Sub-Saharan Africa is weathering the global downturn better than most other parts of the world and is projected to grow by 3,8% and 4,5% this year and next year respectively, faster than Latin America, Europe and Central Asia.
This was according to influential global management consultancy McKinsey ‘s latest research report, McKinsey on Africa, which punts the region as a growing recipient of foreign direct investment.
Better political and macroeconomic stability, a strengthened political commitment to private sector growth, and increased investment in infrastructure and education had made the growth possible. However, last month the World Bank highlighted that the biggest constraints on companies operating in SA, the continent’s largest economy, were crime and corruption.
In contrast, the McKinsey report indicated that fiscal soundness and monetary discipline were increasing, while sovereign credit ratings in parts of the continent enjoyed a positive outlook, and debt as a share of exports had declined dramatically to levels comparable with other regions.
“Most encouraging of all is that the region is continuing to reform through difficult times.
“There is a broadly shared conviction among sub-Saharan leaders that sustained growth will only come from the private sector and increased integration with the global economy,” the McKinsey report said.
The region had almost tripled its export levels and diversified its trade and investment partners since 1990.
Chinese imports alone from sub-Saharan Africa increased to more than 13bn from 64m, while the combined share of the region’s exports fell to 49% from 73%.
Direct foreign investment in sub-Saharan Africa grew for eight successive years. In one decade, the region’s mineral fuel exports rose to 96bn from 11bn.
“Today, sub-Saharan Africa is not only a major supplier of natural resources, but also the region with the greatest potential for new discoveries.”
The region was positioned for developing solar and hydroelectric energy, as well as the production of biofuels, the report indicated.
It had the capacity to feed its growing population as well as meet the burgeoning demand for food and other agricultural products in other markets.
More than 65% of people in the region lived within reach of a wireless network, up from less than 1% a decade ago.
“While great progress has been made in improving access to the information and communications infrastructure in many countries, much less effort has been made to exploit its potential to transform others sectors,” the report said.
The United Nations predicted that the proportion of sub-Saharan people living in urban areas in sub-Saharan Africa would double to 67% by 2050 from 35% in 2005, with significant implications for productivity, growth and demand.
As labour costs increased in China, the competitive advantage it enjoyed in manufacturing was likely to shift to sub-Saharan Africa.