INVESTMENT: African Growth Retains Interest
Recent Western Cape Business News
Despite its challenges the African continent offers a mountain of opportunities to would be investors, particularly those of the Asian persuasion.
According to Tony Twine, a senior analyst at Econometrix, South Africa, previously recognised as the fastest developing country in Africa was in danger of being overtaken by the rest of Africa. The comment was delivered at Wesgro’s Investor Breakfast, held yesterday in Cape Town.
The African continent currently boasts some of world’s fastest growing populations as well as an unlimited supply of resources and arable land. In addition Africa has not fully tapped into its export potential of natural products.
According to Twine global export market share is one of the key factors to driving economic growth. While advanced economies contribute an estimated 56.4 % to global GDP, this figure is offset by 66.4 % of global export share. Incidentally these economies incorporate some of the wealthiest nations in the world.
In comparison, Africa’s contribution of 2.5% to global GDP is accompanied by a low export market share of 3.0%. “To be wealthy you must have a bigger share of export trade than world production” says Twine.
Twine also identified the primary factors that will hinder economic development in Africa. He cited, red tape, with reference to the 48 day waiting period to register a company in Africa, as a key impediment to development. “Water scarcity would also hamper growth in the next decade” says Twine.
Growing interest from emerging markets such as China and India are a primary indication of the potential in Africa. However Africa would need to change its international direction for trade in order to take advantage of its current attractive status. “Africa cannot switch its business orientation from West to East overnight” warns Twine. According to the leading analyst it would take many years for Africa to overcome this challenge.
“Chindia, is a force to be reckoned with” says Wesgro CEO, Angelo Manzoni. Both speakers urged South African companies to take advantage of the growing business opportunities in Africa as the Asian markets were moving in quickly.
“Once Africa’s commodities are depleted, China and India will lose interest” says Twine. Therefore, South Africa and more importantly Africa must “add value” to its export commodities to ensure sustainable development.
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