According to a new study South Africa ranks as the fourth fastest growing digital economy in the world, coming in only after China, Malaysia and Thailand. Egypt, Kenya and Nigeria follow closely behind South Africa. The study, titled Digital Evolution Index, was conducted by The Fletcher School at Tufts University, Massachusetts, and the results were revealed last month.
More Africans have access to a mobile phone network than to piped water, electricity or a health clinic, revealed last month’s Afrobarometer, which canvassed 34 African nations. The report showed that while cellphone coverage is almost universal at 93%, only 64% of Africans have access to an electricity grid (many of which are moreover unreliable), 62% have access to a health clinic, and 59% have access to piped water.
The truth about Africa Rising is that it is real. The economy is growing and potential for huge and sustained growth is enormous. According to the British newspaper The Independent, 31 million households in Africa have moved up from poverty into the consuming class, and in only 20 years Africa will have the largest labour force in the world. The spending power of this demographic will further fuel the economy.
The biggest issue facing business today is how to grow in a low growth economy. This is the challenge facing the G20 leaders when they meet in Brisbane later this week. Against that backdrop, corruption has a staggering impact on economic growth. At $3 trillion or around 5 percent of global GDP, if corruption were an industry, it would be the world’s third largest.
Driven by strong population growth, a growing middle class, and a dynamic private sector, the beer industry in Kenya has taken off in impressive ways, and is promising of even further developments in the coming decade. The potential risks however to be factored in by stakeholders is inflation and tax increases.
When I meet young, educated Africans who’ve graduated from overseas universities I’m struck by their excitement for Africa. They have a vision for their countries of origin, and a passion to return to, and invest in, their homelands. This new enthusiasm, and desire for engagement, is a sign of incredible optimism and hope. There are many other signs of hope.
Africa is blessed with a young and growing population, abundant resources, and large tracts of arable land, but it has many challenges. The main challenge is to leverage Africa’s natural endowments to grow the economy in a way that improves efficiency and creates employment and growth opportunities for the poor.
Recently the Carlyle Group, one of the largest global asset management firms, specialising in private equity, closed its maiden sub-Saharan Africa Fund at around US$700m – about 40% beyond its original target. This has followed the closure of a number of similar Africa funds at anywhere from US$350m to US$1bn. Private equity operating norms suggest that these funds will have to be deployed within the next couple of years – and this illustrates the direction of travel of one of the most focused streams of global investment capital.
At the credit application and processing stage, banks need to invest in systems that allow more efficient and tailored risk profiling. Such a system rewards diligent entrepreneurs with lower lending rates and greater access to capital. Post-disbursement, the establishment of dedicated advisory/support teams can help minimise credit risk and improve credit management by educating and advising SMEs on day-to-day financial management, record keeping and corporate governance. The incremental cost of this will be easily offset by the increased patronage and lower default rates.
Nigeria’s extremely large, youthful and increasingly urbanised population is helping to support a growing national fast moving consumer goods (FMCG) sector. Food, beer, soft drinks, personal care and home care are the primary categories of FMCG, and all of them burgeoning in this rapidly emerging, growing consumer nation, presenting attractive investment opportunities for businesses prepared to saddle the risks in light of the attendant rewards.
In seeking productive investment destinations, the world’s attention has shifted from the BRICS nations to Africa – which is not, of course, a single economic region, but an array of 54 hugely diverse countries. Africa is often perceived as a “last frontier”, but it offers far more than just the resources – minerals, oil and gas – ascribed to frontier economies. The continent is witnessing the rise of an immense consumer class, mostly youthful, and desirous of the same goods and services as the fully developed world.
Resource-based industries are not entirely about resources. They are, in large part, about people, and how effectively people from all sectors work together. In this article I will outline why collaboration is vital to growing our African resource industries. Firstly, we must face the fact that African countries are now competing for a smaller pool of global investment capital, amid investors’ suspicions that Africa has not delivered. The “hidden costs” of doing business in Africa – costs related to weak infrastructure, corruption and political instability – have taken their toll on returns to shareholders.
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- South Africa is fastest growing digital economy in Africa December 19, 2014
- Mobile coverage! Africa’s biggest service achievement December 18, 2014
- The truths and fictions of the “Africa Rising” story December 17, 2014
- Mobile banking series: An overview of why mobile banking remains important for financial inclusion in Africa April 22, 2013
- Telecoms – An African development opportunity September 26, 2013
- Mobile branchless banking in emerging markets February 10, 2014
- Anthony Busino: As with all groups, institutions, countries, etc.....
- Anthony Busino: Terrific write-up. To add to " immense consumer c...
- Richard Koldewey: Kindly advise as to which US oil companies are ope...
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