Back in 2000, the World Bank published a report with the provocative title, “Can Africa Claim the 21st Century?” The tone of the report was carefully-hedged optimism. For exmaple, it said:
The question of whether Sub-Saharan Africa (Africa) can claim the 21st century is complex and provocative. This report does not pretend to address all the issues facing Africa or to offer definitive solutions to all the challenges in the region’s future. Our central message is: Yes, Africa can claim the new century. But this is a qualified yes, conditional on Africa’s ability—aided by its development partners—to overcome the development traps that kept it confined to a vicious cycle of underdevelopment, conflict, and untold human suffering for most of the 20th century
So how is overcoming the development traps coming along? A quarter-century later, the World Bank has published a follow-up report, 21st-Century Africa
Governance and Growth, a collection of eight chapters on different aspects of development, edited by Chorching Goh. From the “Main Message” section at the start of the report, here’s some of the flavor. On one side, substantial and undeniable progress has been made.
Over the past 25 years, Africa has achieved notable progress … Mortality rates have fallen, with life expectancy rising from 50 years in 1998 to 61 years in 2022. School attendance has improved, with primary school enrollment increasing from 80 percent in 1999 to 99 percent in 2022 and secondary school enrollment increasing from 26 percent to 45 percent over the same period. The early 2000s saw strong economic growth fueled by high commodity prices. China emerged as a trade and investment partner, and the continent experienced a massive inflow of foreign capital from 17.6 percent of gross domestic product (GDP) in 1998 to 38.1 percent in 2018. Consequently, African countries have shown significant growth performances: from 2000 to 2019, 7 of the world’s 10 fastest-growing economies were in Africa. Aid dependence has declined, tax revenues have increased, and the median poverty rate fell by about 10 percentage points to about 43 percent.
On the other side, as the report notes, “Africa remains the world’s biggest development challenge.” Here are some bullet-points:
- Persistent poverty. By 2030, 90 percent of the world’s extremely poor population will live in Africa.
- Economic stagnation. Sub-Saharan Africa’s share of the global economy remains at 2 percent, with minimal change in the region’s merchandise exports.
- Investment levels. Private investment remains low, with the informal economy accounting for 59 percent of total nonagricultural employment.
- Limited growth. The reliance on smallholder agriculture limits economic growth due to low investment and productivity.
- Electricity access. Only 51 percent of the African population has access to electricity, compared to the global average of 91 percent. …
- Political upheaval. Violent conflicts increased eightfold between 2000 and 2023 throughout the continent, leading to increases in conflict-related deaths and the number of internally displaced people.
- Governance challenges. The issues of corruption, political instability, and a lack of trust in government and institutions persist.
The report also notes up front that “Africa’s income level per capita would be 40% higher if it had grown at the global average since 1990,” “Nearly 83% of Africa’s employment is informal,” and “86% of 10 year-olds in Africa can’t read and understand a simple paragraph.”
The volume includes chapters on all of these topics and more. My own sense is that if the authors of the 2000 volume could have looked forward to the situation in 2025, they would be more disappointed than pleased.
Here, I’ll add a few words on Chapter 3 of the volume, “Productivity,” by Cesar Calderon and Ayan Qu. Per capita GDP can serve as a rough measure of standard of living, as well as a rough measure of productivity. By that measure, the countries of Africa are struggling relative to the rest of the world. The subregion of West Africa had a little spurt from about 2000-2015, but has now given back those modest gains.
To get a sense of why this pattern is so disappointing, remember that lower-income countries have some potential for “catch-up growth.” They can draw on technologies developed elsewhere, and sell into markets of higher-income countries. A low-income country should have numerous opportunities. When starting from a low base, then achieving a higher rate of growth is somewhat easier. But the countries of Africa are instead experiencing only fall-further-behind growth. Here’s a figure comparing Africa, South Asia, and the East Asia/Pacific region to the US economy in labor productivity. Two of the regions are catching up to the US, at least somewhat, in the last two decades; Africa is below its relative level in the late 1970s.
As Calderon and Qu dig into the underlying data, they point out that the share of productivity differences explained by investment in physical capital is relatively small, and the share explained by human capital differences is only a little larger. The biggest factor is “total factor productivity,” in the lingo of economists, which is efficiently the economy translates these inputs into outputs. Thus, while investing more in human capital and infrastructure can pay off for these economies, the big challenge is to accomplish dramatic structural changes.
These economies need to move away from a focus on small-holder agriculture. The three channels to productivity discussed by Calderon and Qu are: 1) within-firm productivity growth, in which a well-managed company improves its worker skills, technology adoption, and innotation; 2) between-firm productivity growth, in which the high-productivity firms make up a bigger share of the economy than low-productivity firms, so the growth of the successes outweighs the failures; and 3) net entry of productive firms, in which more productive firms are more likely to enter and less-productive firms are more likely to exit. At the end of the day, economies only raise productivity when these dynamics are operating, and for roughly a jillion reasons (see the World Bank volume for details), these dynamics have not been operating especially well across sub-Saharan Africa as a whole.
