Gap between Africa’s perceived, actual risks spells opportunity
29 March 2012
Creamer Media's Engineering News - March 28, 2012
The prevailing gap between Africa’s actual risk and its perceived risk was offering material opportunities for those willing to invest in the continent, which was home to six of the ten fastest-growing economies over the last ten years.
In fact, Frost & Sullivan director of operations for Africa Hendrik Malan argued on Wednesday that the paradigm was shifting from questions about whether or not to invest in Africa, to having to manage the risk of not being invested in Africa.
Addressing a globally broadcast webinar, Malan said that despite the low base, the economic growth experienced by the continent over the past decade had been attractive and also appeared to be more sustainable than in the past.
The ‘new African Story’ was underpinned not only by the extractive industries, but also by rising consumption, a growing middle class, rapid urbanisation and strong infrastructure needs and investment.
But the much-vaunted African renaissance remained nascent and investors still confronted serious obstacles, from corruption and conflict, through to infrastructural deficits and low levels of intraregional trade.
However, those wishing to capitalise on the continent’s potential upside would have to be entrench themselves within the market over the coming 10 to 15 years. They should also seek to localise their operations to cater for the diverse needs and tastes of the citizens in the 54 countries that made up the continent.
Chinese enterprises were doing particularly well in this regard by tailoring their investments to the needs of African governments, often bartering infrastructure investments for a share of Africa’s resources. The financial services sector was also a strong early mover, which was likely to unlock future opportunities.