Xavier Rolet Photo: Charles Shearn
Xavier Rolet, Chief Executive of the London Stock Exchange Group
By Lanre Akinola | Published: 15 November, 2011
“Africa always knew its potential, but now, for the first time, I think Africa has confidence in itself because it has seen the beginning of a much faster and independent path towards growth”
Africa has had a good decade. Sustained economic growth and relative improvements in the political landscape over the past decade have done much to transform the region’s investment profile. Investor interest is at an all time high, while Africa’s international trade has enjoyed healthy growth. From the major emerging markets of Asia and Latin America, to its traditional partners in Western Europe and North America, an increasing number of countries and companies now consider the continent an important strategic asset.
Even the financial crisis of 2008-2009 – which slowed growth to less than 3 percent in 2009 compared to pre-crisis levels of 6 percent – has done little to dampen momentum, with the region rebounding strongly. Growth in sub-Saharan Africa is estimated to hit 5.25 percent in 2011, rising to 5.75 percent in 2012 according to IMF forecasts – despite the relative economic setbacks of the political uprisings in North Africa and Côte d’Ivoire.
In Xavier Rolet, chief executive of the London Stock Exchange Group, Africa has an outspoken proponent of its success in recent years. Speaking to This Is Africa at the Exchange’s premises on Paternoster Square, just next to St Paul’s Cathedral, Mr Rolet is brimming with enthusiasm for Africa’s economic potential in the 21st century.
“Until about 2008 Africa was a net exporter of capital. With the credit crunch everything completely changed. Africa was looking at an environment in which the corporate sector didn’t have much debt, demand for commodities was rising, and for the first time in a long time many African countries that had commodities were offered terms of trade they did not have before.
“Africa always knew its potential, but now, for the first time, I think Africa has confidence in itself because it has seen the beginning of a much faster and independent path towards growth,” he says.
Ernst & Young is forecasting FDI into Africa to reach $150bn by 2015, and the historical dominance of the investment landscape by extractive industries is starting to loosen. The telecommunications sector is booming, with everything from manufacturing to services and agriculture fast becoming attractive investment propositions.
“African capital that was leaving no longer is leaving, and there is a lot of international capital coming in,” he observes.
Beyond being an advocate of Africa’s growth potential, Mr Rolet also represents an institution that may have an important role to play in facilitating the continent’s much sought after transition towards more broad-based and diversified economic development. Growth has been impressive in recent years, but much of it has been concentrated in a few key sectors such as financial services and telecommunications, while commodities continue to constitute the lion’s share of Africa’s international trade.
Access to finance remains a significant bottleneck. Illiquid local capital markets, combined with lending requirements from domestic banks that few local or regional companies meet, mean the region is still desperately short of capital to fuel private sector development.