“Economic output in Sub-Saharan Africa expanded at nearly twice the global rate. With some of the fastest growing economies in the world, African growth is expected to accelerate to over 5 percent in 2013-15.” – African Pulse, April 15, 2013, World Bank
Understandably, many business leaders in the West remain skeptical about Africa. For decades Africa has been stigmatized. Africa is frequently viewed as a continent mired with poverty, corruption and political unrest. However, these perceptions of Africa are lagging behind the continent’s emerging realities. The overall outlook for the region’s economic prospects is broadly optimistic.
Between 2000 and 2009, Africa’s annual GDP grew by 5.3 percent, compared with 4 percent globally. During the global recession while most economies shrank, Africa’s was able to grow. In 2009, Africa’s GDP expanded by 2 percent, while GDP dropped 5 percent in the United States, 2.8 percent in the European Union and 1.5 percent in Latin America. The Boston Consulting Group, “The African Challengers: Global Competitors Emerge from the Overlooked Continent” (June 2010). In 2012, Africa saw a record $54 billion in net private capital flows. The World Bank, Africa’s Pulse, vol. 7 (April 2013). Foreign direct investment to Sub-Saharan Africa increased by 5.5 percent in 2012 to $37.7 billion. Id.
Many regional economies continue to remain stagnant. The global GDP is projected to expand by 2.4 percent in 2013 and slowly grow to about 3 and 3.3 percent in 2014 and 2015. Id. In the United States, growth was revised downward to 2.2 percent in 2012 and 1.8 percent in 2013. The Euro-zone is forecast to grow by 0.1 percent in 2013 after a decline of 0.4 percent in 2012. Japan’s growth stood at 2.0 percent in 2012 and is projected at 0.7 percent in 2013.
In contrast, Africa’s economy continues to thrive. Sub-Saharan Africa’s growth is projected at 4.9 percent in 2013, and 5.2 percent by 2015. Id. This growth is supported by resilient domestic demand and still high commodity prices. Id. Africa is now home to some of the world’s fastest growing economies, as 6 of the world’s 10 fastest growing economies come from the continent. This number is expected to rise to 7 by 2015.
Overall, African nations have weathered the global economic upheaval of the past few years with remarkable resilience and have impressed the world with continued strong growth. Africa offers a wide range of business and investment opportunities. Exports are booming and markets are being diversified, while the emergence of a growing middle class offers new and increasing consumer markets. Whereas mining and oil remain big businesses, infrastructure investment and the consumer market are major growth areas. Telecommunications, mobile banking, retail and agriculture are only some sectors that are showing great promise.
Africa has a consumer base of more than 900 million people. U.S. exporters are able to find a wide market in African countries in the fields of cosmetics, oil and gas extraction, food processing, telecommunications, used clothing and many other sectors. While more than half of Africa is estimated to live on a dollar or less a day per person, the rest of the population does not, and they are hungry for products and services. Even among Africa’s the poor, there are surprising opportunities.
Africa offers the highest risk-adjusted returns on foreign direct investment among emerging economies. As worldwide investors vie for a piece of the action, the expectations of African stakeholders have risen. To succeed, investors will have to look beyond dazzling returns and one-off projects, and sign on as long-term partners.
- Africa’s collective GDP in 2012 was $1.6 trillion, roughly equal to Brazil’s or Russia’s. McKinsey Global Institute, “Lions on the Move: Progress and Potential of African Economies” (June 2010) www.mckinsey.com\insights\africa\lions_on_the_move.
- Africa’s combined consumer spending in 2008 was $860 billion. Id. Africa offers a consumer base of 900 million people. McKinsey & Company, “McKinsey on Africa: A continent on the move” (June 2010).
- By 2015, 221 million additional basic-needs consumers will enter the market in Africa. Id.
- The African mobile-phone market has surpassed the 400-million subscription mark. Id.
- In 2012, Africa saw a record $54 billion in mergers and acquisitions. The World Bank, Africa’s Pulse, vol. 7 (April 2013).
- The combined net worth of Africa’s 40 richest people is $72.9 billion. Kerry A. Dolen, “Africa’s 40 Richest: 2012,” Forbes (November 20, 2012): www.forbes.com/sites/kerryadolan/2012/11/20/africas-40-richest-2/.
- Between 1996 and 2010, the share of people living on less than $1.25-day in Sub-Saharan Africa has declined from an estimated 58 percent to 48.5 percent. The World Bank, Africa’s Pulse, vol. 7 (April 2013).