By Ikràn M.Omar @IkranM
Despite Africa’s long prophesied ascension as the next economic powerhouse there are still questions to be answered on whether this could ever materialise. The main question is whether it is a safe and solid investment.
To invest in anything there needs to be a prospect of a strong return. You can never to be too cautious when entering any market let alone an emerging one. As Africa ascends she is showing exciting growth that is attracting many investors. Africa is home to seven out of the ten fastest growing economies in the world. Ethiopia, a country whose reputation was marred by the 1984 famine, but is today competing with the likes of China, whose growth rate is 9.2 per cent, and India, with a growth rate of 8.1 per cent. Ethiopia’s growth rate is 8.2 per cent with its economy growing at ten per cent a decade.
The dynamics of the continent are changing as more and more educated and ambitious leaders and middle classes emerge. African countries are beginning to show a strong economic global presence. However, there is a risk in any investment but there are also great returns to be had by investing in Africa with a future that looks prosperous. The continent is not only rich in natural resources, traditionally seen as the main income driver for the developing nations.
Today, Africa is not only home to seven out ten fastest growing economies alongside more stable governments, but also to the world’s fastest growing middle classes that includes young, educated, and ambitious consumers. One country who has invested heavily in the region is China. Sino-African trade was worth less than ten billion pounds with average growth rate of 30% in turn of the century. In 2013 the Sino-African trade was worth £120 billion in 2013 a 83% rise from the previous two years.
This has not gone unnoticed by US, whose trade with Africa has fallen behind China and Europe and is playing catch up. In 2013, the US-Africa trade was worth £50 billion while Sino-African trade for the same year was £120 billion. This August President Obama held a historic US-Africa Leader’s summit in Washington D.C. and announced that the US would be investing nineteen billion pounds into Africa.
Also investing in the continent are US including Citigroup, Morgan Stanley, Chevron, and Coca Cola who are investing a$5 billion in water and manufacturing. General Electrics, which already operates in thirty countries out of the fifty-three countries in the continent, is investing $5.3 billion in new business ventures in Africa. Marriott International, Africa’s largest hotel operator with 130 hotels in nine countries is investing $100 million with aim to hire ten thousand new employees and expand into more nations. Aerospace firm Lockheed Martin is also investing in the continent.
Turkey is another investor whose trade with the continent is increasing, the country is investing heavily in East Africa. In February a summit held by Turkish Confederation of Businessmen and Industrialist in Gaziantep, included representatives from most of the East African countries. Turkey’s trade whole of Africa is worth $23.4billion with hopes of that reaching $50billion by 2015.
Surprisingly Somalia is also a fast emerging nation. Somalia is attracting investors such Warren Buffett’s son Howard Buffett who has teamed with Michael Stock. Also an article by Swedish statistician Hans Rosling said that if comes to investing ‘’between Somalia or Mexico choose Somalia.’’
According to Rosling, Somalia as with many African states, offers a more profitable investment opportunity in potential returns. However, Somalia isn’t the only African country devastated by civil war who is trying to rise from the ashes. Paul Kagame the president of Rwanda, has a vision to turn his country into Singapore of Africa – Rwanda set up its first stock exchange just three years ago.
Kagame is a great example of a host of ambitious African leaders who have visions of prosperity for their countries. Africa is rising, but how far can it go?