At Africa conference, World Bank VP foretells optimistic future in African economies
March 22, 2013
A simple show-of-hands at the MIT Sloan Africa Innovate Conference demonstrated just how far the continent has advanced in recent years.
Makhtar Diop, vice president for Africa at the World Bank, addressed the audience and asked how many of them planned to return to Africa following their MIT education. Dozens of hands shot up.
“That tells me you think you can make money,” Diop said. “Just 10 years ago, no hands would have been raised.”
The theme of the conference, held March 16 and 17, and Diop’s keynote address, was devoted to celebrating economic success in Africa while addressing challenges.
“African economies have been growing at an unprecedented rate in the last decade, growing at nearly 6 percent since 2008,” he said. “Even if we take into account the global crisis of 2009, Africa has been sustaining a 5 percent growth rate. Many times we have been seen as too optimistic, and we used to be criticized at the World Bank because we were routinely projecting a growth rate of 5 percent. Today it’s not the exception; it’s the rule, consistent across countries.”
Some of that growth is due to forces outside control of African countries—the rise in the prices of gold and cocoa, the primary exports of Ghana, for example. But that is only part of the story, Diop said. Improved governance and macroeconomic management is directly influencing economic improvement, and that influence is measurable.
“International evidence shows this is the underlying cause of economic growth,” Diop said. “This is very hard work. It is not only luck and good conditions which led to growth in Africa.” This has resulted in Africa as a new destination for foreign direct investment, he said.
“The financial uncertainty and deregulation of the Euro zone drove down capital flows to developing countries [worldwide] by about 9 percent in 2012,” he said. “Yet, the same flows increased by more than 3 percent [in Africa], and reached a record high of $38 billion last year. African public debt is increasingly viewed by investors as an asset class, with a robust return.”
In discussing threats to continued economic growth in Africa—conflict and continued poverty remain among the primary risks—Diop tempered concerns of potential challenges with discussion of mitigation initiatives. He stressed the importance of responding quickly and effectively when conflict threatens investor confidence, and noted a significant portion of the World Bank’s lending portfolio was focused on initiatives that provide basic infrastructure, agriculture, health, education, and social services to lacking regions.
In his introduction of Diop, MIT Sloan Deputy Dean S.P. Kothari noted MIT’s role in Africa’s economic growth through education of students from the continent, collaboration with institutions at the forefront of change, and the continued role of advanced technology in shaping Africa’s future.
Conference organizer Funke Michaels, SF ’13, was struck by Diop’s description of African demographics, where 35 percent of the population is under 25 years old.
“This speaks to the future of Africa, the promise of drive and entrepreneurship,” she said.
Conference co-chair Philip Emeka Obi, MBA ’13, hopes the conference, and ongoing conversations globally, will help sustain interest in Africa’s increasing economic health.
“There is a growth wave in Africa,” he said. “And it’s the next economic frontier, with billions being invested.”
This was the third annual Africa Innovate Conference at MIT Sloan. The event featured speakers and panels addressing entrepreneurship and innovation in a wide array on industries, from media and entertainment to food and agriculture. It was held at MIT Media Lab.