STRETCH your mind and visualise being in 2050 with Nigeria now the biggest economy in Africa. They have successfully completed the multi-billion dollar Lagos Mega City project and every other African city is now standing head and shoulders with the rest of the world.
Some may immediately dismiss this as wishful thinking but if one is objective enough to assess the global trends the indication is that things are changing. There is a definite shift in the distribution of economic power globally away from the traditional G7 countries.
The growth in the Brazil, Russia, India and China, often referred to as the BRIC countries, is expected to far outstrip that of the G7 countries which are mainly the UK, France, Germany, the USA and Canada among others. According to a Goldman Sachs report the Chinese economy will have overtaken the US as the world’s largest economy by 2050, with the other economies such as India and Brazil being bigger than the likes of France and the UK.
The drivers of the growth in the BRIC countries are mainly domestic demand and reduced vulnerability to global economic conditions. Just a glimpse of the acceleration of countries such as China, shows that currently four of the 10 largest banks in the world are in China. The largest bank in the world by market capitalisation is now the Chinese ICBC with a market capitalisation of over US$240 billion. One of the largest IPOs in the world was also undertaken by Chinese Bank recently, the Agricultural Bank of China which raised US$19,12 billion. The bank has an astounding 24 000 branches, 320 million retail customers and 2,7 million corporate clients. The question to be asked is what are the similarities of this trend to what is happening in Africa?
Globalisation will in future sustain growth in African economies with the increased demand for commodities driving buyers to pay high prices for natural resources the continent is richly endowed with. The return on investment in Africa is also generally perceived to be higher than other markets as there are opportunities in the continent to introduce innovative products (technological catch-up), establish new brands, influence consumer tastes and preferences. The growing urban population in Africa, which is currently at 40% and close to the Chinese level, will also sustain growth going forward. A report by McKinsey which is a global leader in management consultancy projects that the number of households with discretionary income in Africa is expected to rise by 50% over the next 10 years, reaching 128 million. By 2030, the continent’s top 18 cities could have a combined spending power of US$1,3 trillion.
The industries which will obviously benefit will be the consumer focused ones, agriculture and infrastructure. The growth evident in countries such as Angola supports this argument with need to invest heavily in infrastructure after years of conflict. The economy has also been growing rapidly due to oil revenue which in turn has also supported other sectors. The telecoms sector has also seen rapid growth with the continent having the fastest growing mobile phone market in the world. Only 6% of African citizens owned a mobile phone in 2004, which has provided a huge potential as prices for both handsets and tariffs came down. Other more developed markets run the risk of reaching saturation soon thus presenting an opportunity for Africa. From a subscriber base of only 16 million across the continent in 2000 this number has increased to over 500 million currently, according to Ericson.
If we bring the analysis back home, Zimbabwe, given the right economic and political environment, can easily regain the past glory. The re-emergence of the middle class and an educated workforce gives the country the scope to become one of Sub-Saharan Africa’s key economies. The country’s story has been told time and time again that it does not require repeating. To take a cue from the recent World Cup song—we can only conclude that “Waka Waka… IT’S TIME FOR AFRICA”.
By Precious Mhlandhla