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Africa's economy could rival China or India, says WTO chief Ngozi Okonjo-Iweala
The African continent has a population of 1.4 billion people, but it imports more than 90% of its medicines and 90% of its vaccines. WTO Director General Ngozi Okonjo-Iweala says the time has come to open up the continent to globalization and encourage businesses to invest in African countries.
On GZERO World with Ian Bremmer, Okonjo-Iweala makes the case for decentralizing and diversifying global trade to open up new markets, bring Global South countries into the mainstream of the world economy, and reduce reliance on any one country for crucial goods and services.
Africa hasn’t yet globalized, but when it does fully integrate into the world economy, it could create a domestic market of over a billion people that rivals that of China and India.
“Africa has about 3% of world trade, and that’s too small,” Okonjo-Iweala says. “When, not if, that experiment really gets going of Africans integrating better with themselves and trading, that is automatically very attractive for trade for the world.”
Watch the full interview: World trade at risk without globalization, warns WTO chief Ngozi Okonjo-Iweala
Catch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
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Focus on Africa: hunger, energy, climate - and the path to growth
Sub-Saharan Africa was on the brink of economic recovery last year. Now, the World Bank expects its growth to slow in 2023. With global inflation on the rise, rising food and fuel costs “actually put lives at risk in a way few other shocks can," says International Monetary Fund (IMF) senior economist Andrew Tiffin.
And sub-Saharan Africa is particularly vulnerable: 123 million people there are currently food-insecure, while the region accounts for 6% of the global energy demand. With climate change exponentially leading to those numbers rising, Tiffin says: “Any globally viable discussion has to take into account Africa’s concerns and needs. Because without that, there is simply no solution.”
The IMF’s latest analysis and growth projections for sub-Saharan Africa were released in a new report, available here: https://imf.org/AfricaREO-Oct22
Tiffin spoke in a Global Stage interview with Shari Friedman, Eurasia Group's managing director for Climate and Sustainability, at the World Bank/IMF fall meetings in Washington, DC.
Demography and destiny: blessing or time bomb?
Demography is destiny. That ominous-sounding pronouncement, credited to French philosopher Auguste Comte, is today taken to mean that a nation's fate depends on the youthfulness of its population. For a poor country to become rich, it needs lots of young people ready to work, to support those too old or too young to work, and to pay taxes. This is called the "demographic dividend."
That's an important part of China's success story. Over the past 40 years, more than one billion people have emerged from poverty in China. Waves of young people surged from the countryside into cities to work in factories. The state invested in education, and wages helped young workers, and then their children, go to school. The state also began a drive to develop the technologies of the future, by any means necessary. In China, once dirt-poor, hundreds of millions have created a middle class.
But the world of work has changed, and that could be bad news for still-emerging countries like India, Indonesia, and Africa's largest economies. Manufacturing, central to China's boom over the past few decades, is now often performed by smart machines. New jobs for people often demand digital-age education and training that relatively few workers in poorer countries have access to.
There is also now less outsourcing of work from wealthier countries because production there depends less than in the past on low-wage workers and more on machines that don't need salaries, lunch breaks, vacation time, safety protections, pensions, and health insurance. Nor do they go on strike or test positive for COVID-19.
In short, the new world of work doesn't create as many opportunities for people with little education and training to escape poverty through hard work alone. And yet, populations of young people in many poor countries are still growing. Where will they work and how will they live?
How will the next wave of poor countries become more prosperous? Their governments and companies need to prepare young people for a new economy by investing more time, money, and energy in education, and in the training and retraining of workers for the 21st century workplace. They also need safety-net protections to help workers make this difficult transition and to protect those who fail. They also need to create many more opportunities for girls and women, because no nation will succeed while sidelining half its population.
Beyond these basics, challenges differ from country to country.
India's government knows it must do more to prepare children for the future. This is a country that produces state-of-the-art engineers and digital entrepreneurs, but India's new National Education Policy is designed to solve the problem that half of rural students in grade 5 can't read at a grade 2 level, and less than one-third can do basic division. India produces more than its share of stars; it needs entire generations of well-educated kids.
In Indonesia, already the world's fourth most populous country, the state is working to ease future demand for jobs and social services by lowering the birth rate. Its government is investing in education and tech development and training, but it's also actively promoting later marriages, family planning and contraception to flatten population growth by 2025. Success will depend not just on smart policy but on the willingness of people to live with fewer children.
The governments of Africa's 54 countries will have varying rates of success in meeting these challenges, but population growth is a shared problem. The United Nations predicts that the rate of global population growth will slow sharply over the rest of this century — but that Africa's population will surge from 1.34 billion to 4.28 billion.
Major security threats in large states like Nigeria and Ethiopia, chronic youth unemployment in South Africa, and political instability in a number of other countries undercut the ability of governments to invest in the future. They are also the kinds of problems that spill across borders into neighboring countries.
And beyond the humanitarian desire to see others succeed, it's this cross-border flow of trouble that makes this everybody's problem. A surge of young people who can't work can create the kind of turmoil that can spill from one country or region to another. Many poorer countries were already burdened with heavy debt before COVID made matters much worse. If the world's wealthier countries expect these governments to invest in the future of their young people — they'd better be prepared to collectively invest in their success.