With Africa’s economic recovery in full swing in spite of the global recession, the continent is set to become the investment destination for many companies, yet South Africa’s influence on this trade and investment will no longer be a significant one given the development of other ports across Africa.
The Global Economic Conditions Survey (GECS) report for the second quarter of 2012 was undertaken by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA). According to ACCA Kenya Country Manager Anthony Kariuki, respondents in Africa were the most confident of the state of the global economy with 34 percent of respondents reporting confidence gains, down from 39 percent three months earlier. “Some 45 percent of the respondents believed that the global recovery is on track,” Kariuki said in Nairobi on Tuesday.
According to the study, Nigeria has been the top performer in Africa over the last 9 months, with Malawi also performing well in early 2012 and maintaining confidence since then. Overall there has been some improvement in business conditions on the ground, business revenues are improving, capital spending has consistently increased over the last three quarters and layoffs are becoming less common, although job creation is still coming in fits and starts, the report says.
Experts says more investors from developed countries have been shifting some of their money into the emerging markets like those in Africa because of relative stability of the financial systems and higher returns. Cape Chamber of Commerce President Michael Bagraim says that doing business in Africa “has been a good idea” for some time, especially given the recession elsewhere, and that it has got a “whole lot better” as a result of the oil and gas discoveries being made off-shore in East Africa.
Further possibilities of investing in Africa were exciting as the United Kingdom (UK) firm Tullow Oil had found oil at Lake Albert in Uganda and would soon be producing between 150,000 and 350,000 barrels a day. The oil field extended into the Congo and total reserves could be as much as at six billion barrels, he said, adding that the UK oil firm had also discovered oil in Kenya and they had reportedly said their discovery could dwarf their oil discovery in Uganda.
“The challenge for East Africa will be to use the resources wisely and we hope that South Africa, through its leadership of the African Union, will be able to play a role to ensure that the new wealth is processed transparently and that the people benefit,” he said.
Yet South Africa’s role in this booming Africa may yet be restricted. Stanlib emerging market economist Xhanti Payi believes that the country can no longer lay claim to the “gateway to Africa” title, as it no longer exists from a trading perspective. Due to developments and upgrades in various ports around Africa, it has become possible for international companies to do business with those countries directly, rather than gaining access through a “gateway” such as SA.
“So, if you go to Mozambique, the port of Maputo has been improved significantly over the past couple of years and does more work than it did 10 years ago. The government asked a private company to go in and help run and improve the port. Kenya is doing a very similar thing with their ports,” Payi said.
SA’s geographic position made it difficult to trade with other African countries situated further away on the continent, he said.
“In a sense, we are very far away from the rest of Africa. If you were coming from China or the US and you brought things, why would you want to come to SA, only to get your stuff in the middle of Africa, if you could just go to Namibia?”
So it seems that recovering Africa is well placed to benefit from the global recession, yet development across the continent could yet be a loss to the powerhouse in the south.