Africa prepares for take-off, says report

By Njiraini Muchira

It is sunrise in Africa again or so suggests a new report.

As the rest of the world plunges into economic gloom, Africa is preparing for take-off.

According to the study by investment bank Renaissance Group, Africa is set to be the next growth frontier for investors seeking new markets.

The study, titled ‘The Fastest Billion – The Story Behind Africa’s Economic Revolution — notes that after what has been described as Africa’s ‘lost decades’ (a time when the continent recorded a depressed average growth of two per cent), the continent is on a long-term rebound with growth expected to average five to six per cent over the next 40 years.

At this rate, the study says the continent’s gross domestic product (GDP) that currently stands at $2 trillion will increase to ten-fold,  about $29 trillion by 2050, making it bigger than countries like India and Russia.

“Africa just needs to follow the same path as Asia 20 years ago and the coming years will be a boom,” said Charles Robertson, Renaissance Capital global chief economist.

He added the continent needs to sustain investments in areas like infrastructure, agriculture, light manufacturing, ICTs and broaden and deepen areas like education and health.

The study, which seeks to show how Africa has managed to transform from a literally hopeless continent to an economic powerhouse that the world can no longer afford to ignore, observes that China has played a crucial role in the revolution.

For instance, total exports from Sub-Sahara Africa to China have significantly increased from less than $1 billion to about $4 billion last year.  

According to the study, the continent offers significant investment opportunities in areas like oil and gas, mining, services, telecoms among others.

In terms of oil and gas, for instance, massive investments in exploration activities has seen the value of discoveries more than quadruple from less than $50 billion in 1990 to over $200 billion last year.

Besides, reforms being undertaken by governments coupled by the fact that majority of African nations are embracing democracy makes the continent friendly to foreign investors.

“Reforms are creating a dynamic private sector that is important in sustaining growth,” said Robertson during the launch of the study findings in Nairobi.

Other factors expected to make Africa attractive are sound macro-economic and fiscal policies, a growing young population and rising quality of education.

According to Robertson, Africa will continue to face the challenge of corruption but will slow decline as the continent grows richer.