A RECURRING theme at the World Economic Forum on Africa that ended Friday is the abundance of opportunities that can unlock further growth on the continent, and the opportunities that this offers to investors.
Be it a Nigerian focused breakfast or a discussion on mobile technology, many comments are preceded by “We have only just started doing this, but already …”.
A senior ICT executive says his company estimates that access to broadband can grow a country’s GDP by an additional 1% per annum.
So what is needed to unlock Africa’s potential and accelerate development?
Many participants mentioned that better planning by governments and better implementation of existing plans and legislation is required.
However, despite these concerns, Ernest & Young (EY), in their Attractiveness Survey Africa 2015, expect 2015 to be a record year for foreign direct investment into the continent (US$ 55.2 billion), and for the first time this will exceed official development assistance (donor funding). More importantly Africa was the world’s second largest recipient of capital in 2014 with a global share of 17.1% - considerably more than its 5% share of global GDP.
We are all aware that the continent faces backlogs in infrastructure spending and, especially, in areas of power supply. However, although many governments are aware of this, they are constrained by limited budgets.
Public Private Partnerships (PPPs) as a means to unlocking this came up in many forums. Judging by the amount of capital already heading to the continent, if the appropriate financing regime is created, PPPs could help governments overcome their financing shortfalls.
What excited me most at this year’s forum was the almost complete focus on African solutions to African challenges.
Africa is not trying to be like other parts of the world, but is looking to solve its issues with new and innovative solutions that it can afford.
Technology is an enabler, and will continue to be a positive force in ways we don’t even know about today. Delivering drugs to rural communities with drones is a now a real way to improve access to healthcare – something that would not have been discussed just a few years ago.
So is Africa facing its challenges and improving? Only 14% of people surveyed by EY think that Africa will become less attractive as an investment destination over the next three years – and this number is even lower among respondents already doing business on the continent.
The recent election and smooth transition in Nigeria indicates that the political environment is improving significantly. This is confirmed for the continent as a whole by the Economist Intelligence Unit in their “Democracy index”.
The World Bank confirms that the business environment is improving with 5 out of the top 10 global improvers in 2013/14 coming from sub-Saharan Africa in their “Doing Business” survey. The region also had the largest number of regulatory reforms to make business easier, with 70% of these economies having at least one reform.
Africa has a lot of good news stories – let’s tell them.
-The author is portfolio manager and Africa specialist at Ashburton Investments. Twitter:@ Paul23Clark.