Africa, Asia ‘the economic future’

2011-09-21 09:50

Africa and Asia can be the future of the global economy, Maria Ramos, group CEO of Absa, said today.

The global economy was shifting, albeit slowly from Europe and North America to Africa and Asia, Ramos told the Discovery Leadership Summit in Joburg.

“Africa and Asia have the potential to become the epicentre of the global economy.”

Fifty years ago, most of Asia was at least as poor as Africa, but by 2008 Asia’s per capita income was double that of Africa. For the last 20 years, Africa’s per capita income had slightly doubled, while in Asia it had jumped 11-fold, Ramos said.

China had actually doubled its per capita income every 10 years for 30 years through concerted leadership in transforming from a rural to a manufacturing economy, she said. This had led to a decline in its poverty rates from 85% to 15% of the population.

Africa would grow at an average of 7% a year over the next decade, making it the most rapidly growing continent. Developed countries had never achieved these kinds of growth rates on a sustained basis, she said.

Ramos said one of the advantages Africa had over developed economies was its demographic transformation, with its rapid urbanisation, growing youth and rapid population growth.

“A growing population implies a greater demand for goods and services ... and therefore increased opportunity and activity.”

However, she said the human potential of all citizens of Asia and Africa need to be similarly developed, and not just “pockets of excellence”.

“An educated, healthy, skilled, self-sufficient workforce must be the foundation of [an] emerging market success story.”

Ramos said the “least uncertain” policy intervention that could aid growth and equity was to invest in education. In South Africa spending on education already made up a large part of GDP by international standards, she said.

The country needed to look at “how to spend this money more effectively to ensure the education system plays a role to reduce structural unemployment and inequality”.

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