OPINION: Is this Africa's opportunity?
Global potential economic growth is coming under increasing focus. Economies are driven by two key variables, namely demographic or population growth, and productivity growth. There is concern that from a global perspective both of these areas are showing signs of slowing. Demographically speaking, fertility rates have dropped from about 4.7 average number of children per woman in 1970 to around 2.5 in 2013. Africa, however, retains the highest fertility rates of any region at some 4.7 children per woman. This, along with potentially good productivity growth off a low base, makes Africa a clearly exciting prospect from a potential economic growth, consumption, and therefore investment perspective.
OK, so that is Africa's potential (and what is good for Africa is good for South Africa), but what's it going to take to realise this potential? The magic word is productivity. Unlock the key to productivity gains and this potential will be realised. So let's look at some areas of focus in this regard.
One prime area is agriculture. Africa is largely reliant on agriculture, with a large part of the population dependent on farming. However, due to a lack of productivity, Africa is a net agricultural importer. Infrastructural development such as dams (irrigation) and roads, commercial efficiencies, and improving soil fertility would all go a long way to improving the situation.
The WEF Africa conference has clearly identified areas that need to be addressed regarding agriculture and a number of other areas. Key focus areas include issues like access to international capital markets (because financing is key to a lot of Africa's ambitions). Intra African investment, smart government and good governance, private sector involvement, access to technology, value adds and labour market efficiencies are all areas that will come under the spotlight and would enable agriculture and a number of other areas of the African economy. Improving education and literacy in a young population will also be front and centre in achieving these ambitions.
Global investment in Africa will be a key contributor to achieving growth goals and it is important that Africa shows the world its commitment to good governance, that it doesn't move the goalposts, and that ultimately it offers international investors attractive returns on investment. If we get this right then the future for the continent will be very bright indeed.
From a South African perspective a vibrant Africa will become increasingly important. It is no secret that South Africa is going through a tough time at the moment with a sub-par economic growth environment likely to persist for some time (electricity supply constraints et al). Africa is a key export destination and a number of South African companies are already benefiting from growth north of our border.
Mark Appleton is a strategist at Ashburton Investments.
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