As European economies have ground to halt and the supercharged growth of China and India has slowed, one area of the world has continued to motor — Africa. Despite fears it would be badly affected by problems elsewhere, sub-Saharan Africa is expected to grow by 6 per cent this year, the same pace as 2011.
That continues a remarkable run over the last decade that has seen Africa finally start to realise the economic potential of its rich human and natural resources. Seven of the world’s ten fastest growing economies are now in Africa and the continent is benefiting from a surge of inward investment, attracted by some of the highest returns available anywhere in the world.
This is the backdrop for The Times Africa CEO Summit, which will be held in London today and addressed by President Ernest Bai Koroma of Sierra Leone, Morgan Tsvangirai, Prime Minister of Zimbabwe, and Olusegun Obasanjo, former President of Nigeria. Much of Africa’s recent growth has been driven by the booming price of commodities fuelled by rising demand from China. But it is much broader than that, with the rapid emergence of an urban middle class creating attractive consumer markets and investment being poured into underdeveloped infrastructure.
The summit will highlight the flourishing information technology in Africa, where entrepreneurs are taking advantage of the explosion of internet usage, particularly over mobile phones. These are transforming the working lives of the market trader in Kenya, who can do all her banking on her phone, and the farmer in Ethiopia, who can get the latest coffee prices quoted on the new commodity exchange in Addis Ababa.
Big challenges remain. Africa still has more than its fair share of the world’s most dysfunctional countries. But, on the whole, governance is gradually improving. Nigeria, Africa’s most populous nation, is tackling the corruption that has long held it back and the Government is trying to push through radical restructuring of the oil and power sectors. The backlash against these reforms and a new wave of Islamist attacks have dented confidence, but the longer term picture remains bright.
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Africa has some of the most important undeveloped oil and mineral resources in the world and some British companies have been leading the way in exploiting them. Cove Energy, one of the companies involved in developing the huge gas reserves off the East African coast, is currently the centre of a £1 billion bid battle between Shell and a number of national oil companies. One of Britain’s biggest success stories is Tullow Oil, which now has more licences in Africa than any other oil company. Other leading British companies with important operations in Africa include Barclays and Standard Chartered banks and Diageo, which sells more Guinness in Nigeria than in Ireland.
But, in the new scramble for Africa, British business is falling behind other western countries, let alone China, India and Brazil. In part, this may have something to do with outdated perceptions. Writing in The Times today, Aliko Dangote, one of Africa’s most successful businessmen, tells the story of the two salesmen sent to Africa to research the market potential for shoes. One concludes: nobody wears shoes, there is no market. The other reports: nobody wears shoes, there is massive potential. One of the aims of today’s summit is to open eyes to that massive potential.