Advantage Financial thanks Dr. Marco Annunziata for the work, contribution and view to follow up the Advantage Financial Forum 2014 on sub-saharian Africa
by Marco Annunziata, Chief Economist, GE
Africa is increasingly seen as the most promising growth region in the global economy. Its potential has long been recognized, given abundant natural resources and a large, young and fast-growing population. Over the past decade this potential has begun to turn into actual performance, as economic reforms and improvements in governance and institutions have broken a long history of economic instability, conflict and corruption.
If this time it is for real, Africa represents a tremendous opportunity for the global economy and for global industry players, who can contribute to developing the massive endowment of oil and other commodities, building the infrastructure needed to foster economic growth, from railway links to power generation, and improving both distributed and urban health care provision. African businesses are also poised to reap substantial rewards: they recognize the disruptive potential of accelerating innovation as the digital world meets the physical, and they are ready to become enthusiastic early adopters of new technologies. Most importantly, this is a tremendous opportunity for Africa’s citizens to enjoy a rapid and sustained rise in living standards.
Africa’s transformation is not yet self-sustaining. Governance and institutions have improved significantly, but from a low starting point and lag other growth markets. Economic growth has become more broad-based, but remains overly dependent on commodities. Doing business in the region is still difficult, and execution risks high. There is more work to be done. Developing infrastructure and local human capital should rank at the top of the priority list, together with a further substantial improvement in business conditions. Sub-Saharan Africa (SSA) should also aim to accelerate the rise of local manufacturing, to create a large number of well-paid jobs, accelerating the growth of the middle class. Regional and global trade integration should be accelerated. Africa’s governments and the companies investing in the region have a common interest in fostering self-sustaining inclusive growth.
Africa today stands at a cross-road. In this brief paper we take stock of the progress to date and the challenges ahead. We outline four possible scenarios for Africa’s future, and indicate the steps to maximize the region’s potential. The road ahead is long, but the progress already achieved is impressive. We are optimistic. This is the time to bet on Africa.