Once dismissed as an economic backwater beset by political turmoil, Africa has become an attractive market for globally active companies seeking long-term profitable growth. Our latestTalking Points article, by RSM’s economic consultant David Bartlett, looks at the drivers behind Africa’s robust growth and discusses the continent’s long term outlook.
Nine of the world’s ten fastest growing economies are located in Africa: Sierra Leone, Niger, Côte d’Ivoire, Liberia, Ethiopia, Burkina Faso, Rwanda, Mozambique, and Zambia. The continent’s aggregate GDP will reach $2.6 trillion by 2020. The total population of Africa will approach 1.4 billion by 2025, approximating that of India, and by 2040 Africa’s working age population will reach 1.1 billion – it is a vast consumer market whose aspirations and demands are rapidly converging toward Western standards.
Many African economies are resource-centric, and the continent benefitted from rising global commodity prices (oil, gas, minerals) in the 2000s. But the numbers are also showing successful examples of diversification, with natural resources accounting for just 24 percent of African growth between 2000 and 2008, and non-resource sectors (communications, construction, financial services, tourism, transportation) posting stronger growth rates than energy and raw materials. Even Nigeria, with an economy famously reliant upon hydrocarbons, registered strong growth in telecom and other non-energy sectors, signaling increasing diversification to support broad-based economic growth.
David Bartlett examines the nature of the forces driving, and sustaining, this growth across the continent and highlights the key commercial opportunities for foreign companies looking to invest. Africa presents unique challenges for businesses but it is clear that, for those taking the long term view, the potential benefits are enormous. Find the full article here.