Africa is on the road to meaningful economic growth
In May 2013, South Africa played host to the 23rd World Economic Forum on Africa (WEF Africa). The theme of the conference was “Delivering on Africa’s Promise”. The conference saw key players and investors from all over the world convene to discuss a sustainable path of growth and development for the continent.
Sustainable economic growth
The summit sought to address three key themes, Accelerating Economic Diversification, Boosting Strategic Infrastructure and Unlocking Africa’s Talent.
While Africa has been acknowledged as the economic breadbasket of the world in recent years, a big majority of participants at WEF Africa agreed that Africa is experiencing sustainable economic growth.
This growth must, however, be inclusive and broad-based to be really meaningful and prevent political and social instability. Whilst most commentators have focused on the resource exploitation-based background of the current economic growth, the reality is that this growth is broad-based,” says Oluseyi Bickersteth, National Senior Partner at KPMG in Nigeria.
The role of BRICS
With the BRICS Summit held in South Africa in March this year, still fresh on everyone’s mind, discussions around the BRICS development bank continued at WEF Africa. The main point of conversation was around issues of funding and how the required US$50 billion starting capital would be raised.
Yunus Suleman, KPMG Africa Chairman, explains the complexity of this issue:
The capitalisation of the bank is a major discussion area at this point. Capital will need to be raised amongst the BRICS countries. The question as to who will put up the US$50 billion has not been clearly addressed. The countries will either equally contribute US$10 billion or contribute as each is able.”
Infrastructure and transport investment
A recurring theme at the forum was the importance of three major factors to sustain economic growth on the continent, namely infrastructure development, relevant and adaptable education, and regional integration.
Nick Chism, KPMG Head of Global Infrastructure, emphasises that overcoming the infrastructure challenges ‘can allow Africa to roar’. In order to meet demand, it is estimated that by 2050, the continent will need to have a thousand new cities. The creation of social infrastructure and a massive investment in transportation is another necessity.
At present, poor transport infrastructure adds 40 percent to the cost of doing business on the continent, which is crippling Africa’s global competitiveness, and depressing inter-African trade.”
Education and regional integration
Bickerstheth suggests that Africa educate its workforce, and equip them with skills that will increase levels of productivity and competitiveness. Africa is predicted to have one of the youngest workforce populations by 2030, and this is perceived as a “decisive competitive advantage” if well leveraged.
Economic regional integration was cited as a key factor in Africa’s economic development. It is seen as a means to provide scale and to establish centres of excellence for the continent.
Josphat Mwaura, Senior Partner at KPMG in East Africa, suggests that the African Union “has a catalytic role to play” in accelerating infrastructure development and economic regional integration. It is estimated that investment and development in the identified spheres will greatly assist in transforming Africa to “a respectable 10 to 15 percent in terms of its contribution to global business revenues, trade and GDP”.
While there is still significant work to be done for Africa to realise its position in the comity of developed nations, there is clearly a very positive endorsement of Africa’s rise.