Africa is hot. With Europe in a slump, America showing signs of faltering and even the mighty Chinese economy slowing, investors are searching for growth elsewhere. Africa has never looked better. The continent bounced back quickly after the financial crisis continuing its remarkable economic renaissance over the last decade. In its latest review of the global economy, the IMF upgraded its forecast of growth for sub-Saharan Africa to a scorching 6.1 per cent for next year. That is almost as fast as the emerging economies of Asia.
The growth has brought a surge of foreign investment, much of which has come not from the developed world but from other emerging economies, particularly China. Some British companies are important investors in Africa, particularly in mining, oil, consumer goods, drugs and financial services. But many Western businesses are still nervous about putting money into a continent with a reputation for corruption, political instability and ramshackle infrastructure.
The Times CEO Summit Africa, which opens in London today, will examine the challenges still facing the continent’s economic development. But it will also highlight recent trends that suggest Africa may be able not merely to maintain its pace but to accelerate.
One of the speakers at the summit will be Dr Raila Odinga, the former Kenyan Prime Minister who was defeated in the country’s closely fought presidential election last month by Uhuru Kenyatta. Dr Odinga claimed that there had been “massive tampering” but the election was relatively peaceful. The contest was seen as a key test for Kenya, following bloody elections in 2007 that left more than 1,100 dead and brought East Africa’s largest economy close to civil war.
There has been less good news in some other countries. The continued fallout from the Arab Spring has spread across the Sahara, with Islamist militants seizing control of northern Mali and other fragile states in the region under threat.
Nigeria, the continent’s most populous country, is struggling to contain a campaign of bombing and kidnapping by Boko Haram, an Islamist group linked to al-Qaeda, while South Africa has lost political and economic momentum. Yet Nigeria is growing at more than 7 per cent while South African growth is expected to pick up after a wave of strikes in its key mining industry.
Another speaker at the summit will be John Mahama, the president of Ghana, whose country is one of modern Africa’s great success stories. Part of its recent economic boom has been based on oil, which is both a strength and a challenge for much of sub-Saharan Africa. Rampant Chinese demand drove up commodities prices, bringing windfalls for many resource-rich African countries. But prices have softened as Chinese growth has slowed and significant further falls could rein back African growth.
Although poverty has reduced significantly in the past decade, the growth generated by resources has not been spread evenly. But big gains can be made if mineral wealth is handled better, agriculture developed, urbanisation managed carefully and the private sector allowed to flourish.
Most of all, Africa needs a huge flow of investment, investment that should provide attractive returns. Many British companies have been slow to seize the opportunities offered by China. They cannot afford to do the same in Africa.