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Progress Watch

As Europe peers into economic chasm, Africa's economy is rising

Reports by the African Development Bank, World Bank, and McKinsey show how Africa continues to offer a bright spot in the global economy.

By Scott BaldaufStaff writer / June 9, 2012

The skyline of Johannesburg, South Africa, is pictured on May 20.

Themba Hadebe/AP

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It’s a continent with a long history of war, famine, disease, and recently, a penchant for political instability due to economic mismanagement.

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But enough about Europe. Let’s talk about a continent with some hope: Africa.

In 2012, as the rest of the world slows down because past exuberant consumerism and speculative investment – or debt, as they used to call it – Africa is expected to grow by 4.5 percent or 4.9 percent, depending on whether you believe the African Development Bank or the World Bank, respectively.

This growth is due, in part, to African natural resources being dug up, chopped down, or pumped out and sold to global consumers who still have cash – mainly China, India, Brazil, and Russia – and it is also due to the growth of African middle-class consumption. Yes, read that again: African middle-class consumption. According to McKinsey & Company, there is an African middle class; and although they are scattered over 54 different countries, and speak many different languages, they are at least as large as the Indian middle class, and they spend money like middle-class people everywhere do.

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"Africa’s economic growth is creating substantial new business opportunities that are often overlooked by global companies,” said Damian Hattingh, an associate at McKinsey & Company, which produced the report “The Changing Face of the African Consumer” last month.

For those who are used to headlines about Africa that include “war” or “rape” or “child soldiers” – let’s exclude readers of The Christian Science Monitor, who know better – all of this may come as a bit of a shock. First, how can Africa grow when the rest of the world is shrinking? The answer is that a number of African countries have gotten better at managing their own fiscal affairs, avoiding crazy social spending or loose credit schemes that load up public debt. Some countries with massive oil deposits, such as Angola, Nigeria, and Uganda, have been watching the cash roll in as the global price for oil hangs steadily around $100 a barrel. Others, such as Kenya, South Africa, and Rwanda, have diversified their economies into technology and services, so that they aren’t so dependent on commodity prices for their economic future.

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