Sub-Saharan Africa (SSAfrica) today is as an economic and investment growth area, but what has not happened in this atmosphere of renewed discussion about the continent, is “reframing” the entire discussion on the region — meaning talking about it differently, and respecting its multifaceted dimensions. Africa has a value-chain contribution to both the continent and the global community. “Value chain” in this context means the progress that each African country makes will have a positive economic ripple affect globally and continent-wide.
The frame, or view about Africa, certainly by many Americans, mostly still focuses on the negative. This does not diminish the serious challenges in the region. But, every world region has tough issues today, including the U.S. as we are very much a politically-divided nation, managing tough economic, security, and social issues. The call to “Reframe Africa,” means redirecting the lens on region so it is more balanced, comprehensive. Avoid swiping the entire region with one negative cloth, but encouraging the economic growth in a fair manner, engaging transparently and with realistic expectations. Unfortunately, however, many African people, despite living in resource-rich countries, are not benefiting from the economic boon, remain impoverished, with high unemployment, struggling with health and education issues, and failing to meet the UN’s Millennium Development Goals.
The Challenges: Although these which will be addressed in more detail in a Part II blog spot, it is important to summarize here. Realpolitik analyses and solutions on current crises areas, (e.g., Mali, Kenya’s littoral, Nigeria’s northwest, Guinea Bissau’s instability, South Africa’s mining sector, and Tanzania’s Zanzibar, are a must-do, along with improved democratic leadership, and a reduction in corruption. Long lasting solutions that do not call for the annihilation of one group or another must be discussed. The old public diplomacy tool about building “mutual understanding” (which is not a do-as-I-say-discussion, but a real conversation) among disparate groups about contentious issues needs to come back en vogue. Let’s begin with the positive value-chain contributions:
Africa’s Global Positive Value-Chain Contributions
- Positive Economic & GDP Growth Rates
- Increase FDI
- Equity Funds & Investments
- Capital Markets Reset
Economic stories by leading media and research institutions in 2012 from The Economist and Financial Times to McKinsey all have highlighted the checklist above about Africa’s rising economic leadership, especially when the rest of world is struggling. But as we approach year’s end, let’s recap the headline: Seven of the world’s 15 fastest growing economies are in SSAfrica.
- Botswana has maintained double digit growth rate the last 10 years;
- Ghana is projected to reach 8 percent, which would making it the continent’s fastest growing economy;
- Mozambique, Nigeria, Rwanda, Angola, and Zambia are in the 5-7 percent range.
Hence, South Africa should not be the sole African country highlighted in the much coined acronym BRICS (use to underscore the economic prowess of Brazil, Russia, India, China, and South Africa). I have said before that BRICS should be re-coined to BRICA to be more inclusive of the success, influence, and economic growth rates of a number of African countries over the last three years. World Bank is projecting for 2013 a collective average economic growth rate for SSAfrica of 5.7 percent, possibly remaining in that range over the next 20 years. Basically this proves that other African countries should be let into the BRICS house.
Foreign Direct Investment: The continent’s FDI in early 2012 rose over $68 billion, while projected FDI estimates for 2015 are $150 billion. China (infrastructure) and India (ICT/manufacturing) respectively are leading the way on both FDI and trade, with Brazil, Canada, and Japan not far behind. The U.S. still lags, but has picked up its game in 2012.
Equity Funds: Creation of Africa-focused equity funds on business, infrastructure, ICT, agriculture, health as well as diaspora funds like Homestrings are at an all-time high. The Wall Street Journal notes 79 Africa-focused equity funds have been established in the last five years, paying five to six times earnings after taxes, depreciation, and amortization.
Examples are Helios, Old Mutual Pan Africa, Bob Geldof’s CDC 8 Mile African Fund, Aureos Africa Health Fund, and, Ghana-based Africa Agriculture Fund (AAF), raising $30 million at first close on its small-medium enterprises sub-vehicle.
Reset of Africa’s Capital Markets: Africa’s capital markets are just now getting the attention they deserve. From Zambia and Namibia to Nigeria and Senegal, these emerging and frontier markets are doing well. Foreign institutional and private investors are looking for growth areas to combat Europe’s downturn and America’s snail-like recovery, and have recognized Africa as the place to be. Stock market indexes in Uganda, Rwanda, Nigeria, Kenya, and Namibia are up 33 percent in 2012 in local currency terms.
Other Key Economic Factoids:
- Collective projected GDP is expected to reach 2.6 trillion by 2020
- Debt dropped from 82 percent to 59 percent of GDP over the last five years
- Inflation dropped continent-wide from 22 percent to 8 percent, with many countries in low double digits in this tough global economy
- Middle class is approximately 331 million, translating into growing consumers with purchasing power
- Households discretionary income is projected to rise by 50 percent over next ten years
- African diaspora remittances are up over the last five years adding to GDP growth, according to informal channels, accounting for 73 percent of the worldwide total remittance since 2005
- Growth sectors are agriculture; infrastructure, housing, manufacturing, ICT (SSAfrica mobile users are more than 100 million, with Nigeria, South Africa, Kenya, and Ghana leading the way
These positive economic indicators definitely call for a reframing of Africa, as a multi-dimensional region with both positive stories, and challenges