Not since the countries of Africa tossed out their colonial masters several decades ago has there been this much optimism and excitement about the continent's prospects. While China's economic expansion has slowed, and while Europe and the United States try to dig themselves out of recession, Africa has not only weathered an up-and-down global economy -- it's been booming. Consider Nigeria's stock market, which gained 35 percent last year, or Uganda's, up 39 percent. But even more important is that real gains are finally being made on the ground in Africa today -- ones that speak to the possibility of a breakout phase that would lift millions out of utter poverty and great misery.
Let's start with the numbers. According to International Monetary Fund data, sub-Saharan Africa has grown at an annual rate of 4.8 percent over the last five years, a period that includes the trauma of the global financial crisis. That means it has outperformed other developing regions -- like Latin America, for example, at 3.3 percent -- and it blows out of the water the advanced economies, which expanded just 0.5 percent per year.
This is happening on a continent that has been saddled for decades with the worst levels of malnutrition, ravaged by preventable and treatable diseases, beset by corruption and rent-seeking, and scarred by a legacy of foregone opportunities. It is also occurring on a continent thought to be deeply vulnerable to negative external shocks, internal political upheavals, and now, sadly, terrorist movements.
No wonder there's so much excitement. Even the most discriminating investors are paying greater attention to Africa, which is all the more remarkable given that for decades the place was deemed virtually uninvestable. Now, from bonds to private equity, new vehicles are emerging to channel foreign investments into more of the most promising African economies. How real is the boom? Foreign direct investment in sub-Saharan Africa has leapt from $6 billion in 2000 to $34 billion in 2012. In just the past couple of years, several African countries -- among them Angola, Namibia, Senegal, and Zambia -- have issued external debt for the first time, allowing them to invest for the future.
Cynics might say they've seen this all before -- that 10 years ago, another great wave of anticipation about Africa's development merely gave way to disappointment. And yes, some things fizzled out; in some instances, countries were even left worse off. Witness what happened to Ivory Coast, once regarded as the jewel of Africa's development crown: It is only now emerging from a brutal, costly civil war that erased years of development.
We should be cautious, then, in saying that things are sure to be different this time around. Yet if one looks closely, cause for hope is on solid analytical soil. Africa's traditional growth story was built on rising prices for international commodities. But this proved neither sustainable nor inclusive, encouraging corruption and an unproductive rentier mentality among the ruling elite. There's a reason we think of Africa when we think of the resource curse.
This time, however, an expanding set of small- and medium-sized enterprises is bringing real economic diversification. According to World Bank statistics, these firms add some 20 percent to the continent's GDP and contribute roughly 50 percent of the new jobs in sub-Saharan Africa. These successful businesses are giving rise to internationally competitive companies, thereby providing access to global markets, new business models and technologies, and higher wages and salaries.
Data: World Bank; Photo: Jon Hrusa/EPA