a Mark Magazine: Africa Dispatches feature by Mandy de Waal (@mandyldewaal) Reductive perceptions of Africa persist, but numbers shatter continental clichés. In the next five years, over half the world’s fastest-growing economies will be African.
Egypt’s spiral of despair, the Ebola outbreak in Guinea, sectarian violence in the Central African Republic and terrorism in Kenya. In the ‘man bites dog’ universe of world news, dictators and destruction are the fodder that fuel a hungry global media machine.
But away from the cliché-confirming global media headlines, there’s a different Africa, a continent where the sweet spots emerge. The African Development Bank says that the continent could push for year-on-year growth rates of between 5% and 7% or more, numbers sluggish Western economies would envy.
In the ’90s, the continent’s average GDP growth rate was just over 2% and Africa’s inflation rate was massive — an average of 27% — peaking at over 40% in the mid-’90s. So what’s changed?
One word that describes the difference is China.
African countries, particularly South Africa, Angola, the Democratic Republic of Congo and Equatorial Guinea, have developed massive trade ties with the world’s second-biggest economy, The links here are so strong that economists now say: “If China catches a cold, expect Africa to sneeze too.”
“China has become a major development partner of sub-Saharan Africa. It is now the subcontinent’s largest single trading partner and a key investor and provider of aid,” states global economic think-tank, EcoMonitor, adding: “Growing links with China have supported economic growth in sub-Saharan Africa. But the burgeoning commercial and financial ties between the developing subcontinent and the world’s second-biggest economy carry risks.”
China’s trade with Africa brings growth, but if the East Asian giant contracts, some regions on the continent won’t escape the fallout.
If there’s a slogan Western brands should tattoo on their souls as they seek growth in this emerging market, it is ‘Africa isn’t a country’. Knowing where and how to grow on the market means seeing beyond lazy headlines and assumptive clichés. Nouriel Roubini, one of the world’s most influential economists, warns often of the folly of lumping countries in Africa together. “One definition of an emerging-market economy is that its political risks are higher, and its policy credibility lower, than in advanced economies,” says Roubini. All the more reason not to be reductive.
SA was the continent’s darling in recent decades. Fueled, in part, by the world’s love affair with Mandela and the massive post-apartheid investment influx, the southernmost country on the continent became the America of Africa — the arrogant ‘superpower’. But the tide is turning.
Today, SA is a territory Roubini labels one of his “Fragile Five”. The land of Jacob Zuma is in a class with India, Indonesia, Brazil, and Turkey because, like the others, it has — as Roubini writes — “twin fiscal and current-account deficits, falling growth rates, above-target inflation, and political uncertainty from upcoming legislative and/or presidential elections this year.” Roubini calls SA “over-hyped”and predicts GDP will slow sharply.
What makes sense then is for local brands to look for growth beyond home grounds. SA aside, in its 2013/2014 “Where To Invest In Africa” report, Rand Merchant Bank (RMB) lists the continent’s most-attractive investment destinations as Nigeria, Egypt, Ghana, Morocco, Tunisia, Libya, Ethiopia, Tanzania and Kenya.
Despite what Roubini says, SA is still the most attractive country in Africa according to RMB, but continues to lose ground to Nigeria, the merchant bank’s second most-attractive investment destination in Africa. “Of the 52 African countries ranked, 42 showed an improvement in their investment attractiveness this year,” says Celeste Fauconnier, Africa Analyst at RMB.
Fauconnier says the report shows that sharp improvements were seen in some of the continent’s most-troubled countries such as São Tomé and Príncipe, as well as Gabon, Cameroon, Sierra Leone, the Democratic Republic of Congo, Mauritania and Liberia. “Those slipping backwards include Algeria, Angola and Equatorial Guinea,” she notes.
And what about the land that gave the world Mandela? “South Africa remains Africa’s best investment destination but its attractiveness continues to decline, which implies it’s losing ground on a relative basis as other countries improve,” she adds, and explains that Africa is at a critical point in time when it needs to boost industrial development and curb its infrastructure deficit, if it is to transform its growth spurt into a sustainable trend.
Data shows a new reality but reductiveness is still rampant when it comes to the continent. “Skepticism, and the outdated image of Africa as a poverty-stricken, disease- and conflict-ridden basket case that informs this skepticism, still runs deep,” states professional services firm, Ernst & Young, in it latest Africa attractiveness survey.
“There is, unfortunately, still enough bad news in Africa to reinforce the negative stereotypes,” the survey reads. “The reality of such a vast and diverse continent is that as much as we may want to celebrate the many economic success stories — from Botswana to Mozambique, to Zambia, to Rwanda, to Angola, to Nigeria, to Ghana, and so on — there are also several states that remain fragile.”
In Africa, the progress of the many is undermined by the failures of the few. “It is too often the failures — increasingly the exception rather than the norm — that dominate the news headlines and reinforce outdated stereotypes,” the EY report says, and then adds: “Whichever way one analyzes it, the numbers tell us that a diverse and critical mass of African economies are consistently outperforming those in other, more celebrated regions of the world.”
Pockets of sensation might skew perceptions but the bald numbers will sift sensation from truth. IMF data for 2001 to 2010 shows six out of the 10 fastest-growing economies were in Africa. IMF’s most-recent forecasts show 11 of the world’s 20 fastest-growing economies in the next five years will be African.
Africa’s sun is rising, and rising. All that brands need to know is which countries to grow with.
Mandy de Waal. Curious scribbler. Born-again atheist. Author on training wheels. Thought activist. Amateur human. Collector of stories. Lover of the long form. Consulting editor to MarkLives.com. Editor of Mark Magazine: Africa Dispatches.
— MarkLives’ round-up of top ad and media industry news and opinion in your mailbox every three work days. Sign up here!