Business
Africans investing more in Africa as western interests scale back
The U.S., and Europe have sent less money to Africa since the global financial crisis began, according to the U.N. report. Overall investment into Africa fell for a third straight year in 2011, to US$42.7 billion, down from a peak of US$57.8 billion in 2008. “The overall fall in FDI to Africa was due principally to a reduction in flows from developed countries, leaving developing countries to increase their share in inward FDI to the continent,” it said.
Many of those developing-world investors, the report showed, hailed from within Africa, a continent of one billion people clamoring toward consumer lifestyles. Already, 355 million Africans spend from US$4 to US$20 a day, a tier the African Development Bank defines as middle class. Consumer spending in Africa is expected to double from current levels to nearly US$1 trillion a year by 2020, according to research firm Euromonitor International.
Africa’s growth is hovering above 5 percent — with rates approaching 10 percent in Angola and Ghana — even as the economies of billion-person developing markets in India and China are slowing.
India’s economy grew 5.3 percent in the first quarter, the lowest rate in almost a decade, while China grew 8.1 percent in the same three months, the slowest since the spring of 2009. Last week, Brazil’s government ordered US$4.1 billion in economic stimulus in an attempt to lift growth above a modest 2.5 percent this year.
“Africa’s domestic market is very big and very poorly served,” says Gachao Kiuna, chief executive of Transcentury Ltd., a Kenyan power equipment and transport company whose revenue has grown to US$300 million from US$3 million in eight years. “That’s going to be the fundamental driver of continued economic growth, and that is what’s making us more resilient to the global economic shocks.”
Many African countries are accelerating growth from a tiny base. Kenya and Ghana each have economies smaller than Madison, Wis., the Brookings Institution wrote in a recent report.
But collectively, the gross domestic product of Africa’s nations are already roughly the size of Brazil’s. Companies willing to decipher the cultural and regulatory nuances between 54 markets are positioned to tap decades of growth potential, according to Louis Deppe, a director for private-equity firm Actis LLP.
