Time magazine has named Africa’s business potential as one of the “10 ideas changing the world right now”.
For once Africa isn’t being depicted as a disastrous basket case — indeed in this article quite the opposite is the case. With positive economic growth for African nations forecasted to continue (despite the global downturn that has caused so many other economies — especially in the first world — to contract) Africa is cited as a glimmer of economic hope in these gloomy recession-hit times.
The article says:
[A]id is no longer Africa’s main source of foreign income. Africa is becoming a business destination.
In 2006, according to the Organization for Economic Cooperation and Development, foreign investment in Africa reached $48 billion, overtaking foreign aid for the first time. That gap has only widened, reflecting a quadrupling of foreign investment since 2000. As the senior adviser in Africa for the International Monetary Fund (IMF), David Nellor, noted in a report last September, sub-Saharan Africa today resembles Asia in the 1980s. “The private sector is the key driver,” wrote Nellor, “and financial markets are opening up.” War is down. Democracy is up. Inflation and interest rates are in single digits. Terms of trade have improved. Crucially, said Nellor, “growth is taking off.” The IMF puts Africa’s average annual growth for 2004 to ’08 at more than 6% — better than any developed economy — and predicts the continent will buck the global recessionary trend to grow nearly 3.3% this year.
As a result of this, Africa is the best bet to back for investors operating within the turmoil of the current global economic climate.
As the article says:
In an article for the online journal allAfrica in February, Oxford University economist Paul Collier and Witney Schneidman, who advised President Obama on Africa during his campaign, noted that Africa now offers the world’s highest rate of return on investment. “Africa, usually the poorest performing region in the world economy, is now likely to be among the best-performing,” they wrote. “Moreover, the region has been largely immune from the current banking crisis…The continent’s financial institutions did not venture into derivatives or sub-prime mortgages.” Shanta Devarajan, the World Bank’s chief economist for Africa, says the current downturn might be unfair to the continent, since it is “not remotely Africa’s fault,” but it should not alter the underlying trend: “There has definitely been a transition in the last few years. The continent now has huge potential.” Or as Stephen Hayes, president and CEO of the Corporate Council on Africa, puts it, “Africa offers more opportunity than any place in the world.”
The article explores China’s lusty rapprochement with the continent, in which the resource-ravenous power is building infrastructure in return for affordable natural resources to fuel its economy.
It also looks at the controversies surrounding aid from the developed world, and the need for the Africa’s burgeoning private sector to lead the way in eradicating poverty:
[L]ong-term charity, living life as a beggar, is degrading. Andrew Rugasira, 40, runs Good African Coffee, a Ugandan company he set up in 2004 to supply British supermarkets under the motto “Trade, not aid.” He is emblematic of a new generation of African antiaid, antistate entrepreneurs. For Rugasira, aid not only “undermines the creativity to lift yourself out of poverty” but also “undermines the integrity and dignity of the people. It says, These are people who cannot figure out how to develop.” Aid even manages to silence those it is meant to help. “African governments become accountable to Western donors,” says Rugasira, “and Africa finds itself represented not by Africans but by Bono and Bob Geldof. I mean, how would America react if Amy Winehouse dropped in to advise them on the credit crisis?”
It’s great that the Africa — at long last — is being feted in mainstream western media as a place of potential. Of course the rampant poverty, conflict and corruption still bedevil the continent. But there’s so much more to the continent.
As Time says “Look … at the African growth figures once more. Compare them with this year’s forecasts for the developed world. Who’s the basket case now?”
Read the rest of the article here.