103 posts tagged forecast
103 posts tagged forecast
1. Dependency on Europe is reducing
“The first trend is that the dependency on Europe is changing quite significantly,” said Brewer. “Historically Europe was a main trading partner for Africa.”
While Europe-Africa trade has decreased in recent years, Brewer said that it is still a key player in African trade, with countries such as the UK and Belgium (and other old colonial powers) still being important markets for Africa.
“So those countries still sit very prominently as trading partners but the dependency is becoming a little less, which I personally think is a good thing.”
This dependency on European trade is diminishing for a number of reasons.
“Firstly because the European economy has been absolutely sick as a dog for the last few years,” said Brewer. The Eurozone crisis has notably affected trade with Africa, but this has come alongside an increase in trade from other emerging markets such as Asia and, in particular, China.
2. Africa is gaining a broader spectrum of trading partners
“Our trade with Asia, which is the second point, is growing significantly and in fact in 2011, trade between South Africa and China grew at 77%,” highlighted Brewer.
“So it’s growing at an incredibly rapid rate.”
China has become Africa’s number one trading partner in recent years, which is one of the reasons why the economic powerhouse has also become a major investor in African transport and logistics infrastructure.
In addition Brewer said that other BRICS economies – such as India, Brazil and South Africa – are also increasing their trade with the continent.
“And of course the US is still a very important market.” “Ideally you want to have a nice broad basket of trading partners,” he added. “And I think Africa is becoming broader in terms of its trading partners.”
3. Manufacturing beginning to come to Africa
“While in Asia, America and Europe, 70% of what is produced stays in those continents, for Africa it is less than 15%, which is staggering, if you think about it,” stressed Brewer.
“You’ve got these three regions with 70% of what they have produced staying in their own continent, but here it’s less than 15%.”
Whether it is electronics, vehicles or medical equipment, Africa has to rely on importing these products from other places in the world. One of the ramifications of this is that companies and consumers have to suffer the price increases to cover transport and logistics costs in Africa.
“There is not a lot of production happening in Africa today. It is going to change but today that is the reality,” said Brewer. “So contextually our trading partners outside of Africa are more important than our trading partners in Africa, but that is changing and you have countries like Ghana, Mozambique, Ethiopia, Uganda, South Africa, Nigeria particularly, and Liberia, growing very rapidly.”
“So that’s the current climate and I think it is going to change, and the next step for Africa is production coming to Africa,” he added.
Capital Economics’ emerging-market “growth stars” sound a lot like MarketWatch’s “New Tigers.”
Even as growth slows among economies in the group known as the BRICs — Brazil, Russia, India and China — other emerging-market nations are set to take the lead, according to Capital Economics.
Economies in sub-Saharan Africa, Southeast Asia and Europe are among those poised to become the new “growth stars,” Capital Economics analysts wrote in a note Tuesday.
MarketWatch published a Special Report on the “New Tigers” last year, breaking down the prospects of emerging economies by region. The best performing emerging markets are likely to either be “very poor countries that get the basics of policy making right,” or “middle-income emerging markets that develop a strong manufacturing base and have good governance,” according to Capital Economics.
Most economies in Africa will grow at rates of 5% or more over the next decade, “simply by maintaining fiscal and monetary discipline and continuing to open up on trade and investment,” they said, noting that they are particularly upbeat on Nigeria, Ghana and Kenya.
CELEBRATIONS are in order on the poorest continent. Never in the half-century since it won independence from the colonial powers has Africa been in such good shape. Its economy is flourishing. Most countries are at peace. Ever fewer children bear arms and record numbers go to school. Mobile phones are as ubiquitous as they are in India and, in the worst-affected countries, HIV infections have fallen by up to three-quarters. Life expectancy rose by a tenth in the past decade and foreign direct investment has tripled. Consumer spending will almost double in the next ten years; the number of countries with average incomes above $1,000 per person a year will grow from less than half of Africa’s 55 states to three-quarters.
Africans deserve the credit. Western aid agencies, Chinese mining companies and UN peacekeepers have done their bit, but the continent’s main saviours are its own people. They are embracing modern technology, voting in ever more elections and pressing their leaders to do better. A sense of hope abounds. Africans rightly take pride in conferences packed with Western bankers keen to invest in their capital markets (see article). Within the next few months MasterCard will have issued South Africans with 10m debit cards. Even the continent’s politicians are doing a bit better, especially in economic management and striking peace deals. Average GDP growth is humming along, at about 6%. Governance is improving: our correspondent visited 23 countries to research this week’s special report and was not once asked for a bribe—inconceivable only ten years ago. (via The world’s fastest-growing continent: Aspiring Africa | The Economist)
“At the IFC, we see the impact of Africa rising in our investments. From less than 10% of IFC’s global investment portfolio only five years ago, today sub-Saharan Africa is the second largest region of investment for us and we project that in three years we will be investing more in sub-Saharan Africa than any other region in the world.”
This was said by Bernard Sheahan, the International Finance Corporation (IFC) director of infrastructure and natural resources for Africa and Latin America, at the African Mining Indaba event, held in Cape Town, last week. The IFC is a member of the World Bank Group and is the largest global development institution focused solely on the private sector in developing economies.
“Economic growth today [in sub-Saharan Africa] is well above world average,” he explained. “The run of economic growth over the last several years is clearly unprecedented and it’s been resilient in the face of difficulties in the overall global environment. Underpinning that growth has been increased political stability and while we have seen several setbacks in recent months we have also seen a number of positive transitions – whether they be Guinea, Ivory Coast or Senegal – underpinning the general positive direction in terms of overall political stability.
And with political stability has come improved economic governance. Again, not perfect in many places but clear improvements in terms of the policy choices made in a great number of the countries in the region and broad-based progress.”
Kenya’s economic prospects eclipse the risks posed by next week’s election, said Mark Mobius, the head of Templeton Emerging Markets Group. (TEM) The country on March 4 holds its first national vote since a disputed ballot in 2007 triggered clashes that killed more than 1,100 people. The unrest caused growth in East Africa’s biggest economy to slump by two-thirds to 1.5 percent in 2008 as farm output collapsed, the shilling declined 8.5 percent against the dollar and the benchmark stock index dropped 11 percent.
THREE STUDENTS ARE hunched over an iPad at a beach café on Senegal’s Cap-Vert peninsula, the westernmost tip of the world’s poorest continent. They are reading online news stories about Moldova, one of Europe’s most miserable countries.
One headline reads: “Four drunken soldiers rape woman”. Another says Moldovan men have a 19% chance of dying from excessive drinking and 58% will die from smoking-related diseases. Others deal with sex-trafficking. Such stories have become a staple of Africa’s thriving media, along with austerity tales from Greece.
They inspire pity and disbelief, just as tales of disease and disorder in Africa have long done in the rich world.
Sitting on the outskirts of Dakar, Senegal’s capital, the three students sip cappuccinos and look out over a paved road shaded by palm trees where restaurants with white tablecloths serve green-spotted crabs. A local artist is hawking framed pictures of semi-clad peasant girls under a string of coloured lights. This is where slave ships used to depart for the New World.
“Way over there, do they know how much has changed?” asks one of the students, pointing beyond the oil tankers on the distant horizon.
This (Economist) special report will paint a picture at odds with Western images of Africa. War, famine and dictators have become rarer. People still struggle to make ends meet, just as they do in China and India.
They don’t always have enough to eat, they may lack education, they despair at daily injustices and some want to emigrate.
But most Africans no longer fear a violent or premature end and can hope to see their children do well. That applies across much of the continent, including the sub-Saharan part, the main focus of this report.
The importance of bringing Africa’s mobile market up to speed with global counterparts was a hot topic of discussion at a session during the annual Mobile World Congress being held in Barcelona.
During a panel discussion, MTN Group CEO Sifiso Dabengwa and Bharti Airtel CEO Manoj Kohli highlighted what needs to be addressed in Africa’s mobile industry.
The growth level in Africa has been great, as Africa is clearly seen as a great opportunity for investment. But Internet penetration is no more than ten percent. That means overall opportunities are significant,” Dabengwa started.
“MTN is looking at very good opportunities for growth, but challenges are there. Whatever we do in Africa, we have to avoid what’s happening in Europe. It’s very important for long term sustainability, from a regulatory point, that we don’t stifle the industry. Africa’s overall market is in a good position, but we have to ask ‘how many operators are sustainable in a single country?’ I’m not sure that many operators in Africa are profitable,” he said.
Kohli added Africa is in a good position, but more needs to be done to ensure that the continent can sustain mobile operators.
“Africa is a great market and frontier, and it’s also a great market to grow voice, data and text. There are very few markets who have all three going for them, but Africa ticks all the right boxes.
On the question of how many operators make a profit, there are many who are actually seeing losses. It’s time to turn Africa around into a healthy sustainable region,” he said
It is argued that Africa is the last frontier, with nine of the world’s fastest growing economies located in sub-Saharan Africa (SSA).
From 2012, Ghana is expected to deliver 8.5 percent real GDP growth, Nigeria will register 6.3 percent, 6.4 percent for Zambia and Zimbabwe will do five percent just to name a few. That’s against an estimated three percent average for the world as a whole. Also encouraging is the improvement in current account balances across most of these countries.
Investment conditions in sub-Saharan Africa (SSA) in particular, where growth has averaged 5.6 percent a year, have significantly improved. Based on the IMF’s latest forecasts, six of the 10 fastest growing economies in the next five years will be in SSA. These include Ghana, Ethiopia and Tanzania.
Their economic growth rates will be underpinned by global demand and inflated natural resource prices; growing infrastructure spend and increasing population and urbanisation and the resultant rise in consumerism and mobility.
Other important economic growth drivers will be the region’s access to and integration with international capital markets and a growing middle class.
As a result of these attractive economic fundamentals, capital flows to Africa are now estimated to exceed those of most BRICS countries, barring China.
As global demand for commodities continues on its upward trajectory, so too will the growth potential of the continent’s extractive industries (including mining, oil and gas). Mining and metals, oil and gas, and the exploitation of natural resources are the top three sectors investors expect will offer the greatest growth potential in the next 10 years.
Africa is home to 13 percent of global oil reserves; 50 percent of proven gold reserves; 60 percent of cobalt and 90 percent of the platinum reserves. This potential is already reflected in listed companies as returns on African Exchanges have widely outperformed those of developed world indices over the past decade.
Infrastructure the key to unlocking Africa’s growth potential
What political and developmental challenges are likely to confront Africa over the next 12 months?