africa

Africa at a Fork in the Road: Taking Off or Disappointment Once Again?
governance and the appearance of democratic institutions. While many obstacles
still need to be overcome before a strong and sustainable middle class dominates
the social fabric in Africa, a continuation of this trend is essential to the building of
inclusive institutions.
Two somewhat more exogenous factors that are likely to have contributed to the
present growth spell are the spike in commodity prices and the quantum jump in
foreign direct investment in Africa. Commodity price indices faced by many SSA
countries doubled or even tripled between 2000 and 2010. High and rising export
prices turned the terms of trade favorably for many resource-rich African countries
and helped fuel economic growth.
This commodity boom, in turn, was influenced by and attracted an enormous flow of
foreign investment. Since 2000, the stock of global foreign direct investment (FDI)
in Sub-Saharan Africa has increased dramatically, from more than US$34 billion to
US$246 billion in 2012. The European Union, China, Japan, and the U.S. accounted
for slightly more than half of the stock of FDI in the region in 2012. This seven-fold
increase in investment was predominantly directed to resource-rich countries, with
South Africa with its precious metals and minerals and Nigeria with its oil reserves
receiving a majority of the FDI (Brookings Institution, 2014). Such investment, while
fueling the pace of growth, can exacerbate inequality, as it tends to be directed to
highly capital-intensive projects creating few new jobs. Yet, if part of the royalties
accruing to governments from this type of investment is used to promote human
development through productive social protection schemes benefitting the poor and
unskilled, then it can also be consistent with inclusive growth.
5.5 Some desirable elements of an inclusive growth strategy for SSA
While the evidence thus far presented suggests that the current growth spell in SSA
tends to be more inclusive than in the past, it is clear that the subcontinent still has
far to go in implementing policies and institutions conducive to a more pronounced
and sustainable inclusive growth process.
To identify some key elements of a pro-inclusive growth strategy, the anatomy of
the growth process needs to be clarified. More specifically, the interrelationship
75