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Over the past two decades, Africa has been home to the fastest-growing economies in the world and is ripe for global and local business investment. In his new book, Unlocking Africa’s Business Potential: Trends, Opportunities, Risks, and Strategies, Thunderbird professor, Landry Signé shares his optimism for sustained growth in Africa as he examines economic, business and investment issues and discusses the growth trends and drivers.
“By 2030, Africa will have 1.7 billion people and a combined consumer and business spending of $6.7 trillion.” ~ Thunderbird professor Landry Signé - Click to Tweet
A number of growth trends back Signé’s great optimism for Africa. For one, entrepreneurs, executives and investors watching Africa can expect to see a rapid growth in population and spending across the continent. “By 2030, Africa will have 1.7 billion people and a combined consumer and business spending of $6.7 trillion,” said Signé.
In particular, Signé says we can expect to see an increase in Africa’s middle-class population and an increase in household consumption and sustained business spending. “Current economic growth and poverty-alleviation efforts mean that more than 43 percent of the continent's people will reach middle- or upper-class status by 2030.” That’s three times more people than in 2015.
This income growth and the increased percentage of citizens with disposable income, Signé pointed out, “has been attracting foreign investment and major finance players” which is contributing to the rapid growth of African cities. “By 2030, Africa will have 17 cities of more than five million inhabitants – up from about six a few years ago – in addition to five cities of more than 10 million inhabitants, in comparison to about three in 2015.” Because of this shift, many businesses and entrepreneurs are switching their investment focus from countries to cities.
We’re also seeing a rise in ‘industries without smokestacks’ – for example, agroindustry and horticulture, tourism, Information Communication Technology-based business services (ICT), as well as transport and logistics. These sectors grew six times faster than traditional manufacturing between 1998 and 2015. “These are critical areas, and they have the same type of characteristics as traditional manufacturing in terms of exportability, trade-ability, the absorption of moderately-skilled workers, and high productivity,” said Signé. Growth in these industries will create many jobs, especially for young people and women, who make up the majority of Africa’s population.
“Political stability, resilience and innovation are key drivers to sustainable growth in Africa.” - Click to Tweet
There are many factors driving growth in Africa. A particularly important one is increased political stability. “In the late 80s, most African countries were led by unaccountable leaders,” said Signé. “Not only are we now seeing a tremendous rise of accountable leaders, we’re also seeing African citizens demanding accountable, effective leadership.”
Another driver of growth is resiliency. “Despite the short-term impact of the COVID pandemic, African economies have demonstrated relative resilience,” said Signé. Some African countries, including Rwanda, Ethiopia and Morocco, have increasingly implemented pro-growth policies, and have improved the ease of doing business, governance and effectiveness.
“Despite the short-term impact of the pandemic, African economies have demonstrated relative resilience.” ~ Thunderbird professor Landry Signé - Click to Tweet
Readiness to benefit from the Fourth Industrial Revolution is another contributor to growth and resiliency in Africa. With the 4IR, Africa has the innovations to unlock many resources and agricultural wealth. “Africa has 60 percent of the world's unused arable land, so there are tremendous opportunities, especially in coastal countries,” Signé said. “The combination of these factors has not only enabled growth over the last couple decades but will help African economies to grow through and after the pandemic.”
Signé knows there will be many growth narratives post-pandemic, but firmly believes that Africa’s economies will rapidly grow into their potential. Businesses, investors and entrepreneurs would be wise to keep Africa in mind.