AFRICANGLOBE – Regarding the recent economic resurgence across the African continent, the question posed will read: should the Africa rising swansong be overplayed or understated? Should Africa focus on making it work instead of revelling in potential?
For the best part of the years preceding the notoriously famous prediction by The Economist, which labeled the continent as “hopeless”, owing to political instability and incessant wars at the time, Africa’s steady economic rise has been a regular feature in the media. The continent, now a firm favourite for foreign investors, with several of its economies amongst the fastest growing markets in the world, has been on the upward trajectory since the turn of the millennium, despite the global economic crises and the recent austere situations in Europe, making the envy of other markets.
Also, investors and business owners now pay more attention to Africa’s emerging markets and the continent’s future looks bright. But, surely, there is still a lot of work to be done to ensure Africa actually births its potential. Below, we explore 10 things you need to know about Africa and its economic resurgence (…we know there are a lot more, so please add yours in the commentary box below.
The Role Of Small Businesses
Small businesses now play a pivotal role in several African countries. In Africa, the support for entrepreneurship is on the rise –making it easier for people to create jobs for themselves and others and provide for their families and community. For example, Nigeria’s National Bureau of Statistics (NBS) reported that there are over 17 million SMEs in Nigeria – Africa’s second largest economy and most populous nation with over 160 million people. Similar stories also abound in other African nations.
According to Global Entrepreneurship Monitor 2012 African Report, the region is now experiencing what is called “entrepreneurial revolution” which has reinvigorated it with new opportunities, increased employment and a robust rise in Gross Domestic Product (GDP), which is acclaimed as one of the highest in the world.
Doing Business In Africa Is Now Easier
Africa is now home to more international private firms. This is due to the increasing adoption of seamless business policies, lowered corporate taxes, and strengthened regulatory and legal systems in some African countries.
The World Bank Group “Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises” released in October 2013 reported that Africa continues to record a large number of reforms aimed at easing the regulatory burden on local entrepreneurs, with 66 reforms adopted in the past year (June 2, 2012 – June 1, 2013).
Of the 189 nations surveyed globally, 18 African economies made the top 50 most reformed economies while Rwanda, Côte d’Ivoire, and Burundi are among the global top 10 improvers in making the biggest improvement in business regulations.
This year, top African countries like Mauritius at 20 position, Rwanda 32, South Africa 41, Tunisia 51, Botswana 56, Ghana 67, Zambia 83, Morocco 87, Namibia 98 and Cape Verde 121 are testament to the growth in ease of doing business in Africa.
The report also showed that of all the economies in Africa, 31 implemented at least one business regulatory reform in 2012/13.
Africa’s Rising GDP
Africa is the second-fastest-growing region in the world, according to economic experts. The continent has been reawakening with new zeal for economic growth and development, and the rate of return on investment is higher than anywhere else in the world.
From 2000 to 2008, Africa’s real GDP rose by 4.9 percent, more than twice its pace in the 1980s and 1990s. In 2012, six of the continent’s 10 economies (Angola, Ethiopia, Ghana, Namibia, Nigeria, and Zambia) reported GDP growth rates of 5 percent or higher – it was as high as 8.5 percent for Ethiopia.
The World Bank in its latest semi-annual report, Africa’s Pulse, forecast an average 5.3 per cent growth in 2014 up from its 5.1 percent projection.
Also, the IMF estimates that GDP growth in Africa will hit an average of 6.1 percent next year, far exceeding the expected global average rate of 4 percent. It also says that seven of the world’s 10 fastest-growing economies for the period 2011-2015 will be African.
The reason behind this growth surge includes government action to end armed conflicts, improve macroeconomic conditions, and undertake microeconomic reforms to create a better business climate.
Africa Will Have The Largest Workforce
Africa’s labor force is expanding. It is also endowed with the world’s youngest population. This offers the continent a chance to reap a demographic dividend by using its young workforce to boost economic growth.
According to Global consulting firm McKinsey & Co, Africa will be home to one in five of the planet’s young people by 2040. This means that in less than 25 years, majority of its population will be youth. By then, the continent will have an average of about 1.1 billion—more than the size of China’s or India labour force.
If Africa provides its young people with the right education and skills needed, this workforce could become a significant source that will propel the continent into economic prosperity.
Africa Has A Huge Appetite
Africa is now in the age of consumerism with prediction of being the world’s leading consumer market by 2050. This is fueled by interrelated social and demographic changes that drive the continent’s growth engine, urbanisation and rise of the middle-class African consumer.
In fact, not less than 31 million of African households have joined the world’s consuming class since 2000.
Financial consulting firm, Deloitte, reported that more than one-third of Africans are middle class today and by 2060, continent’s middle class will encompass 1.1 billion people- about the current size of the population.
This rise will create more demand for local products and spark a cycle of increasing domestic growth.
By 2030, Africa’s top 18 cities will have total spending power of $1.3 trillion, McKinsey & Co estimates. Cashing in on the potential, retail heavyweights like Wal-Mart, Massmart, Shoprite and Atterbury are taking advantage by building stores across the continent. Also, French retail giant Carrefour also partnered with the French distributor CFAO to open stores in eight countries across the continent by 2015.