Africa 2030: realizing the possibilities
Since we initiated our flagship Africa attractiveness programme in 2010, we have been among those at the forefront of promoting the African growth story and advocating for greater levels of investment into Africa.
We have developed a robust data- and knowledge base to help provide quantitative substance to support the ‘business case’ for Africa.
Over the past few years a new African narrative has emerged. For decades, postcolonial Africa has commonly been portrayed as a basket case: economic stagnation, political instability, armed conflict, poverty, famine and disease were the key themes.
EY’s Africa attractiveness reports have highlighted the continent’s steady rise. Our research, which includes investor surveys and analysis of foreign direct investment (FDI) and broader socioeconomic trends, has helped to provide some quantitative substance to the growing perception that African markets offer an exciting growth and investment opportunity.
Key drivers of growth
Despite the lingering perception gap, there’s evidence of the continent’s clear progress over the past decade. We look at what the key drivers for growth are namely:
- Sound macro-economic management
- Improvement in the business environment
- Political reform
There is good reason to pause and celebrate the progress of a region that was dismissed at the beginning of the 2000s as “the hopeless continent.” That said, it is important, too, that we do not get caught up in a latter-day ‘gold rush’ mentality.
Most African countries still have a long way to go to emulate Asia’s sustained growth path. In many respects, Africa is perhaps today at a point where many of the east Asian economies were in the 1970s, and the likes of India, Mexico and Turkey were in the 1980s.
By 2030, in terms of per capita income, SSA will reach the level where Emerging Asia is today
Looking forward: Towards inclusive, sustainable growth
Based on our analysis, the twin key drivers of Africa’s success story will be our ability to connect and integrate markets across the continent and the (related) cooperation between the public and private sector. Particularly encouraging and harness inclusive growth, and to create the social, market and political conditions and institutions which will capture the potential demographic dividend.
With this combination of high levels of connectivity and private-public collaboration, we will start to see a sequence of key ‘building blocks’ that will lead to Africa’s success story of inclusive, sustainable growth.
In the shorter term, the gains we will see will be exemplified by Nigeria’s ongoing fiscal diversification, South Africa’s return to reasonable growth levels and the proliferation of effective public-private partnerships (PPPs), notably in the energy sector. An improving global economy and ongoing Chinese demand for Africa’s resources sets the foundation for more positive developments in the medium-term.
In the longer term, these factors combine to stimulate the private sector, resulting in job creation, growing domestic economic opportunities and a higher tax base. Intra-African trade continues to expand, together with a burgeoning middle class that produces a multiplier effect across African economies via domestic demand driven growth.
These factors will in turn enable greater levels of regional integration and more effective government, and underpin and sustain Africa’s success story.
The EY Point of view: 5 priorities for inclusive, sustainable growth.