June 13, 2012 Leave a comment
Is Africa the new frontier for innovation? That’s what The Economist Magazine is asking in their latest report Into Africa: Emerging Opportunities for Business. The report discusses the implications of increased trade, urbanization and development for the region in the next decade. It focuses on changes to Africa’s macro economy by highlighting that 28 of the 52 counties are projected to increase GDP growth by 5% or more in the next five years. In addition, Sub-Saharan Africa’s real GDP growth is expected to increase to more than three times that of the United States’ by 2013. One such example cited in the report is the progress of Sierra Leone, which is expected to post a rate of 25% growth in real GDP by the end of this year.
The report also highlights how the continent has become increasingly urbanized, with 49 cities having metro populations of over 1 million people and 5 of those cities having populations of over 7 million. The Economist explains how these cities serve as vehicles for trade and commerce, receiving much of their imports from Europe, but seeing more potential in trading with China. Additionally, the report finds advances in technology to be the leading drivers of increased integration in the world market, with the continent surpassing over half a billion mobile subscribers in 2010.
Still, the report points out that more work is needed. For one thing, it makes the point that the continent’s “production potential does not match its needs.” It finds that Africa has had tremendous success in its oil and mining industries, but fails to supply the refining capabilities necessary to retain that success. In addition, bureaucracy continues to halt employment and educational opportunities, scaring away investors who would otherwise take risks to fix those problems if it weren’t for increase corruption and turmoil. It concludes by pointing out that many African economies have enormous potential for future economic growth, but if they cannot tackle many of the underlying problems that still exist than it will be harder for them to continue growing in the future.
Posted By: Jonathan Sherman
Sources: The Economist Magazine Intelligence Unit