Booming African Lion Economies Gear Up to Emulate Asians – Bloomberg 08-04-14

Salient to Investors:

  • A two-decade surge in growth in Africa has raised the prospect of the “African lions” emulating the “Asian tiger” economies in the 21st century.
  • Africa’s has vast untapped resources, a young population and an expanding middle-class.  It also has rampant poverty and inequality, a rise in Islamist militant violence and appalling infrastructure.
  • Average life expectancy was 58 in 2011 vs. 37 in 1950. Primary school enrollment was 77% in 2011 versus 52% in 1990. The Mo Ibrahim Foundation said governance improved in 46 of 52 African countries in the 13 years through 2013.
  • Stuart Culverhouse at Exotix Partners sees nothing to stop Africa from benefiting from its  reforms and become a stronger, faster-growing, more inclusive region like Asia.
  • The IMF estimates sub-Saharan Africa’s economies will grow 5.4% in 2014 and 5.8% in 2015 versus 1.7% and 3% in the US, and 7.4% and 7.1% in China, respectively.
  • McKinsey said Nigeria has the potential to grow 7.1% a year through 2030, making it one of the world’s top 20 economies, with a consumer base exceeding the current populations of France and Germany.
  • Sim Tshabalala at Standard Bank said the rapidly emerging middle class in Africa is driving large-scale diversification of Africa’s economies, which offers immense opportunities to invest.
  • Michael Bloomberg said US companies are not familiar enough with Africa and losing out on opportunities for growth and job creation there and in America, whereas China is wisely diving into Africa head first.
  • Jacques Verreynne at NKC Independent Economists said hostility still constrains economic development in Africa, but the number of affected African countries has declined significantly over the past few decades and the overall economic prospects are positive. Verreyenne said African countries with a proven track record of prudent governance and the willingness to reform should continue to attract substantial amounts of foreign direct investment.
  • EY said Africa attracted 5.7% of global foreign direct investment projects in 2013 versus 3.6 percent a decade earlier.
  • The UN said African nations held the bottom 18 positions in its 2014 ranking of development in 187 nations, while 72% of the sub-Saharan African population live in or on the brink of poverty.
  • Renfrew Christie at the University of the Western Cape said the number of oil and gas-producing nations will rise to 45 within a decade from 22 currently, though oil has caused war throughout history.
  • Mark Rosenberg at Eurasia Group said rising Islamist militant violence in Africa does not pose the same threat to stability and growth as civil wars and violent coups, which are declining. Rosenberg said the longer-term risk to the ‘Africa Rising’ scenario is the potential for jobless growth.
  • Robert Schrire at the University of Cape Town sees progress varying in Africa, depending on security and governance challenges, and says Africa will always ‘promise’ but will never actually deliver. Schrire sees winners, like Botswana, and chronic failures, like Congo and Angola, and he is not optimistic about Nigeria or South Africa.

 

Read the full article at http://www.bloomberg.com/news/2014-08-03/booming-african-lion-economies-gear-up-to-emulate-asians.html

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