Africa firm on its way to meet economic promise

Africa is only just beginning to fulfil its economic potential as its economies show signs of strong growth.

When Nigeria rebased its economy in April it became the 26th largest economy in the world. Last month Kenya raised $2 billion (£1.18 billion) from institutional investors in its first offering on the sovereign bond market. Angola has even offered financial aid to Portugal as the European country struggles with its debts.

The past year has seen Africa truly arrive on the global economic stage.

Even though much attention has focused on the emerging markets of Asia-Pacific and Latin America recently, and the well-known ‘BRICs’ of Brazil, Russia, India and China have been widely discussed, African nations have not seen the same level of interest from the public in developed countries.

That’s despite the fact that they have excellent potential for further growth that they are only beginning to tap into. In April’s Africa’s Pulse report, the World Bank said that economic growth in sub-Saharan Africa as a whole is expected to rise from 4.7 per cent last year to 5.2 per cent over the course of 2014.

Countries that are rich in resources, such as Sierra Leone and Democratic Republic of Congo, performed best overall. Capital is also flowing into areas where new oil and gas reserves have been discovered, like Angola, Mozambique and Tanzania.

Africa’s economy as a continent is growing more quickly than any other, according to a report from the Harvard Business Review, with a third seeing their gross domestic product (GDP) figures rise by more than six per cent a year. Report author Jonathan Berman said the continent could enjoy a huge growth phase that will make it the world’s economic powerhouse for decades.

Large-scale urbanisation and an emerging middle class larger than India’s will be important elements of success, the report argues. Already, the continent has the same number of cities with at least one million inhabitants as Europe at 52.

Demographics are also contributing to growth, Mr Berman writes. By 2035 Africa will have a bigger workforce than China, supporting fewer older dependents. What’s more, they are becoming better educated and although the education gap compared to developing countries is still wide, it is slowly being closed.

But increasing political and financial stability is also playing a role, as is the explosion in smartphone use. There are billions of acres of uncultivated cropland that will play an important role. Though trade between African nations is still lagging behind other indicators, that means there is massive potential to be exploited. Africa’s development has only just begun.