Top 10 economic reasons to invest in Africa

Riddle Markus, ABSA Capital strategist

“Many African countries have started to create an enabling environment by, among others, improving their legal structures, developing their infrastructures, fighting corruption, enhancing democracy, easing their bureaucratic regulations and upgrading their frameworks for development and trade agreements,” Markus said.

He was speaking at the Intra-Africa Business Breakfast held today, Thursday, 18 September 2008, at the Grayston Southern Sun Hotel in Johannesburg. The event was organised by Upbeat Marketing.

Markus firmly believes that these new developments, coupled with the continent's rich natural resources, faster population growth, annual economic growth (6% in 2008), risk diversification, trade liberalisation of cross-border markets, sophistication of its financial markets and high expected returns, have set a platform for further success in the sense that they will attract capital inflows, which the continent badly needs to restart its ‘stagnant' economy.

There are now 10 stock exchanges in Africa compared to a mere four 20 years ago. The market capital has risen from $5,5bn in 1988 to $569bn in 2005 (excluding SA), and the search for yields has led to increased interest in Africa,” he explained.

“For the past 10 years or so, Africa has come back in the radar screen and has become an alternative destination for US and European investors, who 20 years ago could have easily shot someone who would mention the name of the continent,” Markus stated.

However, he said that despite the positive news the continent continues to face enormous challenges.

“Key challenges remain, among others; poor governance standards, corruption and bribery, lack of transparency and consistency in policies, over-reliance in commodities (they need to diversify their economies), and the risk of volatility provided by opportunities of capital inflows,” he said.

Furthermore, Ghana deputy high commissioner to SA, John Boahen, urged South African investors and companies to flock to Ghana to help his country's economy, which presents amazing investment opportunities in the field of agriculture and agri-business, tourism, ICT, infrastructure and utilities, financial services and manufacturing and industries.

“We need foreign investors to take advantage of Ghana's continuous economic and political stability, lower interest rates, competitive tax rates, good supply of skilled and trainable labour, availability of labour at low cost and infrastructure development (road network, rail and sea),” Boahen told the audience.

According to the 2008 IFC Doing Business Report, Ghana is the sixth easiest country to do business with in sub-Saharan Africa.

The Ghana Investment Promotion Centre (GIPC), which is in charge of overseeing all foreign investments in Ghana recorded 447 new investment projects recently, with China recording the highest number. At least 57 projects were from SA at a value estimated at $112m.

Out of the 57, 28 were joint-ventures and 29 wholly-owned by South Africans.

The Department of Trade and Industry was represented at the event by Hester Obisi, its director of West Africa Business Unit.

For more information, log on www.dti.gov.za, www.gipcghana.com and www.upbeat.co.za.