Africa Emerging Opportunities
“The rise of Africa”
Ten years ago, The Economist ran a cover with the title “Africa: The Hopeless Continent”. Today, this has been replaced by “Africa Rising” (last December’s issue)—a reflection of the changes that the continent has experienced over a decade. What has engineered Africa’s rise through difficult times? It is predominantly the emergence of the BRICs, particularly India and China, that has helped to put Africa back on the map of development and investor interests. This paper looks at what is in store for Africa, its growth trajectory, other key driving forces, and the opportunities and risks for investors going forward. Africa today is for the most part at the beginning of the industrialization stage. Take Eastern Europe 20 years ago or India in 1994—this is the stage of development in Africa at the moment. However, the last ten years have been positive for Africa. Growth has been rising by 5-6% per year, on the back of ongoing reforms, a fall in political risk, debt write-off and the well-documented commodity prices story. What does this mean for Africa going forward? In economic terms: Despite the growth seen in the last decade, and although there was a setback in 2008 owing to the global crisis, the continent still managed growth of 2%. In a scenario like this, which would have happened a decade ago, Africa would have had negative growth of almost 10%, and would have failed to recover for a very long time. So this is simply an indicator of where it is heading now: this is a V-shaped recovery seen since 2008.
Growth in a stagnating world
• Africa is small: just 3% of the global economy;
• Sub-Saharan Africa (excluding South Africa) makes up less than half of the continent’s GDP;
• But this group of countries is growing faster than anywhere else in the world;
• Investors are waking up to the enormous potential: the race to share in Africian growth has begun.