Africa Set for Massive Foreign Investment

By Eric Sande

If you have ever imagined of a potential avenue to put your money work for you don’t think beyond the borders of Africa. Emerging markets have allowed many countries in Africa that nobody ever thought would grow into investment destinations to rise. Putting facts right, Africa awaits a 4.4 per cent and a 5.2 per cent growth in 2010 and 2011.This is a clear marked economic growth in the last decade that has been fuelled by emerging economies and stimulated a whole new breed of entrepreneurs.  

Fresh potential trade partners are currently in the tender process of new ventures as the continent discovers Mining fields for gold and oil. The economic centre of gravity has been on the forefront to change from the industrialized economies to the large developing economies.

Rush  for raw material in Africa is clear from emerging economies like Brazil, Indonesia, India and China .This is a new trend that had never been witnessed before. They are also in search for new trading partners for their finished products in Africa, which provides a better trading ground for both.

This year’s annual report documented by African Union Commission (AUC), the African Development Bank (AfDB), the United Nations Economic Commission for Africa (ECA) and the United Nations Development Programme (UNDP). titled, “Assessing Progress in Africa Toward the Millennium Development Goals”, shows that Africa has made steady progress on the Millennium Development Goals (MDGs) which aims to reduce poverty, hunger, maternal and child deaths, disease, inadequate shelter, gender inequality and environmental degradation by 2015.,

Organisation for Economic Co-operation and Development (OECD) recent report foresees the emerging and developing economies set to account for nearly 60 per cent of world GDP by 2030.The new economic dispensation has proved to be important to the Africa’s human resource and raw materials.

Donald Elefson, the portfolio manager for the Harding Loevner Frontier Emerging Markets Fund, which has invested the largest amount of its multi-billion dollar fund about 33 percent in Africa said, “When I go to Lagos, when I go to Nairobi, I see a lot of Africans who have been educated and have gained work experience overseas coming back home because of the potential that can be found there. They are a new breed. They are not like that older generation. They realize that you can get somewhere you can accomplish things, without pursuing corruption. It is a new mindset. These are the new leaders. These are the Africans who will rise up and be the new leaders that will drive return on capital going forward.

“I think you are seeing more and more people looking for return be it yield or exciting equity-type opportunities and that is where the frontier market [like Africa] is really coming to the forefront. The frontier markets are going to be the biggest beneficiaries of the low interest rate environment that we have in the developed world,” said Elefson.

Intra-African trade and South-South cooperation initiated the continent’s growth. This amounts as the economic centre of gravity shifts from industrialized economies to large developing economies.

We are in the information and communication technology (ICT) age, which plays a fundamental part in the investment and development trends in Africa. The landing of two undersea cables to the East African portion of the Africa makes Broadband prices be slashed by 90 percent. This is below what it was two years ago, making broadband Internet, data over the cell phone, and data to the home much more affordable. It means that the list of innovators with an aspiration, can log on the fast internet connectivity and get fast hand information on what other people are doing.

Kenya is part of the EAC, which is made up of five potentially high-growing economies [Kenya, Uganda, Tanzania, Rwanda and Burundi], Kenya holding the mantle of the pack. Leaders from East and Southern Africa agreed to form the largest free trade area in the continent two years ago, bringing together 26 countries and three existing regional groupings-  the Common Market for Eastern and Southern Africa (COMESA), the EAC, and the Southern African Development Community (SADC),this will only require the setting up of the needed infrastructure to enhance development if governance issues, including political stability, continental trade policies and corruption both among security forces and government officials are addressed.

Africa stands to gain from this shift of wealth only if it acts immediately. It can only take advantage of the new economic landscape by addressing Africa unity, infrastructure development, and governance both at national and cross border levels, to further the continent’s economic progress.