Africa’s biggest challenge is to advance its economy beyond commodities and agriculture. That was the crux of the message delivered at the recent World Economic Forum (WEF) Market Insight Africa session, part of the Annual Meeting of New Champions 2008, held in Beijing recently. The United Arab Emirates, Australia and Canada have successfully moved from agricultural and resource-based economies to develop logistics, trade, tourism and retail industries. It is this model that Africa should and can follow. The speakers noted that Africa had witnessed spectacular increases in capital investment, especially in Angola and Nigeria following a decision made by the WEF in 1999 to encourage the extraction of Africa’s resources. As a result, India, Brazil, Russia and more traditional Western markets have all become interested in Africa’s commodities. While democratisation, financial systems and capital markets have improved in a number of countries over the past few years, certain regions do face specific challenges involving factionalism, corruption, violence and political instability. Zimbabwe plans to rebrand itself and lower inflation to lure investors. Countries such as Nigeria are working under new political systems and a much more educated and informed electorate. Nigeria, Ghana, Mozambique and Angola are all experiencing strong economic growth and have larger consumer markets as a result of high commodity prices. In Cameroon, mobile phone users increased from 700 000 in 2000 to 4 million currently. In contrast to past spikes in revenue, money earned through commodities is being reinvested in local infrastructure and development. Many Africans are demanding the same rights to water, power, food and technology that are found in developed nations. There are numerous opportunities for investment in infrastructure projects. Investors must, however, be aware that they will need to be on site to support the projects. It was noted that the impact of the global credit crisis on Africa is unknown. Some expect the US$28 billion promised to Africa by the G8 may be cancelled, while other aid and development support may be suspended. However, Africa is still expected to achieve between 6.5% and 7% GDP growth in 2008. This leads some to believe that Africa is largely immune to the crisis because its financial systems have not been integrated into the globalised economy and China’s growth, which drives Africa’s growth, is still projected to be quite strong.
