Just as European countries tear into each other over dodgy banking systems and a wonky single currency, South Africa happily acts as continental cheerleader at the Durban Brics 5 love-in. That we can do this in confidence comes from Africa enjoying unprecedented economic growth. It’s a very far cry from 10 years back, when the UK’s pompous The Economist magazine felt able to write ours off as the “hopeless continent” – and it holds opportunities for SA business.
Even when the global recession hit in 2008, most African countries enjoyed economic expansion, and it hasn’t slowed. Indeed, seven of the 10 fastest growing economies the past five years have been African. Why? There are a few core reasons, including, notes internationally-renowned Zambian economist Dambisa Moyo, a young population (potential consumers and that most productive of generations).
Africa business commentator David Christianson puts continental growth down to the resources commodity boom, and China. He says that while resources contribute a quarter of African gross domestic product, fully 30% of the world’s minerals are held here and that Asian demand for these seems inexhaustible. Christianson points to Africans having more ready cash than ever before (a nice example being Nigerians buying 150 million mobile ‘phones this past decade, about one per person).
He is backed by a McKinsey Global Institute report looking at African households with disposable income. There were 59 million of these at the century’s turn, rising to 89 million in just eight years, and projected at 120 million by 2020. Urbanisation, the world’s most effective contraceptive and bringer of cheaper infrastructure and less costly service delivery, helps.
Author of the first annual socio-economic Africa Survey, Catherine Schulze, has collated a myriad changes in a continent at greater ease with itself. Thus, while Africa’s population increased 114% between 1980 and 2010, birth rates have dropped in 36 surveyed countries, even while better healthcare sees falling infant mortality rates and rising life expectancy.
The supposedly pandemic nature of Aids has failed to live up to prediction, with just 4% of people currently infected on the Mother Continent. Meanwhile, GDP in constant US dollars rocketed 151% in only the last decade; per capita GDP is up 131%; foreign direct investment rose from US$24 per African in 2001 to $89 by 2008. The African Development Bank tracks foreign direct investment outstripping foreign aid in every year since 2005, a first.
During the 21st century’s first decade, African state debt as a percentage of GDP fell by more than half. The Canadian Fraser Institute now no longer lists any African country in its 10 worst places to mine.
Still, none of this is irreversible, and investors will know that. The main worry should be about entrenching clean state institutions with the fundamentals of liberal democracy, especially the rule of law.
Says Good Governance Africa CEO John Endres: “The Cold War’s end brought a huge uptick in democratic practice. This is crucial to investor confidence and success. Apart from their obvious business considerations, South African companies would do well to watch for clean and orderly governance. Sound democratic culture, with its predictabilities and protection of all rights human and economic, should be their lodestar. Anything else could just blow up in their faces”.
By Paul Pereira, The Citizen