Africa’s future prosperity depends on deepening and extending regional co-operation such as is being currently developed in the East African Community, according to the World Bank Vice President for Africa.
In a speech to mark Africa Day 2011 at the end of May, Obiageli Ezekwesili told African ambassadors to the United States that Africa’s economic transformation depends on regionalism.
“The message is clear,” she said. “Africa is the future; but that future can only be achieved now, through greater focus on regional approaches to common challenges. At a time of global economic turmoil — and as we transition into a multi-polar world, Africa is emerging as an important growth pole.”
The World Bank says that capital inflows to Sub-Saharan Africa alone rose from $35.8 billion in 2009 to an estimated $41.1 billion in 2010 and are projected to rise to $48.5 billion this year.
Foreign direct investments to Africa rose nearly nine-fold —from $10 billion in 2000 to $88 billion in 2008. dwarfing flows to India — which were $42 billion in 2008 — and came very close to flows to China — which closed at $108 billion. Economists are predicting that foreign direct investments to Africa will reach $150 billion by 2015.
The World Bank Vice President’s views echoes the findings of a number of international institutions and banks who all predict substantial growth rates for sub Saharan Africa over the next decade. Standard Chartered has forecast that Africa’s economy will grow at an average annual rate of 7% over the next 20 years, slightly faster than China’s
Africa’s rapidly rising population still dampens its growth in real income per head but that, too, has risen by an annual rate of 3% since 2000—almost twice as fast as the global average.
Standard Chartered says that the rise in Africa’s growth should continue reaching 6.3 percent next year and 6.5 percent in 2013 although much could depend on success in tackling the deficit and continued political stability.
The growth is being built both around investment and increasing trade, particularly between the sub-Saharan African region as a whole; and India and China.
Trade between Africa and China was valued at almost US $115 billion last year, and is growing at a rate of 43.5 per cent. Chinese investment in the continent has been expanding rapidly over the past decade with bilateral trade deals signed between China and 45 African countries.
The concentration of Chinese investment has been in eight African countries including Kenya and Tanzania but also South Africa, Nigeria, Algeria, Zambia and controversially Sudan and Zimbabwe according to the UK’s Daily Telegraph newspaper.
China has invested heavily in Kenya’s ports and is part of a $22 billion project announced by the Kenyan government in April 2008 that includes a rail line and a motorway linking neighbouring Ethiopia, Southern Sudan and Rwanda to the port at Lamu. China has also invested in hydro and wind power projects.
In Tanzania, Chinese direct investment had exceeded $200m by the end of 2009.
The investment is about opportunity according to Ms Ezekwesili. “We all know one thing about money,” she said. “It does not go to places where it is not safe and where it would not make money for investors. The rising volume of capital and investments flowing to Africa send an unmistakable message: take your money to Africa and take advantage of the continent’s endless possibilities.”
Opportunity
On IMF forecasts, Africa will grab seven of the top 10 places over the next five years. The London-based Economist says that while for western firms Africa’s economy still looks tiny, accounting for only 2% of world output, “Africa’s share is rising, not only because of brisker growth but because GDP has been seriously understated in many economies.”
After rebounding to 4.5 percent growth last year, the World Bank expects Africa’s GDP to reach 5.1 percent and 5.8 percent in 2011 and 2012. “At the World Bank, we are bullish about Africa. We believe that the continent is perhaps at about the same point today as where India was 20 years ago and where China was 30 years ago… just before their economic boom set in. Investors headed to Africa know they can benefit from an inter-related chain of sweeping social and demographic changes bound to create new engines of growth for the continent.
Key among these will be population growth and we expect urbanisation, an expanding labour force, and the rise of an army of African middle-class consumers to make Africa one of the best destination for investments. Even by 2040 the estimates are that the number of Africans of working age will exceed 1.1 billion — more than in China and India. Clearly, the world’s biggest market is likely to be in Africa,” said Ms Ezekwesili.
“This is the Africa of promise that I see and one that am honoured to recommend – only to the responsible investor. Investors will not find anywhere else in the world the kind of business opportunities beckoning in Africa. They can bet on Africa or miss the opportunity only Africa offers. The wise investors have already chosen Africa.”
