The steady economic growth that Africa has enjoyed over the past decade is now waning. Global commodity prices, particularly oil, have weakened and China, Africa’s largest individual bilateral trading partner, has slowed considerably as it rebalances itself away from investment and growth. According to the IMF, a 1 percentage point decrease in China’s investment growth is associated with an average 0.6 percentage point decrease in Africa’s export growth rate. The depth of the China-Africa trade relationship explains why this month, the World Bank, in its annual Africa’s Pulse report, downgraded Africa’s growth projections from 4.6 per cent in 2014 to 3.7 per cent in 2015 – the lowest growth the region will have seen since the ripples of the global economic crisis hit it in 2009. A new period of slow growth demands new and creative responses from African leaders.
While the commodity climate and China’s slowdown are certainly a challenge for African policymakers, they also present a unique opportunity. Relying on the beneficial economic climate that has fostered complacency with market inefficiencies is now no longer an option. Necessity will demand that African governments adapt to unfavourable global trends by squeezing greater productivity from the structures and systems that are already in place. East Africa is already quietly making strides in eliminating economic inefficiencies and the progress has much to teach the rest of the region.
East African countries – Rwanda, Kenya, Uganda, Tanzania and Burundi – have demonstrated over the past 24 months that attacking inefficiencies is not only possible, but yields rapid returns. Through the Northern Corridor Integration Project, Uganda, Rwanda and Kenya have addressed longstanding bottlenecks in transportation. Being landlocked, Rwanda and Uganda rely on Kenya’s Mombasa port for trade, and a plethora of border inefficiencies made cargo travel times extremely costly and uncompetitive. Through regular meetings of the presidents of the countries and a focusing of government attention, the countries were able to reduce the travel time of cargo trucks from Mombasa to Kampala, Uganda from 18 days to 4 days, and between Mombasa and Kigali, Rwanda from 21 days to only 5 days. This progress was achieved from no new investment in roads or rail, but rather through the targeted elimination of inefficiencies.