Historically, Africa has largely remained in the periphery of American foreign policy interests except where American security is at stake. Egypt alone, an important US ally, receives about 20 percent of US aid to Africa.
The shift in global economic trading power to the emerging markets over the past decade has been driven by their increasing ability to trade with each other. In Africa’s case, it has turned to China, which is now the continent’s largest trading partner with trade volumes exceeding $150bn in 2011.
As a global community we have to address two major issues: demographics and climate change. With respect to the former, the global population is expected to grow from seven to nine billion by 2050, while Africa’s population is expected to double during the same time period from almost 1bn to 2.1bn.
How to turn citizens into owners of national wealth
On November 28 Anadarko Petroleum doubled the estimate of its massive Mozambique gas discovery. If this proves correct, Mozambique will become a major gas exporter and can expect a hefty windfall.
The future of Africa’s agricultural sector
The overall statistics on African agriculture are well known. It employs over 200 million people and in most countries provides the livelihood of approximately 70 percent of the population. Despite this, Africa has the greatest proportion of malnourished families. Even in countries with the greatest agricultural potential, such as the Democratic Republic of the Congo, up to 75 percent of the population is still undernourished.
Africa needs flexible capital, as well as patient capital
It is widely understood that Africa’s private sector requires a reliable supply of capital to grow, yet SMEs – vital to the continent’s economic growth story – continue to face significant hurdles to securing the financing they require.
African Growth: A cautionary note
Africa’s economic performance in recent years has attracted much attention, suggesting the continent has overcome the “lost decades” of the 1980s and 1990s, which bred far-reaching Afro-pessimism. This recent optimism is an effort to re-brand a continent.
Reassessing political risk
In the wake of the Arab Spring, the time has come to reassess political risk in sub-Saharan Africa
UK Development Policy in an age of austerity
In a 2011 article titled “The Lion Kings?” The Economist noted with surprise that more than half of the world’s 10 fastest growing economies in the past decade were in Africa
Inside this is Africa
September 15 will mark the three year anniversary of the now infamous collapse of Lehman Brothers. In its wake came a string of high profile bankruptcies and nationalisations across the developed world, with governments pumping as much as $1,000bn into financial markets to avoid a wholesale collapse of the global financial system. These actions, we are told, pulled the world back from the brink.
Sheltering the most vulnerable
Six months from now, the world’s leaders will gather in Durban, South Africa, for yet another round of negotiations on the challenges and opportunities posed by climate change – who is responsible for the phenomenon, what should be done to address its effects, who should pay for the necessary adaptation and mitigation measures, how much and to whom the bill is due?
M&A and Investment Flows Binding Emerging Markets
About two millennia ago, ancient Chinese architects used sweet sticky rice soup mixed with lime to make a mortar that gets stronger and stronger with time. Many of the buildings they put up are still standing today. More recently, China and the other Bric countries – Brazil, Russia and India – have been playing an even larger role in binding the world’s emerging markets.
Sovereign bonds integral to growth
Sovereign Bond issues have historically been limited to the more developed economies in Northern Africa and South Africa. But as sub-Saharan economies develop more robust fiscal, institutional and regulatory environments, more economies are tapping into international capital markets.
Finding a path to growth
“to what extent can countries learn from others with similar endowments and higher per capita income when the global context has changed so fundamentally?”
Powering private sector development
Since the start of the millennium and following almost two decades of low growth rates, economies in sub-Saharan Africa have been gathering momentum. GDP growth averaged almost 6 percent, whereas during the 1980s and 1990s growth amounted to less than half of this.
Consumerism surge providing opportunities
Consultants, accountants, conferences and research reports are in unison vaunting the prospects of the fast growing group of people that make up the African consumer. With consumer spending in 2008 forecast to rise from $860bn to a startling figure of $1,400bn by the end of this decade, the African consumer is causing a stir with producers and investment managers alike.
These are exciting times for Africa. The continent is increasingly seen around the world as a place of opportunity for investment and business. Economic progress is taking root with annual growth averaging 5 percent over the last 15 years. Social progress is fast following in its wake. The fact that the continent has the planet’s youngest, fastest-growing and fastest-urbanising population is another attraction to countries and companies looking to the future.
Political Islam: Threat or partner?
Islamist movements will doubtless play some role in the political systems that emerge following the upheavals in the Arab world, but Western anxiety over their involvement is misplaced
Bringing Broadband to Africa
Much is made of Africa’s oil, gas and diamonds. But the full exploitation of another natural resource could be even more fundamental to the continent’s future. Given the prohibitive cost of rolling out more fixed-line telecoms infrastructure, the development of broadband in Africa depends almost entirely on the efficient use of its radio spectrum.
Afro-pessimism is misplaced
Many Africans have seen their quality of life improve significantly over the past few decades despite poor economic progress, but there is no room for complacency
Climate Change is already affecting Africa
The signs of climate change are clear to all across Africa. Severe droughts are occurring in East Africa, producing climate refugees and jeopardising crop production and water supply. Changing rainfall patterns have increased the risk of crop failure. Coastlines could begin to disappear in West Africa as ocean levels rise across the world. Vector-borne disease rates are climbing and the fight against Malaria could be forced backwards as climate change induced prevalence increases.
Strengthening the rule of law
Access to decent security and justice services, such as the police and courts, is as important a development goal as clean water, healthcare and education. Indeed, robust legal systems, independent and transparent judiciaries and clear, comprehensible laws are crucial for creating the conditions in which wider development efforts can take root and flourish.
In Africa, the eagle and the dragon face off
Africans’ perceptions that Americans are too numerous are far less widespread. It’s highest in Djibouti as 51 percent of residents said there are “too many” Americans in their country and lowest in Benin (7 percent) and Zimbabwe (3 percent). However, relatively significant proportions of Angolans (37 percent), Sierra Leonans (30 percent) and Liberians (29 percent), among others, told Gallup there are “too many” Americans in their countries.
The G20 and Africa: Unfinished Business
The lack of concrete steps to deal with global imbalances was the main news from the G20 summit held in Seoul. However the summit also included four innovations with the potential to contribute to sub-Saharan African trade and growth.
Putting aid under the microscope
In October, the Brookings Institution and the Center for Global Development released their first Quality of Official Development Assistance assessment, based on 30 quantitative indicators. During times when many advanced countries are struggling with their own debt and fiscal problems, and are pressured to cut their aid budgets, Quoda is designed to help donor agencies and partner governments determine how aid dollars can be more smartly spent, and to provide a tool for civil society advocates to push for better, not just more, aid.
Is sub-Saharan Africa destined to under-develop?
Despite the lift in its growth rate in the last several years of commodity boom, sub-Saharan Africa’s per capita income today is barely above what it was in 1980. The problem, the prevailing opinion goes, is not simply that the region has failed to grow but that its growth failure is due to natural and historical factors that cannot be changed – tropical weather, a high incidence of “landlockedness”, “bad neighbourhood” effect – being surrounded by poor, conflict-ridden countries, “natural resource curse”, ethnic diversity, poor institutions, “bad” culture and whatnot.
Where is the consumer movement to ‘Buy African’?
Since 1990, economic growth has helped to lift hundreds of millions of Asians out of poverty. This humanitarian leap was underpinned by the developed world’s voracious appetite for buying Asian exports.
Going for growth in Africa
Between 2000 and 2008, Africa’s economic growth was remarkable. Real GDP grew by 5 percent – more than double its pace in the previous two decades. Following a dip to below 2 percent in 2009, growth is expected to rise to between 4-5 percent in the coming years. The African Development Bank describes this post-crisis recovery as spectacular. But how resilient is it? And what does it portend for the future? Is Africa the next Bric?
Investing in investing
To sustain rapid growth, Africa will need to substantially raise the rate of investment. In recent years it has averaged only around 20 percent of GDP, whereas the rapidly growing Asian economies invest above 30 percent.
Corporate sustainability has survived the downturn
As we begin to look beyond the economic downturn to recovery and global growth, it has perhaps never been more timely to examine the state of corporate sustainability. Despite the downturn, we see corporate commitment to environmental, social, and governance issues remaining exceptionally strong: 93 percent of CEOs in our recent survey see sustainability as critical to their company’s future success.
Sub-Saharan markets remain in lower league
Given South Africa’s showing in the recent World Cup it would appear that Africa in 2010 is a lot like the US in 1994 – better at hosting the tournament than playing. Similarly, sub-Saharan stock markets in 2010 are a lot like the S&P 500 in 1994: poised for five very strong years of appreciation.
For mining firms being big matters
Despite the recent recession, mining fundamentals remain strong, fuelled by robust demand from urbanising economies, especially China’s, and by constrained supply for many metals and minerals.
Few reasons for Africa to fear EU’s fund directive
Much has been written in the financial press about the draft EU directive on alternative investment fund managers. The usual focus is on the directive’s potential impact on remuneration and the additional regulatory burden it seeks to impose. A lesser-told story is the potential impact of the directive on Africa-based funds, whose investments play a key part in the economic development of the continent, particularly with regards to infrastructure. We look at the history of the directive and how it might affect Africa-based funds.
- Build on broadband – and the rest will follow Information and communication technologies underpin almost every single activity undertaken in the modern world. Today, it is no exaggeration to say that the great majority of people are dependent in some way on ICT networks and applications, even if they do not themselves have first-hand access.
- Mobile health: from silos to systems Still in its infancy, the emerging field of mHealth – the use of mobile technologies to improve health outcomes – runs the risk of not realising its full potential.
- Why food could be Africa’s sweet spot The food industry has been amongst the best performing sectors in Africa and has shown an average annualized growth of 20 percent in the last 4 years. Investors in Africa are slow to adjust to this reality as most of them are still focused on finding the next oil field or securing the next plot of arable land. Silk Invest is launching its African Food Fund because investors are much better off investing in food companies that service the local consumer rather than investing in commodities or farmland.
- New developments in African telephony In OECD countries mobile telephony is seen as a business with utility-like characteristics. Saturated penetration levels and established competition are pervasive. Africa exhibits the polar opposite of this; there are thought to be 500m potential new subscribers and currently there is a scramble for mobile assets across the continent as multinational mobile operators seek growth away from their stagnated markets.
- Lending to Africa’s small holder farmers means improving efﬁciencies Developing innovative solutions is the key when lending to small holder farmers and small to medium sized businesses in Africa’s agricultural sector.
- Africa can help the world build its way out of the crisis The world needs to build itself out of the financial crisis by investing funds in poor countries – it makes good economic sense and it can help reduce poverty, whether in Ethiopia, Ghana, Malawi or Zambia.
- Now is the time to focus on Rwanda Fast forward to the year 2025 and find yourself in Kigali, Rwanda’s thriving capital, where there are now direct flights to all major global cities. Few children are in the streets as they are busy in school, with homework or other formative activities. There’s an unmistakable international flair. Compared to the past, it is evident that international aid does not feature in any significant way in the national budget and planning – years of attracting investment and streamlining bureaucratic processes have paid off.
- Plenty of life left in African equity markets In 2009 there was a marked divergence between the performance of the larger emerging markets (up 74.5 percent) and the G7 markets (up 24.2 percent) relative to frontier markets (up 7 percent) and Africa (down 6.9 percent) making 2009 the second consecutive year in which African equities have underperformed most other regions of the world.
- 2009 performance masks 2010 potential To the casual observer, one glance at the performance of African stocks in 2009 may be enough to convince them that they don’t need to take a second look. The continent’s stock exchanges severely underperformed last year. Nigeria, for example, normally one of the continent’s most reliable performers, lost 34 percent.
- Can investors handle polarised metal prices? Metal prices may be notoriously volatile in the short term, driven by a combination of price inelasticity and the violent stock changes commonly seen at the front end of long supply chains. Whilst this volatility may offer arbitrage opportunities for metals traders, it may be viewed as ‘noise’ for analysts trying to determine the long-term value of a company.
- Capturing Africa’s agricultural potential African agriculture has become an appealing theme for international investors: large swathes of sub-Saharan Africa offer fertile land, abundant water resources and proximity to transportation links or regional markets. Against this backdrop, it is remarkable that, while less than one quarter of the land suitable for crop production in sub-Saharan Africa is under cultivation, many African countries are unable to meet local food requirements. We believe a sustainable business model for farming in Africa must not only take advantage of the continent’s impressive agricultural potential, but also implement strategies that will make Africans successful farmers in the years ahead.
- Foolish to ignore the facts It is a fact that more than one billion people worldwide are starving. The climate is changing all over the globe with alarming consequences for millions of poor people especially in developing countries and, above all, in countries on the African continent. The number of people on the planet will increase from approximately 6 billion today to over 9 billion in 2050, which will put enormous pressure on the resources at our disposal.
- Experts - Simon Norris and Kaushik Ray: The rocky road to independents Africa is in desperate need of power. It has little: the same amount as Spain, despite having over 20 times the population. Privately-financed independent power projects are essential to meeting this need, though the development of IPPs on African soil presents acute challenges. What can be learned from those African IPPs that have been successful?
- Experts - Tom Harden and Daniel Jones: Diverse drivers of telecoms investment The African telecoms market is attracting a lot of investor interest of late. Privatisations of telecoms operators, including Nigeria’s Nitel and Zambia’s Zamtel, have caught the eye of various potential suitors, including Indian state-owned companies BSNL and MTNL. Essar’s buyout of Warid’s operations in Uganda and Congo also illustrates recent activity emanating from the sub-continent. Another large M&A deal involving an Indian operator, the proposed merger of South Africa’s MTN with Bharti, only failed to materialise because MTN was unable to gain the approval of the South African government.
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“There is a regional consensus that the crisis cannot be allowed to affect regional development”
“Africa probably has more resources than any place you can imagine”
“There can never be soft touch regulation. But it has to be regulation that is not arbitrary. The direction needs to be clear”
“Africa has lots of potential – raw materials and young people – but it needs FDI”