Africa to Withstand Global Headwinds
Published 02 October 2018
Giving the keynote address at the Africa Hotel Investment Forum (AHIF), Daniel Silke, Political Economy Analyst & Director of the Political Futures Consultancy, based in Cape Town, gave an optimistic assessment of Africa as a destination for inward investment. He said:
“With geo-political risk increasing across the world, Africa’s recent growth spurt is in question. Increasing protectionism from the Trump administration amidst an expanding US/China Trade conflict adds to the tensions. The rising US Dollar and interest rates also puts pressure on inward investment to the continent as well as domestic currencies. Not to mention political uncertainty in Europe and the unresolved Brexit issue in the United Kingdom.”
“African nations face these global threats along with other emerging markets across the world. However, despite these tensions, African nations continue to consolidate their economic growth. While global growth is set to stagnate in 2019, Africa’s growth is set to improve over 2018 and outpace the global GDP average. A rising consumer class underpins much of the performance of African economies, but better governance, institutional capacity and business reforms all assist in attracting foreign direct investment from a variety of nations – and not just China!”
“Importantly, the continent is only at the beginning of enhancing its intra-African trade and opportunities for continental companies doing business. The continental free-trade agreement and air-traffic liberalisation bodes well to improve access for Africa’s companies to regional markets. Economic policies are shifting across important markets as new leaders embrace more market-friendly reforms. And, trade wars can shift production and manufacturing towards the continent as Africa largely remains outside of the current tariff wars. A more educated population, a clamouring for job and urbanisation all contribute to the rise of the services sector, agriculture and manufacturing as key players into the future.”
“The pressures though remain on African countries to embrace both foreign investors and the rising domestic corporates keen to seek a larger footprint. Better governance and less corruption, resisting nationalist tendencies and resource (or regulatory) nationalism and improved infrastructure are critical to maintaining the momentum and the critical challenge of job creation. Increasingly, Africa will embrace the outside world and also its own corporate investors with greater trans-continental opportunities.”
“While the short-term volatility will continue, the longer-term growth opportunities remain solid.”
Data presented at AHIF to support Daniel Silke’s report included the following:
- Africa to grow in 2019 by 4.2% against an average global growth of 2.9%.
- Ethiopia, Kenya, Rwanda and Tanzania will grow in excess of 5% based on positive foreign direct investment flows.
- Cote D'ivoire, Senegal and Ghana set for growth in excess of 6% for 2019.
- Massive increase in Africa's working-age population to almost 2 billion by 2060.