Is African-11 a real alternative engine of BRICs and N-11 ones?

The world is waking up to a new Africa. The predominant theme in the emerging narrative is no longer war, famine and disease but rather strong economic performance. The resources industry has played an important role in this shift but economic diversification is coming to many African countries, where an expanding consumer base is fuelling growth in other sectors. And measurable improvements in governance and human development suggest that these changes will be lasting.

Investors are realizing that Africa is good for business. Strong economic growth, business friendly reforms, mature financial institutions and some large economies (Morocco, Algeria, Nigeria, Egypt and South Africa among them) add up to an enticing proposition. It is no wonder that foreign investment in Africa is showing strong growth and that returns on investment in Africa, both foreign and domestic, are among the highest in the world.

Increased investor interest is having a beneficial impact on many African countries: business is good for Africa. Investment is creating jobs which have a wide ripple effect. And foreign companies are helping to develop domestic industries through the transfer of skills and technology and by generating demand for extended supply chains.

A sharper investor appetite for African opportunities is sparking a virtuous circle of developments. As companies wake up to Africa’s potential, they are making investments which develop local industries. As those economies grow, they present yet more opportunities to investors and spur governments to make their business environment more attractive to investors.

Africa has turned a new page. The prospects look bright and this is only the start of the story.

Sources:
-“How Exciting is Africa’s Potential,” Goldman Sachs Strategy Series
-“Emerging opportunities for business and Africa”, Ernst & Young New Africa Series

Brahim ELAZZOUZI (B.Elazzouzi@LSE.ac.uk)