Will slow growth depress investment in Africa?


Africa has been an investment magnet for around a decade. Meanwhile recent trends show that the growth of the continent will slow down.

The recent economic forecast of the World Bank states that Sub-Saharan Africa’s real Gross Domestic Product (GDP) growth was down to 3.4% in 2015 from 4.9% in 2013. The recent years decline in economic growth is witnessed across the globe.

But Africa’s reliance on export of raw or primary commodities such as, unprocessed or non-value-added agricultural products and minerals is often mentioned as one of major contributor to the slowing of Africa’s economy in face of global commodity price decline.

It is also clear that unpredictability of politics in Africa and the recent drought in many parts of the continent, which is mainly caused as a result of El Nino, has also contributed to slow economic growth of Africa.

Now the big question is, ‘will the slow growth hampers investors from flocking to Africa as they used to?’

Much hope that this doesn’t negatively impact the growth of once known as, the darkest continent, which now offers unlimited business opportunities.

One of these optimists is Hennie Heymans, Managing Director of DHL Express Sub-Saharan Africa, who argues that ‘the continent is one of the last frontiers for growth’. He argues that still there are lots of untapped business prospects for both local and foreign companies.

Despite all those challenges Africa will continue thriving with its unexploited opportunities and will continue providing growth prospects in 2016 for people and companies eager to pursue them, according to Heymans who indicated DHL’s commitment to continue investing in the Sub-Saharan Africa ‘with the ultimate goal of seeing Africa thriving’.

Like Heymans, Author and Acting Chief Economist: World Bank Africa Region, Punam Chuhan-Pole, is also optimistic about the future growth of Africa. His forecast shows that the continent’s growth will go up to 4.4% in 2016, reaching 4.8% the following year.

This is mainly because of the domestic demand generated by consumption, investment, and government spending, according to Chuhan-Pole who contributed to ‘Africa’s Pulse’ report of the World Bank.

The report states that Cote d’Ivoire, for instance, ‘Ethiopia, Mozambique, Rwanda and Tanzania were listed as countries expected to growth of roughly by 7% per year in 2015-17’. This is mainly because of ‘the large-scale investment in energy and transport projects, consumer spending, and investment in the resource sector’.

From the experience of DHL, each country in Africa provides unique growth chances, according to Heymans who mentioned as an example Ethiopia’s telecom industry as a large contributor to GDP.

It was reported that Ethiopia had 40 million mobile subscribers and 10 million internet connections in 2015. However with a population of over 90 million, telecommunication has capacity to double its contribution to GDP.

Source: http://www.dhl.africa-newsroom.com/press/africas-slight-economic-slowdown-will-not-discourage-investment-says-dhl?lang=en


This entry was posted in African News, Ethiopia News, Mozambique News, Republic of Côte d'Ivoire (Ivory Coast), Rwanda News, Tanzania News. Bookmark the permalink.

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