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V for Victory
Africa is bouncing back from the global recession faster than any other region in the world, enjoying a V-shaped recovery.
“Our prediction is that this year, the continent will have a growth of 4.5%, next year 5.5% and then 6%,” African Development Bank vice president and chief economist Professor Mthuli Ncube was recently reported as saying. “This is a great time to be marketing Africa.”
Pro-market economic reforms, shock-absorbing flexible exchange rates and increased diversification set the scene for growth across the continent, with East Africa emerging as the fastest growing region.
Ethiopia leads the pack with its 10% growth rate, while Tanzania, Uganda and Rwanda are regarded as having exemplary macro-economic management.
Add to that diversification away from oil in Nigeria and good performances across North Africa, and certainly, Africa as a whole is looking good.
Southern Africa, unfortunately, is an exception, with Angola, Botswana, Namibia, South Africa and Swaziland accounting for five of the10 African economies to have contracted last year.
Even so, there is tremendous optimism in the wake of the 2010 Fifa Soccer World Cup – a factor that, coupled with slow recovery rates elsewhere in the world, may partially account for the observed decrease in the emigration of professionals, which has afflicted South Africa for decades.
As Professional Provident Society chief executive officer Mike Jackson pointed out in a recent survey, “The so-called brain drain in South Africa is finally showing signs of reversing, with indications that skilled graduate professionals who have left the country are beginning to show signs of returning home; and with fewer of those who do remain, choosing to emigrate.”
In light of this abundance of resources and skills, Africa is an economic powder keg in search of a fuse. The one thing lacking for ignition, though, is venture finance.
Citing an infrastructure deficit in Africa of $US1.5 trillion, Ncube said in an interview with Engineering News that Africa was unable to fund its own projects. “A lot of money needs to come from abroad in foreign direct investment.”
Unsurprisingly, transport infrastructure ranked top of the list of priorities.
“There’s a need to develop roads through quasi-market initiatives such as public-private partnerships. Railway development is very important for Africa,” said Ncube.
“In the 1960s and ‘70s, one could travel from the Cape to Cairo by train, but political conflicts did a lot of damage to railways.”
He added that ports and airlines were sorely in need of development.
In light of these facts, it is important that the Department of Trade and Industry’s (dti) mission to the Shanghai World Expo 2010 bears fruit.
As the Minister of Trade and Industry Rob Davies said at the launch of the dti’s promotion, “We believe that there are many opportunities for Chinese companies to invest in our country in areas of capital equipment and infrastructure development, which will continue long after the 2010 Fifa World Cup.”
With the publicity facelift granted by the World Cup and the suspicion that where China leads, the rest of the world cannot afford not to follow, one is optimistic that South Africa’s economy will show the world a V-sign of its own.
