It’s been a remarkable couple of decades for Africa. Twenty years ago it was widely regarded as a ‘hopeless continent’ in terms of its economy and prospects for future development. Now it’s being talked about as a future driver of global growth, just as are more developed parts of the world. As such it represents a real opportunity for smart investment, especially for the area of infrastructure. We look at why these good fundamentals make Africa a smart place for investment.
An African decade?
Investors in emerging markets are increasingly bullish about Africa’s prospects over the coming decade. There’s a degree of excitement and optimism surrounding the continent that is notably absent from other parts of the globe. What’s underpinning this change of mood?
African growth speaks for itself
Recent performance counts for a lot. Six of the world’s 12 fastest-growing economies are in Africa (Ethiopia, the Democratic Republic of the Congo, Côte d’Ivoire, Mozambique, Tanzania, and Rwanda). In 2019 African nations were among the top performers in terms of annual percentage growth. The IMF and World Bank are predicting this to continue in 2020. They believe South Sudan will grow by 8.2%, Rwanda by 8.1%, Côte d’Ivoire by 7.3%, Ethiopia by 7.2% and Senegal by 6.8%. This compares with a low 1.2% for the 19 country Eurozone.
The Ibrahim Index of African Governance measures progress on four categories: Human Development, Safety & Rule of Law, Participation & Human Rights and Sustainable Economic Opportunity. In 2017 it found that Africa’s overall annual rate of progress averaged 1.4%, with increases of over 5% in some countries such as Rwanda and Ethiopia. International investor engagement with Africa’s modernisation agenda has played its part in encouraging moves towards better governance across the continent.
A perfect combination for infrastructure projects
The combination of sustained economic growth and improving levels of governance makes infrastructure projects not only more viable but also more attractive for investors. Africa is home to some of the world’s most ambitious current infrastructure projects, be they new highways, railways or ports. These large scale projects may grab the headlines but there’s increased interest in developing smaller-scale regional infrastructure that can help connect communities and increase prosperity, particularly in rural areas.
Find out more about what makes Africa a smart place for investment
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About The Author
Tunde is the founder of UK-based Jabiut Development Partners; a strategic development, infrastructure finance and project consulting organisation. He is actively involved in major programme delivery and strategic advisory; providing numerous organisations and arms of government with advice on capital projects, project financing and infrastructure concession placement.
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