High Growth, Low Inclusion: the 'Africa Rising' Illusion

Ethiopia’s reported 8.1% gross domestic product (GDP) growth rate for the fiscal year 2023/24 highlights a paradox that resonates across much of Africa: robust economic expansion often coexists with deep structural inequalities. Too often, investors and policymakers equate GDP growth with market attractiveness, while overlooking how unevenly its benefits are distributed. Ethiopia—where GDP per capita remains among the lowest on the continent despite sustained growth in the last two decades—illustrates this tension and offers a cautionary lens for understanding similar patterns across Africa.

GDP measures the size of the “economic pie” that a country produces, but it does not reveal how that pie is shared. A country can show impressive growth rates even if most citizens see little improvement in their daily lives. GDP per capita, calculated by dividing total GDP by the population, provides a clearer sense of average income or output per person. Yet even this figure can obscure deep disparities. For instance, if a small elite earns vastly more than everyone else, GDP per capita could appear relatively high, even though the majority of citizens are still living in poverty.

To capture inequality, it is more useful to look at another economic indicator: the Gini index. Unlike GDP, which reflects total output, the Gini index measures the distribution of income among different secioeconomic groups within a population. It ranges from 0 (perfect equality) to 100 (perfect inequality). A high Gini score signals that wealth and income are concentrated among a small minority, while the majority receive much less. Sub-Saharan Africa consistently records some of the world’s highest Gini coefficients, underscoring how inequality persists even where growth appears strong.

Across the continent, headline growth figures are often celebrated as signs of progress and opportunity. Countries such as Rwanda, Côte d’Ivoire, and Tanzania have also recorded impressive rates over the past decade. Yet in many of these economies, the benefits remain concentrated in narrow sectors—extractives, real estate, or export-oriented manufacturing—while inflation, stagnant wages, and weak social safety nets limit purchasing power and security for the majority.

This disconnect challenges the popular narrative of Africa’s “rising middle class” and its supposed role in turning the continent into a consumer powerhouse. Although widely embraced in business circles, the notion is often overstated. UNCTAD’s Trade and Development Report 2024 underscores this point, showing that Africa’s middle class remains comparatively small—both in absolute size and in geographic distribution—when measured against other world regions. Moreover, many so-called middle-class households hover just above the poverty line and remain highly vulnerable to inflation, health shocks, or socioeconomic fragility.

The result is a dual reality. On one side, Africa offers vast opportunities in many sectors. On the other, structural weaknesses—low per capita incomes, fragile domestic markets, limited job creation in high-value sectors, and entrenched inequality—make it risky to assume that growth will automatically translate into sustainable development or raising consumer demand. Equal economic opportunities and narrower gaps between social classes are not just desirable—they are a condition for enduring progress and societal stability.

The real test for Africa’s fastest-growing economies lies not in sustaining high GDP figures but in improving the quality of growth. Inclusive development requires reducing inequality, strengthening domestic industries, investing in human capital, and building resilient institutions. Without these foundations, growth risks becoming a house of cards—impressive on paper but vulnerable to collapse at any moment.

For African economies, the path forward must involve reshaping growth to deliver not only opportunities for investors but also tangible improvements in livelihoods, equity, and social cohesion. Africa does not need growth that shines only in statistics. It needs growth that reduces inequality and anchors political stability. Only then can the promise of “Africa rising” move from rhetoric to reality.