Africa's Incredible Economic Potential

Africa is already home to a number of large urban areas. Though it doesn't come close to matching China, Africa has more urban areas with at least one million residents than the U.S. or any of the other BRICs:

Growing Economies

Africa's economic importance is expected to increase not only because of its population growth. Four of the top five economies, as measured by expected 2016 GDP growth, are located in Africa.
Africa's GDP is expected to grow at a considerably higher rate than the United States and other developed economies over the next several years. The following chart compares the World Bank projections for sub-Saharan Africa and the United States.

Over extended periods of time, seemingly small differences in annual GDP growth can compound and result in very different trajectories. For example, PWC projects that Nigeria's economy will expand by about 5.4 percent annually through 2050 compared to a growth rate of 2.4 percent for the U.S.

That difference may seem nominal, but when compounded over 35 years it results in the following trajectories.

Available Land

Beyond simply large and growing populations and short-term GDP growth, real economic opportunity can be derived from natural resources.

Hunger remains a major issue facing Africa; nearly a quarter of sub-Saharan Africa is undernourished, compared to about 14 percent in developing regions globally.

There is an opportunity for Africa to not only feed itself, but become a major exporter of agricultural commodities as well. The continent is home to a significant percentage of the world's "potentially available" cropland.

Efforts to develop this farmland have met a number of challenges to date, and unlocking the potential here will take time. But Africa's natural resources could ultimately make it a leading provider of a number of important commodities.

Broadband Penetration

While a relatively high number of Africans already use cell phones, penetration of smartphones and Internet connectivity is relatively low. But in coming years, hundreds of millions of Africans are expected to gain access to mobile broadband for the first time.
The above chart has several implications. Most importantly, hundreds of millions of Africans will experience increases in productivity related to a mobile broadband connection. But it also captures the fact that Africa is home to hundreds of millions of consumers who may potentially begin making discretionary purchases in the coming decades. Beyond smartphones, Africa will be a huge market for cars, televisions, and clothing.

Moving in Right Direction

From several economic perspectives, Africa is moving in the right direction — in some cases quite quickly. Life expectancy has increased by two years since 2010, while the time needed to start a business has declined significantly.

Low-Hanging Fruit

While considerable progress has been made, there remains some significant low-hanging fruit that has the potential to extend life expectancy and provide economic stimulus.

For example, the number of physicians in Africa is significantly lower than in other developing economies. Access to clean water and sanitation facilities is similarly well below the developing world average.
There are certainly major challenges ahead for African economies; the rapidly growing population that creates huge opportunities also introduces a number of threats.