Published On: Mon, Apr 25th, 2016

No curtails to Africa’s potential despite recent hiccups

Africa economyJOHANNESBURG, (CAJ News) – THE continent might not be spared the global financial shocks and bearing the brunt of falling prices, declining currencies, political instability, disease and widespread drought but Africa is set to maintain its standing as the preferred destination of choice for international investors.
Also buoyed by a rapidly expanding population, particularly Sub-Saharan Africa projected to leap to 2 billion at current growth rates of more than 2 percent yearly, the continent is at the top of the mind for foreign business investment, often referred to as one of the last frontiers for economic growth and development.
Optimism remains high despite the recent economic downturn and headwinds that the continent is experiencing, and projections indicate slight economic slowdown will not discourage investment.
The World Bank’s January 2016 Global Economic Prospects reported Sub-Saharan Africa’s real Gross Domestic Product (GDP) grew at its lowest rate since 2009 in 2015 with a growth of a 3,4 percent.
This was down from the 4,6 percent and 4,9 percent growth that was reported in 2014 and 2013 respectively.
“The drop in GDP growth for the region over the past year shouldn’t deter investors. Africa will continue to thrive, albeit, at a slightly slower pace as previously experienced,” said Hennie Heymans, Managing Director of DHL Express Sub-Saharan Africa.
Hennie said the company firmly believed the African continent was still one of the last frontiers for growth, and that the region would continue to grow as it has over the past decade due to the vast number of unexploited would opportunities available for local and foreign investors.
Meanwhile, rising violence and conflicts are fueling increased forced displacement.
Emerging threats in the form of trafficking, piracy, and religious extremism are causing persistent fragility in large parts of the continent.
Although Ebola has been largely contained, the risk of pandemics remains high.
The World Banks notes the lessons of the Ebola crisis highlight the importance of developing strong health systems and supporting regional disease surveillance and coordination.
The impact of climate change is another risk facing the region.
Africa is the lowest carbon-emitter, and yet suffers the most from the effects of climate change, through droughts, coastal erosion and flooding.
All that though does not deter the continent’s investment potential.
“Despite this, the region remains abound with untapped prospects and offers growth opportunities in 2016 for those willing to seek them out,” said Heymans.
African Union Commission (AUC) Chairperson, Nkosazana Dlamini-Zuma, believes the continent is ripe for investment having recorded an impressive turn around for the average growth compared to the 1980s and 1990s.
“Since 2000, the continent’s transformative process has continued,” she said.
To fulfil its potential, she recommends diversification of local economies.
“Africa’s economies cannot be resilient if not diversified, our products are not competitive if not processed. There are many more factors to consider,” underlined the AUC Chairperson.
“Africa must defend and expand investments in education, skills and science technology to further boost the economic growth of the continent,” Dlamini-Zuma said.
Heymans said what put Africa in good stead was that each country offered unique growth opportunities.
For example, in Ethiopia, the telecommunications sector is a large contributor to GDP.
It was reported that the country had 40 million mobile subscribers and 10 million internet connections in 2015.
“However with a population of over 90 million, the sector has capacity to double its contribution to GDP,” said Heymans.
In Mozambique, the retail sector is offering huge opportunities.
“With a growing middle class and shopping culture, coupled with a limited availability of common products, this sector offers opportunities for both small and large businesses,” he said.
With Rwanda’s ambition to become a regional information and communications technology hub, there has also been a stronger demand for communication devices and ICT-related equipment.
Heymans added that more countries in the region could be thriving if not for underdeveloped infrastructure and bureaucracy.
He points to the mining sector in Madagascar as one example.
“This could be a potentially lucrative opportunity for investors due to the country’s coal, nickel and ilmenite resources, however several legislative reforms are still needed.”
Prof. Emmanuel Nnadozie, Executive Secretary of the African Capacity Building Foundation (ACBF), opined the continent’s prospects were even higher than projected considering prevailing problems were within control.
“The issue of droughts, floods and decline in commodity prices can be addressed if Africa pays particular attention to the right policies and necessary capacities,” Nnadozie said.
CAJ News

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