The Prepaid Economy: African Edition

African countries south of the Sahara are set to benefit from thier engagement with emerging economies like China, India and Brazil as these powerful economies outsource some of their industrial activities.

There is increasing indication that emerging economies seek to outsource some of their industrial activities, particularly in light manufacturing, to developing nations.

This would be a change of attitude from regarding developing countries, especially those in Africa, as sources of raw materials.

According to the latest International Monetary Fund global economic outlook report, the global rebalancing between advanced and emerging economies will play in the favour of developing nations as rapid industrial growth is anticipated in China and India.

The other benefit of Sub-Sahara African (SSA) countries dealing with emerging economies is the availability of cheaper imports compared to the traditional partners such as Japan, West Europe and the US.

“This relationship would boost the economy of Sub-Saharan African producers, adding to low-cost manufactured imports that will benefit both consumers and producers,” said the report.

Such economic relationship will intensify trade and investment opportunities among the partners, leading to cheaper and less sophisticated technologies that may be catalysts to the level of developing countries progress.

Besides, the relationship will create intraregional integration which will help to engineer economic growth by creating economies of scale –increases in efficiency of production as the number of produced goods increases and improve allocation of factors of production within the region.