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Africa
poised for growth spurt, says World Economic Forum
When it comes to investing and doing business, Africa is no
longer the impassable Dark Continent she used to be. Today,
private enterprises and government organisations from all
corners of the world seem to be after a slice of what the
region has to offer.
Trade,
jobs key to World Economic Forum conference
When it comes to investing and doing business, Africa is no
longer the impassable Dark Continent she used to be. Today,
private enterprises and government organisations from all
corners of the world seem to be after a slice of what the
region has to offer.
To
build on this momentum and stimulate further macroeconomic
growth, African governments need to address the plethora of
issues that exist at micro level.
Compared
with the rest of the world, Africa is doing phenomenally well
from a macroeconomic perspective. In January, for instance,
the World Bank raised its forecast for economic growth in
sub-Saharan Africa to 5.3% for 2011. If the region is to live
up to the predictions, she will be the world's second best
performer after south-east Asia (7.8%).
The
2011 growth predictions for the Organisation for Economic
Co-operation and Development (OECD) region, on the other hand,
are set at just below 3%.
The
main ingredients for Africa's performance include its vast
natural resources, the astonishing resilience the region has
shown during the global crisis, and the continent's improved
social and political stability.
"It
is interesting to know that seven of the 10 fastest-growing
economies will come from sub-Saharan Africa in the next five
years," says Katherine Tweedie, head of the Africa World
Economic Forum, in an online media statement, a week before
the kick off of the meeting's 2011 edition.
The
international event, which will take place in Cape Town from
May 4-6,2011 will to a great extent revolve around the drivers
of Africa's growth spurt and the existing opportunities for
growth and investment, but also the challenges that are ahead.
However,
despite the progress at a macro level, the African sky is
far from clear when observed from a micro and grass-roots
angle. The continent, to a large extent, is still firmly stuck
in a chronic state of underdevelopment, poverty, and socioeconomic
inequality.
Despite
the predicted economic growth, nearly half of the 840 million
people living in sub-Saharan Africa have to survive off US$1.25
per day or less.
This
situation translates into other problems, such as hunger.
According to the United Nations (UN) Food and Agricultural
Organisation (FAO), 240 million people living in African countries
south of the Sahara are chronically undernourished.
To
work towards a better future, African governments have to
take the bull by the horns. The World Economic Forum therefore
advises authorities across the region to improve the collection
of taxes and to more efficiently and effectively spend these
funds. This also counts for donor funds, loans and investment
money.
Areas
that need urgent attention include infrastructure, healthcare,
education and job-creation programmes.
Governments
are also advised to empower small and medium enterprises,
which are the main creators of employment, thus income generators
across the continent.
In
addition, African states should join hands with each other
as well as the private sector, stresses Peter Attard Montalto,
emerging markets economist at Nomura International.
"There
is the ever-present issue of untapped potential and as such
a key priority will have to be the inter-linkage of the private
and public sectors to drive growth," he says. "Individual
countries in Africa also need to join hands with each other
instead of operating alone when it comes to fighting poverty
and generating economic growth. Countries on their own have
only so much power. Part of the issue here is infrastructure,
and part is politics and foreign economic policy.
"African
governments also need to drop trade barriers and duties within
Africa, improve infrastructure and allow the private sector
to do the rest", says Montalto, adding that African countries
should boost the trade with their African counterparts instead
of focusing on the outside world.
According
to the World Bank, the level of intra-continental trade in
Africa remains among the lowest in the world. Just 10% of
all African trade is taking place within the continent.
"Providing
these foundations would help unlocking an awful lot of private
sector interest, which up until now has shied away from doing
business in Africa," he adds.
"What
Africa does not need are new and more regional trade bodies
and regulations. The region does not need more talk shops,
as it already has those institutions. What the region needs
to do is strengthen them and make them more effective."
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