To millions across the globe, Africa is synonymous with hunger, disease, aids, despots and conflicts. China, India and other Asian countries suffered same stereotyping until few decades ago when they started the current economic transformation through rapid industralisation and international trade. Africa is cautiously on the tails of the Asian Tigers. The continent is quietly shedding its old toga as it transforms into a conglomerate of prosperous nations.
New business shift
One-third of Africa’s total trade is now with markets in emerging economies, namely China, India, Brazil and Malaysia among others. Africa is marking a shift away from previous reliance on traditional trading partners in Europe and North America. Although the European Union (EU) as a whole continues to dominate Africa’s trade, that dominance is receding, especially in imports. European Union now accounts for only a little over a third of the continent’s inward trade.
The International Monetary Fund (IMF) projections for world growth reinforce the grounds for optimism. While many of Africa’s traditional trading partners are in a recession, many of its new markets, particularly China and India, show relatively healthy growth prospects.
The $5 billion China-Africa Development Fund (CADFund) opened first office in Africa at Johannesburg South Africa. At a time when much Western capital is fleeing the continent, the CADFund, established in 2007 by the state-owned China Development Bank as an equity investment fund for Africa, has already spent some $400 million of its initial $1 billion capital and looks to be adding a further $2 billion to help promote more Chinese investment in Africa.
Brazil’s oil giant, Petrobras, has projected that it will invest more than $2 billion in Angola and Nigeria over the next five years, while its steel-producing compatriot, Vale, is putting a reported $1.3 billion into developing coal deposits in Mozambique, where Coal India also has acquired mining rights. India’s Tata is planning a major expansion in South Africa, Nigeria and a number of other countries.
On the other hand, Russia’s Gasprom is looking to invest in natural gas in Nigeria and to acquire oil concessions in Algeria and Libya. Malaysia’s Petronas has made a significant presence in the oil sector in Egypt and Sudan. These are all snapshots of Africa’s newfound trade and investment partners among emerging economies.
Global perception challenges
The image of Africa as a continent bedevilled with sufferings and wars still exists in minds of millions through television images and news reports. Most media outfits in developed nations continuously mirror the worst pictures out of Africa to maintain the stereotype. There may be drought, disease and corruption. Still, there are new generations of young, educated, savvy entrepreneurs running businesses in Africa. A great number of professionals and business managers in Africa are educated in the world’s best universities, and have worked in high profile organisations in developed economies across the globe before returning home.
Despite the contribution of these new generation of Africans in the development of the continent, the global television audience is still being fed with an overdose of malnourished children, conflicts and famine to mention a few. The media blitz on Africa may have discouraged many entrepreneurs in the western world with products and services that could thrive in Africa to look elsewhere. There is a widening gap between reality and perception of Africa.
Economic prospects
Africa’s economic growth is steady despite the global financial crisis. The World Bank confirmed that growth in gross domestic product has been higher than the world average for five years and is predicted to grow in 2009 and beyond.
Africa’s economic prosperity has created a growing middle class. The World Bank estimates that the sub-Saharan middle class will be 43 million strong by 2030, up from 12.8 million in 2000. South Africa leads the pack, with other countries such as Zambia, Nigeria, Kenya and Ghana demonstrating strong prospects. It all means that billions will be spent on consumer goods, telecommunications, agriculture and infrastructure projects.
Africa’s mineral wealth is vast. Africa supplies half of the world’s diamonds, a third of its gold and more than three-quarters of the platinum/palladium precious metals complex. It has huge copper reserves in Zambia and South Africa and 12 percent of the world’s oil reserves.
Political reforms
Across Africa, the number of democracies has risen from 10 in 1980 to 34 by the end of 2007. The older generations of leaders are retiring and the new western-educated elite is taking control. From 1960-1980, no African leader left office having lost an election. In the 1980s, there was just one. But from 1990-2003, 18 were voted out of office.
The Mo Ibrahim Foundation has recently published its new ranking of African governance; 48 of the 54 African countries were reviewed, with Mauritius, the Seychelles, Botswana, Cape Verde, and South Africa occupying the top five positions and Sudan, Chad, the DRC and Somalia at the bottom of the table.
A country such as Nigeria noted for protracted military rule has been under democratic rule since 1999 till date. There are still democratic challenges in African countries such as Zimbabwe, Niger, Madagascar and Kenya. These are young democracies that are bound to make mistakes and learn as they climb the ropes of good governance. Almost all African countries are embracing capitalism and stock markets have a sound legal framework based on respect for property rights.
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