Africa could be the new China for investments

20 November 2007
News of rapid growth in certain Asian economies such as China and India has been almost impossible to ignore in recent months. However, one huge area that may have been overlooked by investors is Africa which, according to the World Bank, is on track for “fast and steady” growth. The continent’s development is outlined in the World Bank Africa Development Indicators 2007 (ADI) report.

“Over the past decade, Africa has recorded an average growth rate of 5.4 per cent which is on a par with the rest of the world,” says World Bank vice president for the Africa Region, Obiageli Ezekwesili.

“The ability to support, sustain, and in fact diversify the sources of these growth indicators would be critical not only to Africa’s capacity to meet the MDGs [Millennium Development Goals], but also to becoming an exciting investment destination for global capital," he adds.

The ADI indicates that 18 of Africa’s resource-poor countries – home to 35.6 per cent of the continent’s population – have prospered as much as some oil-rich countries over the last decade, if not better, sustaining growth of more than four per cent. Of all the African nations, only Zimbabwe posted negative growth.

“Greater integration with the global economy, especially through export trade, is a characteristic common to all African countries that have recorded sustained growth. These, according to the ADI, largely explain the aggregate efficiency levels and investment volumes – comparable to India and Vietnam – recorded by these countries,” points out Mr Ezekwesili.

Investment increased from 16.8 per cent of GDP to 19.5 per cent of GDP between 2000 and 2006 and shares in Egypt, Morocco and South Africa have reportedly made particularly impressive gains. The ADI also highlights significant long-term gains for Sub-Saharan economies; however, it warns that growth in the region is more volatile than in any other region, and suggests that this often proves a deterrent for investment.

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