Africa Summit 2010: Take a Look at Emerging Africa
Africa is set to become the developing world’s next success story. In 2008, Africa’s combined GDP reached $1.5 trillion – more than India or Brazil – and GDP growth rates averaged 5 percent per year between 2002 and 2009. The IMF expects this outperformance of markets like Brazil, Russia and Eastern Europe to continue in the future. Foreign direct investment into Africa stood at $62 billion in 2008, seven times more than in the year 2000. Already per capita GDP is higher in Africa than in India, as is the number of middle-class households.
Africa hosts 10 percent of the world’s reserves of oil, 40 percent of its gold, and 80 to 90 percent of chromium and platinum metals. Yet, only a quarter of the economic growth is driven by the resource sector. Retail, agriculture, transport, and telecommunication all contribute significantly to the economic rise. McKinsey expects a 35% increase in spending power and 221 million extra basic-needs consumers by 2015. The continent has more than 500 million people of working age today. By 2040, their number will exceed 1.1 billion. A quarter of the world’s arable land lies in Africa. Infrastructure investments on the continent have quadrupled in the past decade to a total of $12 billion in 2008. And the mobile phone, of which there are more than 450 million in use today, is only the prelude to a fundamental ICT revolution underway.
These opportunities can be translated into revenues and profits. Publicly traded companies in Africa achieve an annual return on capital that is on average 65% higher than that of their counterparts in China, India, Vietnam, or Indonesia, according to economist Paul Collier. Globally, Asia has been the main benefactor. The combined share of Africa’s exports to the European Union and the United States fell to 49 percent, from 73 percent in 1990, while Chinese imports from sub-Saharan Africa increased to over $13 billion, from $64 million. Now is the time for Europe to break that trend by becoming a valuable partner for the continent.
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