The latest episode of Business Beyond considers the scale of economic challenges faced by countries across Africa, and asks what needs to be done to close the gap between the continent and the rest of the world.
Over the coming years, Africa will become more important than at any other point in modern history. The main reason is demographics. Many parts of the world are grappling with aging populations and ultimately, population decline.
Europe currently has a median age of 43, while Eastern Asia, covering the likes of China and Japan, is 41. Africa's is just 19 — by far the youngest of any continent or major global region.
By 2030, half the people entering the global workforce will be from Africa, and by 2075, one out of every three people on the planet will be from Africa.
Those countries with older median ages face the challenge of meeting the rising costs of social care with less workers to pay for it through taxation. Africa has a different problem: finding good jobs for its hundreds of millions of young people.
Emmanuel Owusu-Sekyere, director of research at the African Center for Economic Transformation, thinks Africa could be a "very powerful force" for economic growth and development, or a "ticking time for instability."
"The differentiating factor is the availability of jobs. Now, we have to make sure that the economies grow in a way that creates jobs for a youth population," he told DW's Business Beyond.
The Africa Gap
While Africa will account for a third of the global population by 2075, and currently accounts for just under 20%, it has a far smaller stake in the global economy.
Measuring GDP at current prices, Africa accounts for less than 3% of the global total. Collectively, its 54 countries' combined GDP is smaller than Germany's alone. It has a disproportionate share of the world's smallest and weakest economies.
In terms of extreme poverty, Africa is also an outlier. The majority of African economies remain exceptionally underdeveloped by global standards.
The UN has identified 44 countries globally as so-called Least Developed Countries or LDCs. The vast majority — 32 — are in Africa, almost all in sub-Saharan Africa.
What this means in practice is that a far higher percentage of people there live in poverty compared to the global average. While the percentage of people living in poverty has fallen overall since the mid-1990s, the gap between sub-Saharan Africa and the rest of the world has widened significantly.
"Clearly, there is a problem," Enoch Randy Aikins, a researcher with ISS Africa, told DW. "Anybody that is interested in fighting global poverty, fighting global justice, cannot do so without addressing this huge gap. Because a huge gap of inequality is a big problem for the world."
Connecting Africa
There are several reasons for the vast economic gap between Africa and the rest of the world.
A long-established problem is commodity dependence, according to Emmanuel Owusu-Sekyere. He says that makes African economies extremely vulnerable to price fluctuations.
"We grow at the back of raw materials and natural resource exports, which we export without adding any value to it," he said. "The second thing is that we are price-takers. When prices do well on international commodity markets, we grow. When prices collapse, our economies contract. This externally-driven growth is not creating decent jobs and is not reducing poverty."
Another major issue for African economies is the lack of economic connectivity between countries. "There is no way Africa as a continent can develop much quicker if there is not African unity or African integration," said Enoch Randy Aikins.
According to various estimates, only 13-16% of Africa's total trade is intra-African trade, which is trade between African nations.
The African Continental Free Trade Area (AfCFTA) aims to change that. The free trade agreement was established in 2018. There are currently 54 signatories, making it the largest free trade area in the world by population and geographic size.
However, experts say that while progress has been made in reducing tariffs, trade between African countries remains hindered by poor infrastructure.
Owusu-Sekyere notes that cross-border trade infrastructure is very poor. "Road, air, sea shipments can leave China and get to Eastern Africa much, much faster than from South Africa to the West of Africa."
Africa can catch up
Yet there is optimism that growing cooperation between African countries, combined with a determination to keep the values of resources within the continent and a drive to diversify manufacturing and export bases, can push Africa forward.
"So two key areas where we need to improve is diversification of production and exports and enhancing our export competitiveness, especially non-extractive exports," said Owusu-Sekyere. "Then, you create cross-border value chains, you move up the value chain and add more value and create more jobs."
Charlie Robertson, author of the book The Time-Travelling Economist, thinks Africa will not get the investment it needs, but can gradually build up its own reserves and capacity through education. He also sees a connection between fertility rates, education and growth, and argues that it's always down to Africa's own leaders and the choices its people make.
"When those leaders prioritize education, when the fertility rate then falls, they gain independence and sovereignty, economic sovereignty, and the ability to make decisions, good decisions over time that propel them to even further prosperity," he told DW.
Flourish Ubanyi, DW's bureau chief in West Africa, based in the Nigerian capital Lagos, remains optimistic about the continent's ability to harness its demographic dividend. She moved from the US, where she had studied, back to her native Nigeria because of that optimism.
"There are signs and there is optimism that things are going to get better, that this growing population is going to be turned and used as an advantage, and it's not going to be a major global crisis," she said.
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