Africa a fertile hub for investment in uncertain global environment

Rapid population growth, accelerating urbanization and prompt technology adoption are making Africa the world’s next major growth market, according to a recent analysis.

Insights published in a bimonthly business magazine, Harvard Business Review Press, in November by the authors of Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market state that the continent is poised for economic acceleration akin to the Asian boom.

“While other geographies are seeing incremental growth, global companies that get in early and join the African champions shaping the right strategies can sustain double-digit growth over the next few decades,” it says.

The authors, Acha Leke and Georges Desvaux, both senior McKinsey partners, and Mutsa Chironga, an executive at Nedbank, a financial firm based in South Africa, draw from their experience and interviews with 40 prominent CEOs. The book, according to them, targets global and Africa-based companies looking to access new growth markets.

They say the continent is a breeding ground for firms eager to build large, profitable businesses. “There is a trilliondollar opportunity to industrialize Africa, to meet rising domestic demand and create a global bridgehead.”

However, it warned that Africa’s business environment remained poorly understood and known to many executives in the West only by its reputation for complexity, conflict and corruption.

Conversely, a United Nations agency, Economic Commission for Africa, has again identified East Africa as one of the fastest growing regions in the world. The region, covering Kenya, Uganda, Tanzania, Rwanda, Burundi and the latest addition South Sudan, has been growing at an average growth rate of 6.7 percent between 2013 and 2017, double the African average.

Average life expectancy has increased by 5.3 years over the past decade, with some countries, such as Kenya and Rwanda, registering unprecedented gains.

“There are of course still many challenges — chief among them being the need for faster job creation for the rapidly growing population — but on balance progress has been impressive. Life expectancy is a good general indicator of living standards, and the pace of change is one of the fastest in history,” said Andrew Mold, acting director of the ECA in Eastern Africa, presenting an overview of economic and social developments in the region at the 22nd meeting of the Intergovernmental Committee of Experts, ICE in Kigali, Rwanda.

In 2019, the region is expected to grow at 6.2 percent, thanks to sustained public and private investment, renewed optimism in the Horn of Africa, and the opening up of new trade opportunities under the African Continental Free Trade Agreement, signed in March this year.

Among the challenges are the impact of climate change on agricultural production, rising levels of debt in some countries, and peace and security concerns.

Outside the continent, the specter of trade wars and moderating global demand could also impact on regional growth. At such a time, ECA argues that African countries should focus their attention on the more resilient and dynamic regional trading relations.