Background: Asia is currently the most populous (more than 4 billion people) and spacious (45,000,000 km2) in the world. The biggest continent incorporates 55 nations and boosts a population density of 100 km2. The continent has a nominal GDP and GDP per capita of $31.58 trillion and $ 7,350 respectively which are highly regarded when comparing other continents. (Source: www.worlddata.info.). Asia is currently being synonymous with fast and huge economic development and global contribution.
Africa is right behind Asia boosting a population of more than 1.2 billion and area of 30,000,000.00 Km2. The continent has a Nominal GDP and GDP per capita of $ 2.45 trillion and $1,930.00 respectively. Despite the existing backward perception, Africa has everything marvel about currently with a population boosting a median age of 20, a potential market which provides 1.2 billion people which is even expected to double in the next 10 years and other packages within ( Source: McKinsey & Co. “Africa’s Overlooked Business Revolution) , it looks like the current period is key to transform Africa in every front.
What are the signs that the next century will be dominated by Asia?
Before we become conscious of it, Asia had been setting tone in different issues of the world. From supply chain to the Fintech, Asia is currently setting the new norms in the world. Consequently, Asia’s development is also taking a new turn, one which enables the continent to stay at the top of the pyramid. As people await the grand arrival of the Asia century, what are the indicators of the new era?
1. By 2040, Asia will be a destination for 50 percent of the world GDP.
2. In the next 20 (twenty) years, Asia will boost the biggest consuming class in the world.
3. Soon, Asia will account the biggest middleclass in the world.
4. During the last 50 (fifty) years, seven (7) countries in the world have grown at 3.5 GDP per capita in the world. All of them are Asia nations.
5. During the last 20 (twenty) years, 11 countries have grown by at least 5 or more. More than half of them are Asian counties. (Source: McKinsey Podcast: Future of Asia).
Key Ingredients
The above stated glowing facts must not deceive us that Asia had it easy. Different problems were prevalent in Asia ranging from poverty, poor governance to population growth. Referring to the current situation, it looks that Asia had taken a holistic approach on various fronts that these problems are not pressing points in Asia currently. Even if the change Asia nations underwent is broad, which changes had a significant impact on the current state of Asia? Let us review each of them.
1. Education
The rise of the Asian continent is highly intertwined with education. Currently, the Asian continent is home to different world-class education institutions. The Asian countries have world-class education centers coupled with the best human resource to do the job and facility to aid the overall process.
The emergence of highly prestigious universities such as Peking University and Tsinghua University in China, Yokohama University and Tokyo University in Japan, Seoul National University and Korea University in Korea, and a lot more implies that Asia is now not only becoming a destination for quality education but also creating skilled, creative and visionary educated human capital who have a huge influence on creating and maintaining the current “Normal”. It also looks like the Asia continent has also given the maximum value for education.
According to recent statistics, almost half of the international students in the world are Asians. With coverage of quality education broadening and education for women on the constant rise, it seems that Asia is reaping the benefits of education.
Lesson for Africa # 1
Africa is one of the most poverty-stricken continents in the world. Not enough, poor governance, infrastructure, poor healthcare, corruption, famine and related are highly relevant in the continent.
The best remedy for Africa’s various chronic problems seems to be education. Even if things look better, there is still a huge gap in coverage and quality of education in Africa. Governments, educational institutes and the society must act immediately to solve this problem.
Africa must build an education sector that is capable of producing abundant and effective human capital. Creating human capital that recognizes the underlying problems and providing solution must be the vision of each nation in Africa. Even if it is up for a debate, the education obsession that is observed in South Korea and Japan must be replicated here in Africa. These countries are more than self-reliant in economic, technological and other aspects of development indeed. Africa must do whatever it takes to build world-class educational institutions starting from primary schools to universities to resolve its overwhelming problems.
2. Business Juggernauts
Within the last 50 years, Asia has created recognizable business brands in the world. From the rise of Sony (Japan), Samsung (Korea), Alibaba (China), Tata (India) and Amarcon (Saudi Arabia), Asia has become the hub of prolific businesses during the last five decades already incorporating the longest running business in the world (Nishiyama Onsen Keiukan is a Japanese resort which was founded in 750 A.D and still is operating to date a fact which is backed by Guinness Book.)
According to McKinsey’s “Asia’s Future is now”, Asian business has unique style which distinct them from other business companies in their ownership style and growth strategy. Most of top performing Chinese business firms are state owned when comparing to top performers of US and Europe. We take Chinese Construction Bank, ICBC and Saudi Aramco to justify the unique ownership style existent in Asia.
With Asia already incorporating 119 (Grab, ByteDance are honorable mentions) from the 300 unicorns in the world and almost 40% venture capital funds directed to develop Asian businesses, it is safe to conclude that more exciting business entities are in the pipeline.
Lesson for Africa # 2
There is no need of complex analytical skill to realize how much Asia benefited from its well-known business organizations. Asia already incorporates various business organizations that are hugely acclaimed in different sectors: from the biggest oil refinery Aramco in Saud Arabia to the e-commerce giant Alibaba, Asia is filled with business that fills their pockets with multi billions of dollars per annum.
Africa keenly needs the emergence of these Africa-made businesses. Looping in a staggering fact, Africa has more than 400 companies which generate more than $ 1 billion dollars in revenue according to Mc Kinsey & Co. article “Africa’s overlooked business revolution”. According to the same article, the response for the question “How many businesses in Africa earn more than $ 1 billion?” ranged from a minimum “Zero” to a maximum “100”. Even if it might be a staggering number shattering our perception about business in Africa, our continent is still stricken with lack of such firms as unemployment is not only high as usual but rapidly increasing . With a market that offers 1.2 billion prospective customers, local talent, several unmet needs and abundant entrepreneurial drive, Africa needs to properly utilize these resources to create renowned business organizations which can be catalysts for development of the continent.
3. Interconnectedness
Asia is much interconnected than ever. Asia does not give an image of just a geographical entity but a united front. Referring to the McKinsey & Co. podcast, Asia is becoming more interconnected than ever. There are different evidences of economical and even in some case social, environmental and physical linkages in the prospering continent.
The increased economic linkage is hugely contributing for Asia’s prosperity. Other than the significant economic linkages, social linkages are taking a deep root. The popularity of the K-industry which incorporates K-pop, K-Drama and K-Beauty in different Asia nations is an excellent example.
Lesson for Africa # 3
Linkage among African countries must increase. Even if various groups including the African Union were found with the mission of increasing relationship of African nations on various fronts, it is difficult to point out a vindication of succeeding in their missions and achieving the optimal economic, social, environmental and physical linkage. If such summits are used appropriately, there is no reason that they will not be an input for a prosperity which might follow. If it becomes challenging to create a continent wide integration, there are signs of semi integration practices through regional clusters such as ECOWAS and IGAD which represent west and east Africa countries unity respectively. Hence, revising the missions of these clusters and using them for such integration would have paramount importance in achieving the intended results.
Obstacles
1. Socio-economic Issues
Various socio-economic factors are one of the perils that the Asian continent must overcome to lead the main stage in the globe. The big Asian economic powerhouses such as Japan and South Korea are currently facing multiple various socio-economic problems such as low fertility rate 1 accompanied with suicide2 and increase of Hikimori3 . Yet again there are other pressing issues such as increasing household debt4, increasing high tariffs and on Chinese Products5 , unrest in Hong Kong challenging China’s control, the unanswered feminist movement in the Middle East, prevalent dictatorship in Saudi Arabia and other issues are some of the critical socio-economic problems that Asia is encountering currently. These prevalent socio-economic issues must be solved before all progresses made so far become futile.
2. Stagnating Economies
There are signs that the Asian counties economies might have passed their peak and might be already taking a downturn. As unemployment is high in South Korea after the IMF crisis, Japan struggling with ‘Abeconomics’, India already encountering an economic downturn and slow economic growth becoming the new normal in China, some are predicting that Asia might not reach the classic heights that were forecast. Governments, businesses organizations and the like must seize this slight downturn in order to continue their journey as per their aspirations.
3. COVID-19
Despite the fact that the COVID-19 is a big global challenge, once this pandemic transmission is halted or improved, it is almost inevitable that serious economic, social and political consequences will follow. The pandemic could be a huge blow for Asian countries who are already struggling in various fronts. The powerhouse of Asia, China, could also be hugely impacted as the country image has been tarnished globally. Architecting a safe route to pass this tricky challenge is very critical for the fulfillment of the continent aspiration.
4. Political Issues
Current political tensions also pose a threat of distracting the current development. There are various political issues that must be solved immediately. To mention some, there is a tension between South Korea and Japan which entails a broad historical background. Refusal for proper recognition for the crime they committed6 (especially issues related to “Comfort Women”) during the invasion is clearly negatively impacting their relationship. Japan recently took South Korea out of the “White List” which is a big statement. The tension between the two Koreas, which can almost be traced back to the end of the second world war, has also resumed. The two nations who were divided without their consent are still bearing the impact of the Cold War.
The tension between Qatar and Saudi Arabia is also another example of current political issues residing in Asia. Saudi supported by her allies like Egypt embargoed countless Qatar products. This created negative implications on business and image of the continent. The on-going trade war between China and America, recurring instability in Iraq, and a lot others could clearly depict the current problem and the need for solution.
The Tale of the two forgotten nations: North Korea and Syria
The two countries look like they have dipped into a problem they have no solution for. North Korea has been surrounded with controversy since their split with their southern counterparts while Syria is still striving to enjoy breath of freedom which many Middle East countries achieved during the Arab Spring. It would not be an exaggeration to say that the two countries are almost economically inactive currently.
As a result of the unrest, Syria has been labeled as a failed state where only anarchism seems to exist. Even if similar unrest is not occurring in North Korea, the government does not seem to be picking importance of productive and prosperity while investing most of the country’s meager resources for developing nuclear weapon which is highly predicted (by the USA and its allied) to be used for devastating effects. There are still ongoing negotiations for cease fire in Syria while North Korea has recently held significant talks with USA and South Korea even if no actual progress has been made so far on both issues. For the time being, it does not look like the tide will change soon for the two countries.
Summary
The prosperity of Asia is admirable and also looks inevitable. For now, Asia seems to be on the last course of transitioning from an emerging market to a leading market. Through the last decades, Asia was busy sorting out her various economic, political and social failings. Even if such problems will and are expected to persist in the future, it is the evidence of those amendments that they made led them to their current state. Definitely we can identify thousands of ingredients had led to this success but I strongly reckon that the three factors take a huge stake.
Africa, on the other hand, a continent that seems to have passed the nadir point and emerging from the shackles, must act smartly to emulate Asia’s success. Unlike Asia, Africa has a lot of chronic problems (poor governance, lack of infrastructure, political volatility and alike) which might be hard to find a solution. But Africa also has numerous abundant resources on hand. These two contradicting statements imply two outcomes. Even if the realization of Africa’s emergence might take a long time, there is a huge fluke that the Africa’s transformation might be the biggest we have observed in our lifetime.
The Ethiopian Herald July 17, 2020
BY YARED YOSEPH
