Africa is a continent on the move. This is demonstrated by increasing foreign investment, robust economic growth and a burgeoning middle class. While all countries in Africa have demonstrated commendable economic growth in the past decade, nowhere is this more apparent than in sub-Saharan Africa. These countries have managed to continuously harness their considerable natural resources leading to sustained economic growth over the years.
Indeed, economics experts are projecting that the continent is on course to favorably compete with other emerging economic regions (Brazil, India, China and the Middle East) in the coming decades. The continent’s major cities are changing thanks to consistent growth in the technology, manufacturing, hospitality, retailing, outsourcing, finance and business sectors.
According to the African Development Bank’s economic outlook, Africa’s gross domestic product (GDP) is expected to strengthen to 5% in 2016 from 4.5% in 2015. If these predictions are right, the continent could be closing in on the impressive growth levels seen before the 2008/09 global economic crisis.
This promising information indicates that Africa’s governments are resilient and are coping admirably with some of the major challenges they have recently faced. You may remember the 2014 Ebola outbreak in West Africa, the Boko-Haram crisis in Nigeria, Al-shabaab attacks in East Africa, as well as other domestic political uncertainties that characterize most African countries. Although these challenges could block the projected economic growth of these countries, confidence in the continent remains high among foreign investors.
Ease of doing business in Africa
As countries on the continent compete with other emerging markets, you may ask whether they are doing enough to improve their business and regulatory environments to attract investors. According to the World Bank’s 2015 Doing Business Index, Rwanda, Botswana, South Africa, Tunisia and Morocco rank higher than India, Brazil and China when it comes to the ease of doing business in those countries. However, African countries still made up 66% of the bottom 50 out of 189 countries ranked. This means that although some countries are moving in the right direction, a lot remains to be done to improve the overall investment climate the continent.
You should not view this as a negative. A look at World Bank reports reveals that since 2005, all countries in sub-Saharan Africa improved their business regulatory environments for small and medium sized businesses. Economic partnerships such as the East African Corporation have come up with free trade agreements that have helped to ease the transportation of goods across countries, resulting in increased cross-border trade.
Entrepreneurship and African economies
Other than seeking to improve investor confidence, several African governments are actively working to improve business regulations that will aid entrepreneurs in their respective countries. This may include making it easy for individuals to register and run businesses, giving tax incentives to entrepreneurs and providing training and educational opportunities to encourage entrepreneurship.
One of the ways these governments are helping entrepreneurs to establish themselves is by increasing technological infrastructure. Governments that open up their cyberspace are set to reap great profits as entrepreneurs utilize the Internet to tap into global markets. This is a worthy investment for any African government.
African entrepreneurs can borrow inspiration from some of the world’s great businesspeople. A good example is entrepreneur Ehsan Bayat, who was a key pioneer in improving the telecom sector in Afghanistan. In partnership with the Afghan Ministry of Communication, Bayat created the Afghan Wireless Communication Company that opened up the country to the world. Additionally, he founded the largest TV and radio station in Afghan – the Ariana Radio and TV Network – which played a huge role in sharing news and information about the country’s progress after the fall of the Taliban. As you can see, entrepreneurs can make their fortunes by investing in emerging economies.
Key factors driving economic growth in Africa
Africa has a number of factors working in its favor to establish it as a future economic giant. These include:
– Sustained and robust economic growth in several emerging economies, such as Accra, Kenya, Nigeria, Ethiopia, Rwanda and Angola.
– Abundant commodity and energy resources throughout the continent.
– Favorable demographics- namely a very youthful population that can be harnessed to drive innovation and entrepreneurship.
– An expanding middle class that has caught the attention of international retailers and investors who want to tap into this fast-growing consumer market.
– The rise of innovation and technology on the continent. This is mostly driven by a growing ICT sector and Internet penetration throughout Africa.
– Continued investor confidence and increased foreign direct investment (FDI).
There is no doubt that Africa has what it takes to surge ahead of other emerging economic regions in future. In order to do this, African governments need to focus on creating and implementing the right supportive policies for business.