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Why Invest in Africa?

Reasons to invest in Africa and Africa's economy
By Araks-Naomi Zainali Africa- a growing economyThink of Africa and what springs to mind? Negative stereotypes about poverty and corruption have become lodged in the Western imagination after years of well-meaning charity campaigns and celeb appeals for public donations. But the perceptions can be distorted and damaging. They do not admit of the possibility that Africa may become the West’s partner, rather than just a recipient of aid and an object of pity. They hinder Africa’s potential growth by casting it in the perpetual role of victim. Though some problems persist, they should not be allowed to eclipse the brighter picture. In the previous decade, the continent finally discarded the last remnants of its colonial past. Coups and dictators dwindle. Africa has arisen from the horrific civil wars of the mid- 90s not only intact but prospering, with more than a grain of hope. Scarcely reported is that six of the world’s ten fastest- growing countries are African. In eight of the past ten years, its development has surpassed that of Japan. And while the economies of the West contracted and its politicians floundered during the 2009 financial meltdown, sub-Saharan Africa maintained its steady grow at around 3.5%. So what are the factors behind this new narrative of economic vibrancy? Partly it is due to a shift in demographics. Birth rates have started to decline while 75% of the population are under 35, meaning a boost for the proportion of working- age people to dependents. Currently the African Middle class is as large as the populations of Russia and Brazil combined. The percentage of city dwellers is comparable to that of China, the once quiet streets of Johannesburg, Nairobi and Kampala now the stage for crippling traffic jams. Although Africa’s wealth has long been measured in terms of its oil and metals production, the booming middle class, by increasing domestic demand, enables African economies not dependent upon exportation to develop as rapidly as those that are. But African ingenuity and adaptability deserve much credit. A generation of managers who trained during the restructuring programme of the early 90s are at the helms of businesses. Skills have been honed, with the productivity growth of 3% per annum dwarfing America’s 2.3%. And, vitally, the diversification of African economies acts as a buffer against any drop in commodity prices. Nigeria is a case in point, where the once oil reliant economy has been bolstered by tourism and agriculture. The resultant surge of confidence in Africa as an investment destination is registered by the World Bank’s most recent Ease of Doing Business rankings:14 African countries place ahead of Russia, 16 ahead of Brazil and 17 ahead of India. Foreign direct investment has risen six-fold in the past decade, with China at the vanguard. This move has been widely denounced by the West, still clinging to its paternalistic stance and fearful that its own interests in the continent are threatened, as exploitation and neo-colonialism. But through partnership with the Asian powerhouse, which invested £8.34bn in African resources between 2000 and 2011, improving infrastructure and boosting the manufacturing sector, Africa’s coffers have swelled. Other non-Western countries, including Brazil, Turkey, Malaysia and India, prepare to take China’s cue. Africa and any future partner will mutually benefit provided dividends are shared fairly. For Africa, co-operation will yield support for local businesses and increased employment; for its partner, a diversified company, a new market and the highest returns in the world. One member of the Clinton Global Initiative recently launched by a company allowing African citizens to check the authenticity of their medication by texting a code on their mobile phones. Tony Blair once reduced Africa to the “scar on the conscience of the world.” But last August he revised his judgement, telling businessmen in London: “There is no doubt: Africa is changing for the better, the perceptions of Africa are changing for the better. There is a new sense of hope and confidence, of optimism and an expectation that is based on evidence not dreams.” Perhaps it is time to cast off our old preconceptions and see this long patronized continent with fresh, un-blinkered eyes? Liked this blog? Then feel free to click on those buttons below to share it on Facebook, LinkedIn, etc. Want to comment? All you have to do is enter your comment, then your name and email into Disqus and press register. That’s it!

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