Procurement Intelligence Unit

Jon,
I disagree with your presumption. I think there are tremendous opportunities to be had and as with many developing market economies, strong government has come with greater business investment and vice versa. What we need is longish periods of stability to create economies which are prime for investment. Furthermore, expecting african economies to fail only lead to proving these theories correct. We have to change our perceptions to those which engender growth, confidence in these economies and therefore drive upward investment. China, as your graph rightly point out, was trailing Africa until the 1950s but a centralist regime has pushed for growth, which is unquestionable. The corollary for Africa is that it needs stable governments, whether they are corrupt or not. Stability will drive investment and with investment the market economy will demand greater transparency and therefore pro-growth and pro-poor reforms.
Ben

I agree with Ben. Yes the risk is high in Africa, but there are at the same time a lot of opportunities in the region and I don't think that those who invested USD 55bn in Africa in 2010 will forget the region in 2011...

Quick facts from the IMF / World Economic Outlook: average real GDP growth forecast 2011/2015:-
Advanced Economies (G7): 2.2%-
Central and Eastern Europe: 3.9%-
Sub-Saharan Africa: 5.6%-
ASEAN: 5.9%

I couldnt agree more!! 

The article compares Africa with China, however. Compare South Africa with Afghanistan and asia will look bad. Sometimes when trying to get the bigger picture (like talking about Africa) its easy to forget the most important details (individual countries).

Also don't forget Africa Union, the political steps are very important and how Africa in many regions are building new system, instead of replacing old systems like in Europe/ USA. In many countries in Africa the mobile phone is the bank of choice, something yet to happen in most of the "western world". I think it could take 2-3 years or 20-30 years before Africa "explodes in growth".

Fortune favours the brave... the Chinese are all over Africa, and finding profitable opportunities...

Fortune, in terms of widely held wealth, also underpins political stability. While so many Africans are excluded from the formal society, their poverty will continue to fuel the revolutionary thinking that explodes into violence from time to time. As it has across the world and throughout history.

The article, which damns the heroic progress made in places like Rwanda and the vibrant economies of many other African countries, appears in this way irresponsible, yet its aim to advise on risk is valid, if misrepresentative of the efforts of so many.

Around 60% of wealth is held informally, 85% - 90% of the population are financially excluded and 60m Africans live in the diaspora... what a formula for exponential growth.

The opportunities for collaboration between successful developed world businesses and budding African entrepreneurs has never been greater.

British African Business Alliance has devised a formula for the transfer of knowledge, technology and expertise to stimulate low risk, profitable, commercial opportunities. This sort of activity can empower African economies and at the same time liberate the billions of dollars sitting ready, waiting for proven investment opportunities.

By working together to do something about developing the wealth that will help underpin the missing political stability, we can perhaps change the tone and recommendations of such destructive articles. 

Hi David,

Thank you for your thoughtful comment. 

There are undoubtedly opportunities across Africa, and many people also working hard in a variety of productive projects. However, the question is whether the accumulation of these endeavours is sufficient to cause an economic "miracle" that we saw pull so many people out of poverty across Asia. 

Currently, certain African economies are doing well. But this prosperity also coincides with high global commodity prices. We must ask whether this current boom is sustainable and whether it will have a lasting effect upon the people of Africa. 

However, the massive mobilisation of (private) capital, that Africa badly needs is still wanting. Indeed, recent figures from the World Investment Report on African states fell by 14% last year.  As much as we may regret it, it appears as though businesses are not investing the required resources into the continent. Worse still, it doesn’t look like this will be the case for many years yet. 

So, we should let another few million people die in poverty then... which is the literal response to your article...

I think my big issue with your position is the destructive force with which you write off the efforts of so many. I appreciate it is your job... but sometimes we can not just take the easy way out...

As I see it, the fundamental banking system lacks penetration. Business growth is held back by the lack of banking and payment infrastructure, micro businesses are held back by excessive interest rates, which are deemed good value to the investors that support them. The increasingly educated population lack jobs and therefore their goodwill fades and develops into frustration... with the results you foretell.

And, the investment your column could encourage has been sent in a completely different direction...

All of the above are elements of potential... which with the investment you have just eliminated, might well make a considerable difference.

Such a shame.

Really is there not an alternative point of view...?

Surely the development of economies that are growing and can become self sustaining is an economic miracle in itself... 

Africa is a continent of a large number of countries. To generalise from Cote d'Ivoire across the continent is not correct. Latin America has huge differences in economic and political development, this is also true for Africa. 

This is your opinion, wishful thinking or do you have some FACTS? China is in Africa with a vengence do infrastructure and capacity building. Obviously, they know something you don't. Africa is 50 countries not one. You have to look at EACH country and see where they are in developing their economies beyond sources of raw materials to development of said raw materials

Good one Michelle,there's a way forward and it's clear and with facts.

This is the time to choose where you are investing in Africa. Smart investors are already on the ground. Ironically, even some Western countries who predict that Africa will take decades to get out of the woods have made some serious investiments. Don't jump into the pool when the water has dried.

Dear Jonathan and friends who think like you; You may be right.

But think of the economy as a "game" for a minute. Western economies have been dominating the "game" for 300+ years. While most African countries are "independent" for 50 years. Globally, growth opportunities in Europe / N. America are done. Asia may still have a long way to go but is catching up. What is the remaining "empty" place on the globe with growth opportunities (infrastructure, agriculture, green business, mining, tourism, industries...) ?? As Michelle said Africa is not a single country!

True, you are probably right; it will take time to emerge.
Like it or not, it seems to me like Future is on Africa side.
Bests, 

G

It is evidently true that poverty runs in the brains, real rich men know where to invest, n they know where in Africa

"...political turmoil... illustrative of African countries' inability to escape poverty...many years before Africa is a significant sourcing destination."

If this is truly what you think, you belong in the world of two centuries back.

What utter claptrap. Who has, and is still trying to harness all of her collective wealth in the production of their consumer goods? Think first before you commit to paper, ignoramus...tut, tut.
Enough said

ouch, sore point, look back at South Africa apartheid time, isn't it ironic that people thrown out from Ethiopia and other African northern countries came to South Africa because they lost their privileges somewhere else, so cheap labour was a t hand, convenient legislation that enabled whites to assume a role in the society in spite of little qualification?
 Can we just collectively stop for a minute and think about Northern Africa.
 Once there is another event in the newspaper which is sensationalizing any information the whole thing will be forgotten.
 In the Mediterranean Sea its not only the last boat that has capsized, it is estimated that at least 15 to 20000 people died.
 When is Europe going to stop this massacre? when are other economies going to stop the hypocrisy of sending arms and selling any non valuable surplus (example chicken carcasses and or retread tires to Cameroon from Belgium), creating artificial places in Tunisia, Egypt, where you can spend a week for less than 330 Euros, thus destroying the local economy? when is this madness of recycling clothes through international NGO's or private individuals and selling them to Africa???? not only India and Pakistan are big fans of second hand European stuff. 
Berlusconi usual attempt to provide the 48 hours solution in Lampedusa is a dejavu of Aquila and Naples. Who in his sane mind travels through the desert to reach better green grass? 
Is the grass greener the other side?? Nop There is an underground organization that speculates on immigration these people often pay a fortune to get on a makeshift boat, go through unimaginable hurdles and they are desperate. 
The illegal immigration I am worried about is not this one rather the one that happens through legal channels, people who get o tourist visa and then disappear. 
Please go back and read some relevant history about immigration into the States in teh 18th and 19th century and there are some valuable lessons to be learnt. 
Read Giantantonio Stella" When we were the immigrants" or Gunter Wallraff "Ganz unten" about the Turkish Gastarbeiter in Germany, or Roberto Saviano "Gomorra" and others published recently. Europe lives on foreigners, needs workers, so why not reward teh people that contribute to the economy or create the premises for an ethical investment into Africa, where by the way both Europe and Africa would benefit?

You can't sit on two chairs. If you mingle with rotten apples eventaully you also rot.

Gregory you said it right on the money, Africa is the next economic growth frontier whether any one likes it or not

I don't deny Jonathan's and friends right to voice their opinion. @Folusho: Thank you Sir

Gregory - The remaining "empty"place on the globe should be filled asap by the Africans themselves. If not, I fear that in such a competitive world it will not take decades but centuries for Africa's economy to emerge. .

Hi guys,

Thanks for all the interesting and varied remarks.

My original argument is based on the thesis that Africa is the ‘next big thing’ and will follow a China-like trajectory of growth.

However, I argue that the evidence simply does not support this. Baseline growth figures across the continent have been unchanged for the best part of 50 years; the current spikes come partly off the back of substantial rises in commodity prices. The question I have – and it is a question founded in worry – is whether these rises are sustainable; and what are the consequences for the people should the bubble burst? The last time that this happened, during the drop in commodity prices in the 1980s, it led to widespread instability.

This is not an argument over potential, but scale. Undeniably, there are opportunities, but the capital flows suggest the reverse. The World Investment Report stated that African FDI fell by 14% last year.

The potential of Africa, however, will take many years to nurture. It will be decades before its average GDP per capita are comparable to China’s

(Hi All, I’d like to warn you this is a long message from me to you) 
Dear M-H,

The dynamics in place in Africa for centuries will not disappear / change overnight.  “Nothing personal”; I am fed with up the continuous pessimism and negative images over Africa.

I hear / read negative images, experiences from entrepreneurs (and many more) talking for instance about corruption, “good governance”, development, etc.

I am from DR Congo, I hear them say 1) Congolese are lazy. 2) Congolese are not professional, not serious, not competent, not reliable, not concerned by the development of their country – community.

OK, Congo is not a paradise; millions of people are struggling to stay alive… but at the same time, some little things are “moving”… I see for instance in Kinshasa the emergence of a middle class who can purchase locally. In rural areas, some innovative projects are growing.

Every time I return to Kinshasa, I see hard working folks, people with drive, willing to work but they have no access to the job market.

I see talents available locally; a lot of SMEs, independent entrepreneurs who know their stuffs and get the job done!!! Of course, those are not necessarily the ones who will be covered by media…… that you guys would be in touch with when on an official trade mission in Congo or working for well established organizations!!!!

I’m networking to be in touch with social entrepreneurs - professionals, to valorize those talents available locally, I am networking for companies and fair job creations, training and assessment opportunities; to improve the living standards and have population able to buy food, pay their rent, pay children school fees, going to hospitals, etc…

@M-H, it’s OK to me if it takes centuries like you mentioned.

I may not witness it in my life time; the mindset for me is to contribute by doing small things on my tiny little level so that perhaps our grand grand children have a bigger chance to live it.

Specialists / Analysts have their reasons to be pessimistic. Personally, I am blessed for having been raised by hard working parents, with ethical principles who sacrificed a lot to send me to school.

I am optimistic by nature, not naïve. I am fortunate because I have seen role models being self-made men - women and hard working professionals. Many young Congolese do not have that chance! My grand-father was one of the rare Congolese Directors under the Belgian colonization. He never stole anything, anybody. I respect my parents for that, they are not rich, all they have they work hard for it.

What you see in Congo is not always what you get… as it’s not the habit of “the right person at the right seat”. And I guess this is applicable in several African countries.

Many young professionals, entrepreneurs from Diaspora (who grew up in Belgium, France, Canada, China, Brazil, USA, UK, South Africa, India, Russia, Germany, etc…) are going back. OK, some or many because they have parents in the government will adapt the “local old school” mentality and habits. And I hear some others looking for talents, qualifications, win-win partnerships; they are creating companies offering first class quality products / services. Big challenge locally, yet not everybody see the added value of first class / professional services.

Sure, Africa is not yet powerful, competitive. Because one does not necessarily see something coming, does not mean it’s not happening. Even if takes decades.

International Analysts, the IMF with their GDP estimations etc, don’t have info on the level of activities happening in the informal economy in Africa. Big portion of the population don’t deal with banks and “official” institutions.

It’s a long message I told you. Thanks if you have read it so far. Looking forward to reading more positive news - contributions and projects development happening on the continent.

Bests,

G

I couldn't agree with this statement more. Africa is not one country, it is made up of many different entities each with it's own economic dynamics. Simply pointing to one country that has flared into violence and using this to paint a picture of the entire African continent is wrong.

The wind of change is surely blowing throughout the continent, the change process is just in its infancy and it is foolhardy to expect instantaneous results, stereotyping Africa based on its past will not do and we as the emerging professionals owe it to ourselves to turn around this process.

G