Africa: The Back Yard of the Global Economy is Experiencing a Big Boom

African Update – 22/01/13

While most the world is still recovering from the Great Recession, one region is going through an incredible boom. This discussion is not about Asia being powered by the Chinese engine, but about Africa, a continent that until recently was associated primarily with bloody civil wars, diseases and poverty. The region, which seemed to be only living off humanitarian aid organized by pop stars, now attracts international investors through business opportunities that are yielding promising returns.

“Compared to the dismal rates in the rest of the world, Africa’s growth is exceptional,” Gustavo Galindo, a portfolio manager with Russell Investments, was quoted saying in the Daily Beast. He also found it surprising that a greater number of people in Europe and the USA still do not realize that in many African countries some African stocks were earning up to 15 percent to 20 percent returns.

This fact is most pronounced in telecommunications, primarily in the area of mobile technologies. Mobile operators estimate that there will be 761 million customers this year. According to a London-based company Telecoms & Media there will be 1 billion of them by 2015.

“What’s happening in business on the continent will reshape everything people know or thought they knew about Africa,” said Rosa Whitaker, a longtime Africa business expert and CEO of the Whitaker Group consultancy.

Fast growing economies

She points out how the perception of Africa is leading to a lessening of stereotypes. This is happening in relation to the economic crisis that has on some level affected most of the world. In the first decade of the new century, six African economies were among the fastest growing economies in the world. By 2015, it is expected we will see 7 African countries within the top ten. Ghana showcased such growth in 2011 when its GDP rose by 13.6 percent.

Economies are growing all across Africa, for example in Botswana and Nigeria, as well as in Tanzania, Mozambique and Angola -i.e. countries where there are no civil conflicts.

Africa still has to rely often on foreign investment. In addition, “local human recourses” based development is often hindered by endemic diseases, such as malaria or AIDS.

The Chinese are also penetrating Africa

When Africa is spoken about, we also hear about the Chinese penetrating African markets, which in the past, used to “belong” to the former European colonizing powers. In some parts of Africa highways have started to be known as “the Chinese roads”.

Big American companies are also trying to hop on the fast moving train. For example, business giant Walmart has already completed the acquisition of the South African chain Massmart for $2.4 billion. IBM has invested $1.5 billion into an African technology company Bharti Airtel. The purchasing power is estimated at a trillion dollars, which is approaching India’s GDP. In addition, even long-term estimates offer promises of greater opportunities in Africa where the population is projected to reach 2 billion in 2050.

Source: novinky.cz

Original paper in Czech langage : Afrika: Zadní dvorek světové ekonomiky zažívá velký boom

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