Investors
and business owners are now paying more attention to Africa’s emerging markets
and the continent’s future looks bright. But, surely, there is still a lot of
work to be done to ensure Africa actually births its potential.
Below, are
10 things you need to know about Africa and its economic resurgence.
The role of small
businesses
Small
businesses now play a pivotal role in several African countries. In sub-Saharan
Africa, the support for entrepreneurship is on the rise - making it easier for
people to create jobs for themselves.
For example,
The National Bureau of Statistics (NBS) reported that there are over 17 million
SMEs in Nigeria, which is Africa’s second largest economy and most populous
nation with over 160 million people. Similar stories also abound in other
sub-Saharan African nations.
According to
Global Entrepreneurship Monitor 2012 sub-Saharan African Report, the region is
now experiencing what is called “entrepreneurial revolution” that has
reinvigorated it with new opportunities, increased employment and a robust rise
in Gross Domestic Product (GDP), which is acclaimed as one of the highest in
the world.
Doing business in
Africa is now easier
Africa is
now home to more international private firms. This is due to the increasing
adoption of seamless business policies, lowered corporate taxes, and
strengthened regulatory and legal systems in some countries.
The World
Bank’s “Doing Business 2014: Understanding Regulations for Small and
Medium-Size Enterprises” released in October 2013 reported that sub-Saharan
Africa continues to record a large number of reforms aimed at easing the
regulatory burden on local entrepreneurs, with 66 reforms adopted in the past
year (June 2, 2012 – June 1, 2013).
Of the 189
nations surveyed globally, 18 African economies made the top 50 most reformed
economies. Rwanda, Côte d’Ivoire, and Burundi are among the global top 10
improvers in making the biggest improvement in business regulations.
This year,
Mauritius at 20 position, Rwanda 32, South Africa 41, Tunisia 51, Botswana 56,
Ghana 67, Zambia 83, Morocco 87, Namibia 98 and Cape Verde 121 are testament to
the growth in ease of doing business in Africa.
The report also
showed that of the 47 economies in the Sub-Saharan Africa, 31 implemented at
least one business regulatory reform in 2012/13.
Africa’s rising GDP
Africa is
the second-fastest-growing region in the world, according to economic experts.
The continent has been reawakening with new zeal for economic growth and
development, and the rate of return on investment is higher than anywhere else
in the world.
From 2000 to
2008, Africa’s real GDP rose by 4.9%, more than twice its pace in the 1980s and
1990s. In 2012, six of the continent’s 10 economies (Angola, Ethiopia, Ghana,
Namibia, Nigeria, and Zambia) reported GDP growth rates of 5% or higher – it
was as high as 8.5% for Ethiopia.
The World
Bank in its latest semi-annual report, Africa’s Pulse, forecast an average 5.3%
growth in 2014 up from its 5.1% projection.
Also, the
IMF estimates that GDP growth in sub-Saharan Africa will hit an average of 6.1%
next year, far exceeding the expected global average rate of 4%. It also says
that seven of the world’s 10 fastest-growing economies for the period 2011-2015
will be African.
The reason
behind this growth surge includes government action to end armed conflicts,
improve macroeconomic conditions, and undertake micro-economic reforms to
create a better business climate.
Africa will have the
largest workforce
Africa’s
labor force is expanding. It is also endowed with the world’s youngest
population. This offers the continent a chance to reap a demographic dividend
by using its young workforce to boost economic growth.
According to
Global consulting firm GBSH Consult Group, Africa will be home to one in five
of the planet’s young people by 2040. This means that in less than 25 years,
majority of its population will be youth. By then, the continent will have an
average of about 1.1 billion - more than the size of China’s or India labour
force.
If Africa
provides its young people with the right education and skills needed, this
workforce could become a significant source that will propel the continent into
economic prosperity.
The rise of the African
Woman
Although
much still needs to be done, fair gender representation, which has been
underutilized as a resource for too long, has received a boost with improvement
in the number of African women holding key public offices, for example, Joyce
Banda (Malawi’s president), Ngozi Okonjo-Iweala (Nigeria’s finance minister),
Nkosazana Dlamini-Zuma (AU chairperson) among others.
African
women have penetrated the business and political corridors in many countries
and are increasingly filling roles traditionally occupied by men. Their
representation in parliaments in sub-Saharan Africa is now higher than in South
Asia, the Arab states or Eastern Europe.
According to
the 2012 data from the Inter- Parliamentary Union, women occupy 20.2 percent of
parliamentary seats in sub-Saharan Africa, which is slightly higher than the
world average of 19.5%.
Also, going
by the World Bank estimates that eliminating barriers which discriminate
against women’s working in certain sectors could increase labor productivity by
as much as 25%, sub-Saharan is already achieving this with an estimated 50
percent of the agriculture sector being women – higher than in some countries.
To achieve
this third Millennium Developmental Goal, the continent has declared 2010-2020
as African Women Decade (AWD 2010-2020) the decade where African women and the
girl-child are empowered to take charge of their rights in being an equal and
active participant in the political and social-economic development of the
continent.
More investment in
agriculture, industrialization and technology
Unlike the
past when most African countries depended on oil and mineral resources as the
bedrock of their economies, the face of business is now changing as more
African nations are now diversifying into non-oil sectors. For instance,
Africa’s most developed economies like South Africa, Morocco and Egypt, have
been able to grow their agriculture, manufacturing, and retail and hospitality
sector to create more jobs.
The Moroccan
government for example set a goal for the country to become the industrial
automotive supplier for Europe. Today, the sector employs more than 60,000
people.
Also, with
about 60% of the world’s uncultivated arable land embedded in the continent,
African countries are now paying attention to agriculture as governments and
foreign investors contribute substantial investment into farming for
consumption and economic growth.
More so, in
a number of countries particularly Kenya, which has seen the birth of Africa
first tech incubator- the ihub, the role of technology in economic growth is of
utmost importance as large multinational corporations and government agencies
now pay close attention to developments in the tech sector as regards
socio-economic influence, job creation and its contribution to GDP. The Kenya
government also launched Konza City, reportedly said to be Africa’s silicon
savannah.
Africa’s embracing the
knowledge economy
Although
mobile penetration is growing at an impressive rate, the continent is slowly
waking up to technological opportunities as more than 80% of the African
continent is still unconnected.
International
Telecommunication Union (ITU) recorded that only 16% of Africa’s 1 billion
people use the Internet, half the rate in Asia Pacific and below a global
average of 36%.
African Development
Bank (AfDB) also reported that the information and community technology sector
contributed just 7% to the continent’s GDP last year, and Africa’s wealthiest
still amass their fortunes through resources.
However,
despite these shortcomings, technology is making an impression reducing
Africa’s youth unemployment rate. It is also making social services more
accessible to individuals.
In Kenya,
mobile money transfer system M-Pesa, launched by the country’s largest telecoms
operator Safaricom is helping to make a huge economic impact. With a total
transaction of about US$1 billion per month, the technology service has enabled
about 67% of Kenyan adults to access banking.
Industry
Experts also believe that economic gains powered by better and cheaper Internet
access and broader adoption of Smartphone can help increase technological and
economic growth in Africa.
Youths are increasingly
participating in leadership
With the
number of the youth population sky-high, more youths are coming forward to have
a say in the future Africa promises. Although youth participation maybe
relatively low, depending on the country, the response from social media and
technology bares evidence that youths are now more interested in making their
voice heard as the economic and social pattern takes shape.
Africa’s
next generation is participatory and involved in the development and growth of
the continent. Scores of young, western-educated youth and new breeds on the
continent have established businesses that are driving the economy, and are
constantly playing a part in the continent’s socio-political renaissance. They
are also at the forefront of innovations coming out of the continent.
GBSH Consult is a top global
consulting firm that delivers essential advantage to the world's top
influential businesses, governments, and organizations. Follow us on Twitter
@gbshconsult
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