The IMF has published an update of its “World Economic Outlook”. In their studies, the IMF still separates sub-Saharan Africa from North Africa. In our opinion, the organisation is thus consolidating an outdated image of Africa. Why can't Africa be Africa?
Capital News Africa: From the Trading Floor – Week 29-2022
The International Monetary Fund (IMF) published an update to its World Economic Outlook on Tuesday, 26 July. Like many investment banks and other international organisations, the IMF adheres to a separation that we believe is antiquated and nonsensical.
The African continent is still divided into a “sub-Saharan Africa” and another Africa. Some investment banks are still talking about the MENA region. By that they mean Middle East North Africa. In addition to the Middle East, they include the African countries on the Mediterranean: Morocco, Algeria, Tunisia, Libya and Egypt.
At the IMF, it is even less clear where North Africa falls. The fund does not speak of MENA, but only of "Middle East and Central Asia". North Africa can hardly be included in this, just as little as in the region "Emerging and Developing Asia" or in the "Latin America and the Caribbean" region.
In our opinion, the division into North Africa and sub-Saharan Africa is discriminatory and reinforces a view of history that might have existed 200 years ago. After all, the MENA region does not differ significantly from the Ottoman Empire as it existed before the European conquests in Algeria and Egypt in the 19th century.
Why should the borders of the Ottoman Empire 200 years ago still be decisive for the financing policy of international organizations today? We can find few plausible reasons for this.
A separation of Africa along the Sahara also no longer corresponds to the economic and political reality of the continent. Today, sub-Saharan people study in Morocco or work in the oil fields of Algeria and Libya. Companies from Morocco and Egypt are investing in the rest of the continent. Banks, investment banks and private equity funds from North Africa are long-established market participants across the continent.
Politically, too, the African Union is now an important player on the continent, as is the African Development Bank. Africa today is a political and economic reality. It would be time for the international financiers to take notice.
Incidentally, the IMF estimates the economic prospects for sub-Saharan Africa to be above average: The organisation expects the global economy to slow down again. Africa alone stands out: the economy in sub-Saharan Africa will grow by 3.8 percent this year, doing better than the rest of the world, which only comes in at 3.2 percent.
However, the report does not tell us how well North Africa is doing. The "Middle East and Central Asia" region will even achieve a growth rate of 4.8 percent this year. Perhaps that is why African economic growth would be even higher if North Africa were included in the Africa figures. However, it is also possible that North Africa is not included at all in the IMF data.
If we assume a close connection between economic prospects and the stock markets, investors will find in Africa better growth opportunities than in the USA (+2.3% GDP growth this year), in the euro area (+2.6%) or in Latin America (+3.0%).