 2040. The growing middle-class demography is contributing to the growth and modernization of the retail sector which is greatly devoid of supply competition and requires investment to meet the growing consumer base. The market for essential goods constitutes the majority of consumer spending owing to the low-income levels in the economy and as the income-level status is not expected to undergo a drastic change in the recent future, the comparatively smaller market for luxury products will have a low growth rate.

As a large amount of consumer spending in Africa taking place in informal markets, due to the absence of prominent formal retail presence, is unaccounted for, Africa is projected as an economy with low household retail-spending despite that not being the case.

“The Brookings Institute’s latest analysis on trends of the African consumer market shows that consumer expenditure has grown at a compound annual rate of 3.9% since 2010 and reached US$1.4 trillion in 2015. This figure is expected to increase to US$2.5 trillion by 2030.”

There are several cyclical challenges related to the retail sector, like low GDP growth, high inflation, dwindling credit extension. The challenges can be used as opportunities to enhance the growth of the sector by focusing on the development of the retail infrastructure and modern logistics spaces to satiate the demand for high-quality space from retailers looking to expand in Africa.

Finance

Finance is one of the top sectors in Africa which regulates the funding of all the other sectors. Financial innovation guarantees the diversification of banking sector services and facilitates the incorporation of capital market instruments to reduce investment risk.

Rwanda, The Gambia and Senegal have shown massive progress in financial system rankings. However, there has been an overall decline in Africa’s global financial standing from 2017 – 2018 due to a fall in the pace of reform of this sector.

The impact investing industry has shown substantial growth and is quite relevant as several countries in Africa lie below the global average score for Human Development (0.8) with declining levels of official assistance. The industry has made an abundant impact across a wide range of sectors like Healthcare, Agriculture, Housing, Education and others. This provides ample opportunities for investment in several initiatives which will reap both financial and environmental returns.

Some of the prominent threats to this sector include underdeveloped market infrastructure due to limited funding, difficulty in gathering viable investment to meet financial and social targets, limited capital supply, unclear regulatory environment, inconsistent impact-measures and so on. These might prove to be a disincentive to many and hinder their investments. However, a far-sighted investor might implement innovative measures to meet the pending gaps and turn these challenges into opportunities to optimise social and environmental investments.

Infrastructure

Infrastructural inadequacy causes a huge hindrance to investment and growth in all sectors of Africa. There is a wide gap between the infrastructure needs of the continent and the amount being spent on fulfilling the need. There is an urgent need to bridge the gap through sufficient investment to meet the growing needs of Africa.

In countries like East Africa, Ethiopia and Tanzania, infrastructure investments in the form of new roads, energy support, transportation networks and others have led to guaranteed growth and transformation of the prevailing sectors. Construction has been primarily responsible for high economic expansion in Egypt. Infrastructural developments lead to employment generation via contractors, boosting aggregate demand. Investment in infrastructure by foreign players can prove to be very beneficial as it would provide the required sophistication to the local industry by supplying goods needed for large projects.

Real estate has evolved significantly, providing higher returns on investments, thus, becoming increasingly attractive to potential investors. Despite having good growth potential, real estate has certain risks attached to it like complex legal considerations, such as property ownership rights, social instability resulting from inequality, and others. However, the growth drivers like sustained high demand driven by urbanisation, improved capital regulation, technological advancements in banking leading to a boost in investment rates, and expected GDP growth supporting the demand for housing easily overshadow the challenges.

Conclusion

For many years, Africa’s growth potential has been understated and misunderstood. It has been treated as a non-friendly investment destination due to the several challenges posed. However, there has been a worldwide lack of understanding of the ease of converting the insurmountable challenges to opportunities. Africa’s growing population and the prevailing problem of excess demand need to be met via increased investment and innovation which will, in turn, lead to increased employment, decreased poverty and increased infrastructural development. Thus, despite Africa’s slowing global growth, if the prevailing challenges are addressed adequately, growth is inevitable.

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