Positive news is flowing out of Africa these days. The global consultancy Ernst & Young, now EY, ranks Africa as the world’s second-most attractive market after North America.
If anyone had asked me, I would have pointed at China as the world’s second-most attractive market after the United States (US).
Okay, forgive me. China is the world’s biggest factory yard. Can Africa be a base for a global factory and one day rival China’s manufacturing might? Yes it can.
Let’s start with the obvious. African governments certainly need to invest more in healthcare, education and innovation. They need to promote more public and private capital into infrastructure – roads, modern railways, power plants etc. These steps should – all things being equal – further facilitate intra-Africa trade which also needs to grow. Presently, African nations conduct only about 10% of their trade with each other, according to the World Bank, which also reports that the continent’s share of global trade in value terms currently stands at less than 5%.
A substantial share of the world’s timber, diamonds, gold, cobalt, copper and platinum come out of Africa. Transforming Africa’s raw materials into finished goods before exporting them to the rest of the world would also help.
South Africa already exports German technology (BMW sedans) to the US. Ethiopia has excellent leather and coffee. Kenya produces world-class tea and horticulture. Beyond its crude oil and liquefied natural gas (LNG) exports to international markets, Nigeria’s movie and music industry has practically displaced European and American pop culture across the continent, helping to rekindle African pride, local talent industries and worldwide appetite for indigenous African content.
Foreign firms are all over Africa, scrambling for opportunities. In China’s case, its direct investment in sub-Saharan Africa has jumped from virtually nothing in 2002 to $18.2 billion in 2012. The EYs and McKinseys of this world are only stating the obvious: Africa is a very safe bet for Western and Asian companies, European private equity firms and fund managers from Silicon Valley looking for superior return of investment (ROI). The counterpoint to this fact is to ask how well Africa will harvest its ROI delivery capabilities.
Will Africa take advantage of its unique spot in global trade to improve its society and environment?
Africa’s business and political leaders attending the US-Africa Summit in Washington last August came away with more than $14 billion in investment pledges by American firms.
According to the Brookings Institution, cumulative foreign investment in sub-Saharan Africa grew from $33.5 billion in 2000 to $246.4 billion in 2012. Former New York City mayor, Mike Bloomberg, says it is now factually incorrect to refer to Africa as an emerging region.
“Africa has finally emerged,” he says.
We all, however, need to look beyond the continent’s sweet and sour stories to see this emerging reality. The harsh reality of life in Africa for so long has been one of stagnated growth and arrested development fueled by endemic graft, penury and scarcity in the midst of affluence, painful and unprogressive politics, career militants, religious and ethnic strife, wars, cross-border epidemics, currency constipations, illicit trade, human trafficking and the sheer reluctance of Africa’s elite class to confront the bogey of nepotism.
Thankfully, these harsh realities are being attenuated – at national and sub-national levels – by positive exemplars of economic and social progression and by a new wave of afro-centric thinking which seeks to locate and redefine Africa’s role and position in the evolving global polity.
Practically every corner of the African continent today is adding value to Africa’s new growth story. A McKinsey report released in August 2014 states that the continent is home to eight of the world’s top 15 fastest-growing economies between 2000 and last year, with growth topped only by East Asia, which includes China.
Several sectors – the entertainment, financial services, telecommunications, information technology and agriculture sectors – have helped to galvanize this growth spurt.
Responsible for most of the foreign investment streaming into Africa, their cumulative contributions to social and economic transformation will continue to spur growth and new jobs. They have been the most receptive to the disruptive influence of innovation. They have helped to define the new picture of Africa rising out of the development woods.
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