African economies must plug in globally: experts
Africa must accelerate links to global markets and improve competitiveness to sustain the strong growth expected this year, experts at the World Economic Forum on Africa said on Wednesday.
African economies weathered the global economic storm in 2008 and have since resumed strong growth — a positive showing which paradoxically highlighted Africa’s weak presence in global financial markets, said Jennifer Blake, head of WEF’s competitiveness centre.
“It is also a reflection of the fact that African economies are not sufficiently integrated into global markets,” Blake said at the launch of the third Africa Competitiveness Report.
“While this sort of sheltered them over the shorter term, this will be a hindrance for economic development going into the future.”
The International Monetary Fund forecasts that sub-Saharan Africa will grow by about 5.5 percent this year, one of the strongest showings in the world, but cautions that the region could suffer if the global economy falters again.
Competitiveness “is going to make the difference whether Africa’s growth is sustained or not”, said World Bank chief economist for Africa, Shantayanan Devarajan.
“Competitiveness is the key to our employment strategy as well.”
By several measures, African economies are doing remarkably well.
Consultancy Ernst & Young said on Tuesday that foreign investment in Africa grew by 87 percent in the past decade, as the continent has offered strong growth rates and high returns.
Foreign direct investment jumped from 338 new projects on the continent in 2003 to 633 in 2010, it said.
Ten African countries attracted 70 percent of those projects: South Africa, Egypt, Morocco, Algeria, Tunisia, Nigeria, Angola, Kenya, Libya and Ghana.
“Africa has remained an attractive investment destination throughout the global downturn and has managed to maintain its relative share of global investment flows as a result,” the company said.
“Strong growth in new projects into Africa is expected from next year with (foreign direct investment) inflows forecast to reach $150 billion by 2015.”
According to the firm, investments started picking up in 2008, at the height of the global downturn, after a drop in previous years.
“There are of course parts of the continent where there are real and perceived barriers to investment due to political instability and corruption,” said Ajen Sita, managing partner for Africa at Ernst & Young.
“These are obvious challenges but those investing in Africa, and Africans themselves, have much to be positive about,” he added.
“Although the African share of global (foreign direct investment) has grown over the past decade, we believe that it does not reflect the increasing attractiveness of a region that has one of the fastest economic growth rates and highest returns on investment in the world,” said Sita.
The 21st WEF on Africa in Cape Town is set to discuss how sub-Saharan Africa can sustain growth and increase its economic potential, with the first session opening later Wednesday.
The three-day forum will be attended by 900 delegates including regional leaders of governments and businesses.