A Marshall Plan for Africa
Africa could be the largest source of global economic growth over the next half-century. But during the same period, the continent could also trigger the next great European war.
Goldman Sachs projects that Africa’s GDP will grow from roughly $3 trillion today to $44 trillion in 2075, with its share of global GDP rising from 3% to 11%. This increase would make the continent one of the world’s main growth engines, surpassed only by India, which is predicted to add $46 trillion in GDP over the same period. To put this in perspective, between 2030 and 2075, Goldman Sachs’ model predicts that Chinese GDP will rise by $8.5 trillion less, and the United States’ GDP by $16.5 trillion less, than Africa’s. In fact, by 2075, Nigeria is forecast to become the world’s fifth-largest economy, with a GDP of $13 trillion, and Egypt the seventh-largest, with a GDP of more than $10 trillion. Meanwhile, Ethiopia is expected to rank 17th, while South Africa remains around 25th, with GDPs of more than $6 trillion and $3 trillion, respectively.
At the same time, Africa’s population is set to rise from 1.4 billion today to 3.3 billion in 2075, accounting for 32% of the world population, up from 18% today, according to the United Nations’ 2022 World Population Prospects report.
Two conclusions can be drawn from all this. First, by 2075, nearly one-third of the world’s population will have to share 11% of global GDP. While this represents an improvement on the current situation, it implies that African countries will still struggle to feed, clothe, and provide income to all their inhabitants, likely triggering an explosion of migration to Europe. Second, a small section of African society will benefit disproportionately from this period of wealth creation, while large segments of the population will most likely remain in poverty, implying a rise in inequality and an increasing risk of social unrest.
The continent is, in fact, a ticking time bomb. Global post-pandemic economic conditions, including the rising cost of capital, surging inflation, and interest-rate hikes, have hit African countries hard, closing capital markets to most African issuers. The defaults of Zambia, Ghana, and, most recently, Ethiopia are warning signs of a sovereign-debt crisis, offset by Côte d’Ivoire’s successful bond issue in January and Kenya’s recent, albeit expensive, bond issue. Equally worrying are spiking yields and the wall of debt coming due in countries like Kenya and Angola. As a result, these countries have been forced to cut public spending to the bone and raise taxes, worsening social and business conditions.
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