Sub-Saharan Africa: glimmer of hope amid crisis

In many parts of the region, business is thriving and companies are flourishing and investors are smiling, buoyed by higher annual returns, market-oriented economic policies, business reforms, increasing consumer spending, fight against corruption, improvement of infrastructures, and other mechanisms put in place to attract domestic and foreign investment.

“If you look at sub-Saharan African markets, they have given annual returns that are substantially better than most around the world,” Duet chief investment officer Ayo Salami was quoted by The Washington Post as saying.

The region's economy grew by 5.4% in 2005 and 2006, and 6.5% in 2007 and 2008, according to the World Bank's statistics. Although the World Bank and the International Monetary Fund (IMF), in its latest report, projected that growth in the region was due to slow to 1.7% in 2009 due to the recession which slightly stifled EU and US foreign direct investment (FDI), governments refuse to lie down and despair.

Success stories

Despite the crisis, hope is in sight as Africa's successful stories continue to emerge. For example, Angola, with its Gross Domestic Product (GDP) growing annually at a rate of 15% over the last eight years and 6.2% this year. Genocide-hit Rwanda is another African economic miracle, registering an economic growth of 11% in 2008.

Reports said that from 27 armed conflicts in Africa in the 90's, that number has now decreased to six.

Economic shift and drivers

“Countries across Africa have demonstrated their commitment to creating more attractive environments for foreign investors and domestic entrepreneurs, introducing wide-ranging reforms, removing barriers to business and nurturing a more stable and certain climate for economic growth,” the Africa Progress Panel was quoted as saying.

The World Bank said that many African countries have managed to reduce debt, tame inflation and set competitive exchange rates.

“Such efforts are producing real results and individual countries are consistently proving that there are significant economic opportunities in Africa.”

Furthermore, the World Bank said sub-Saharan Africa was better placed to withstand the worsening global environment because many countries in the region are less exposed to shifts in global economic conditions.

“Smaller current account deficits and fiscal deficits, lower inflation, reduced debt, increased foreign reserves, and strengthening policy frameworks have all helped make the region more resilient to global economic shocks.”

In its report launched in June this year in Cape Town, the Africa Progress Panel said: “Foreign direct investment in Africa illustrates the promising growth potential for the continent to become a reliable business partner for the world.”