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Latest News

23 April 2019
Africa’s New Electoral Playbook

Africa’s New Electoral Playbook

Africa Current Issues Vol. 2019-02

23 April 2019
Africa Digest, Volume 2019-01

Africa Digest, Volume 2019-01

Bi-weekly summary report on the trends and issues in the macro-environment and industry to promote knowledge and raise understanding of business in Africa.

23 April 2019
African SEZs & GVCs in the age of automation

African SEZs & GVCs in the age of automation

Is the African dream of industrialisation via special economic zones (SEZs) hosting global value chains (GVCs) feasible? 

23 April 2019
Nigeria's business prospects, investment opportunities to grow in government's 2nd term

Nigeria's business prospects, investment opportunities to grow in government's 2nd term

Nigeria's President Muhammadu Buhari successfully secured a second term at the helm of Africa's largest economy. Despite the controversial circumstances surrounding the run-up to the February poll, this was a...

23 April 2019
Is Africa the next tourism growth frontier?

Is Africa the next tourism growth frontier?

Summary report of a panel discussion at the Africa CEO Forum, held in Kigali, Rwanda, on 25 and 26 March 2019.

12 April 2019
The Opportunity in Banking Consolidation in East Africa

The Opportunity in Banking Consolidation in East Africa

  The East African banking sector has made significant strides in the past several years. From an industry that was once blamed for its exclusion to now being praised for its...

22 March 2019
Belvie: Establishing a consumer goods business in West Africa

Belvie: Establishing a consumer goods business in West Africa

  BeIvie is a Niger-based non-alcoholic beverages manufacturing and bottling group founded in 2014. This case study looks at how, in a relatively short period, Belvie captured significant market share from...

22 March 2019
Trends and Events in Africa 2018

Trends and Events in Africa 2018

2018 has been an interesting year for Africa, with various events and trends becoming visible. 2016 saw the effects of the slowdown of China’s economic growth due to its rebalancing...

20 March 2019
Nigeria’s Opportunity to Enhance the CFTA

Nigeria’s Opportunity to Enhance the CFTA

  Synopsis: The Continental Free Trade Area negotiations should take the concerns of domestic stakeholders seriously, for its own sustainable development.

19 March 2019
Raising The Steaks: Africa’s booming meat industry

Raising The Steaks: Africa’s booming meat industry

  The rapid growth of meat consumption in Africa will provide attractive opportunities for investors, but making production more efficient, protecting the environment and improving the lot of smallholders, pose many...

05 October 2018
Cover story: Sudan: Lifeline for the banking sector

Cover story: Sudan: Lifeline for the banking sector

  Sudan, one of the largest countries in the heart of Africa, has been struggling to stay afloat economically since the US imposed crippling trade and investment sanctions in 1997. The...

04 October 2018
Involving youth in agriculture in Africa

Involving youth in agriculture in Africa

Africa’s youth bulge presents both an opportunity and a challenge. More must be done to involve youth in agriculture as a means of providing employment, say Johan Burger and MD...

27 September 2018
More Singapore firms venturing into “challenging” Africa

More Singapore firms venturing into “challenging” Africa

It is a “long-term” play, say experts, but there is potential in areas like services, infrastructure

27 September 2018
Manufacturing in Nigeria: Status, challenges and opportunities

Manufacturing in Nigeria: Status, challenges and opportunities

  According to the National Bureau of Statistics (NBS), the Nigerian manufacturing sector is dominated by the production of food, beverages and tobacco, with sugar and bread products generating the greatest...

24 September 2018
Africa Rising will Lift Singapore Boats Too

Africa Rising will Lift Singapore Boats Too

If there is one thing that the recent Africa Singapore Business Forum (ASBF) reminded me of, it is what a polarising prospect the continent remains.

07 September 2018
Unpacking South Korea’s engagement with Africa

Unpacking South Korea’s engagement with Africa

  Following the end of the Korean War in 1953, South Korea prioritised its alliance with the United States in pursuit of economic growth and military security. It took more than...

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Economic trends in Africa
At the end of 2017, and looking forward to 2018/19, the following African countries appeared in the Top 10 Global Economic Growth countries list: Ghana (1st - 8.2%), Ethiopia (2nd - 8.0%), Côte d'Ivoire (4th - 7.2%), Djibouti (5th - 7.0%$), Senegal (8th - 6.9%), and Tanzania (9th - 6.8%). This is a continuation of a trend identified earlier in 2017.

The World Bank identified the Top 10 African Economies in its 2017/2018 Doing Business report. Most of these have made many significant reforms, although some have not.

Mauritius ranks at 25th place worldwide, up from 49th position in 2016/2017. It improved its ranking in eight of the 10 business lifestyle areas given. Rwanda entered in the top 50 countries for the first time, at 41st place (2nd in Africa), compared to being 56th in 2017. It has made 52 reforms over the last decade. Morocco is ranked at 69th position (3rd in Africa). Kenya gained 12 places to 80th position. The improvements are driven by the government and the private sector. It has gained 53 positions over the last three years - a tremendous improvement.

Zambia has gained 13 places to 85th position (7th in Africa). Currently, Zambia has also been listed as one of the world's top 10 economies with the most notable improvements.

However, Botswana moved down from 71st in 2016/2017 to 81st (5th in Africa), caused by a lack of interest in investing in the diamond industry. However, investments in the service sector are expanding rapidly. South Africa dropped from 74th to 82nd (6th in Africa).

Tunisia, ranked 88th (8th in Africa), has dropped 11 places from its spot at 77 in 2016/2017, falling 46 spots in just 7 years. Seychelles is placed in 95th position (9th in Africa), down from 93rd in 2017. Lesotho is ranked in 104th position worldwide and 10th in Africa.

Mauritius has been ranked 1st in Africa for quite a number of years, but its massive jump to 25th in 2017/2018 can be seen as the result of a government and business community determined to make things work. The same goes for Rwanda, Kenya and Zambia.

The sad news appears to be Botswana, South Africa and Tunisia. The latter could blame the Arab Spring of 2011, but it has had a lot of time to restore itself. The most depressing story probably belongs to South Africa. It was ranked at number 28 in 2005/2006. It fell dramatically to 73rd place in 2015/2016; to 74th in 2016/2017 and to 82nd in 2017/2018.

African countries conspicuous by their absence are Nigeria and Egypt, as neither feature in the African Top 10.

Politics and transfer of power
Africa has again seen a number of peaceful transfers of power. Nana Akufo-Addo was peacefully elected as Ghana's President in 2017, in Angola, the transition from the rule of long-term President José Eduardo dos Santos to that of Joāo Lourenço was smooth and in Kenya, a situation that had threatened to turn ugly, was peacefully resolved through some mature leadership by President Uhuru Kenyatta and the opposition, led by Raila Odinga. In Zimbabwe, Emmerson Mnangagwa was recently sworn in as the new president after Robert Mugabe was removed.

Mnangagwa has committed to elections by August 2018. He created positive expectations at the WEF's Davos meeting in January.

Joāo Lourenço is expected to instigate major changes in his economic policy. He is willing to reopen negotiations with the IMF, attract more foreign investors to Angola and develop the business environment, by changing its visa policy, improving governance and diversifying the economic base beyond oil.

On balance, 2017 was a good year for the political environment.

The African motor industry
Africa is the final frontier for the global automotive industry, with enormous growth potential; vehicle sales in Africa are expected to grow by 40% within the next five years.

In Kenya, Mobius Motors are producing low-cost vehicles for Africa's off-road and rough terrain.

VW is hoping to open an auto assembly plant in Rwanda. It recently started production at a low-volume car assembly plant in Kenya. VW's move into "app-based integrated mobility" in Rwanda is significant for two reasons. It's happening in a city in Africa and it's a new business model for future urban mobility. Kenya and Ethiopia, amongst others, have also been targeted by companies such as VWSA (VW South South), Toyota and Kia as a base for vehicle assembly.

VW also wants to link with other German companies to establish a local technical academy, to ease the transfer of technology and skills. The move is also part of Volkswagen's plan to develop markets in Africa. Various French manufacturers have targeted Morocco. Others will also be assembling in countries such as Kenya and Nigeria.

Ethiopia's first engine manufacturing plant, Mekelle Engine Production Factory, will manufacture three types of engines; small, medium, and heavy.

Agriculture
Africa has tremendous potential in the agricultural sector. With 65% of the world's uncultivated arable land, Africa will determine the future of food for the world. However, Africa produces only 10% of the global food output and spends $35bn net annually on food imports. By 2025, this figure will reach $110bn.

AfDB president Akinwumi Adesina recently said its investment in the agriculture sector would rise by 400%, to $24bn over the next decade, as it looks to the industry to create more jobs in the future and to unlock is full potential.

The mechanisation of agriculture is a priority in many African countries as Africa gears up to exploit its potential to become the world's food basket. Currently, its farming system remains the least mechanised of all continents'. Some 70% of farmers cultivate parcels of less than two hectares by hoe. The challenge is to enable smallholder farmers to access equipment like tractors.

The mechanisation of agriculture must address the whole value chain in order to take up the employees that would be otherwise unemployed with the mechanisation drive. Africa cannot afford more unemployment. On the other hand, it cannot ignore the benefits of mechanisation.

China in Africa
With the apparent isolationist approach of the new US President, Donald Trump, and the uncertainty associated with Brexit, Africa will increasingly be looking towards China and other Asian countries.

China is Africa's largest economic partner and its involvement is bigger and more multifaceted than previously suggested. There are over 10,000 Chinese firms operating in Africa; about 90% of these are private firms, with about 33% in manufacture. China's financial flows to Africa are 15% larger than official figures suggest when non-traditional flows are included. There are many economic benefits to Africa from Chinese investments: Job creation and skills development; the transfer of knowledge and new technology; and the financing and development of infrastructure. China is the largest source of infrastructure funding in Africa.

Mining
East Africa as a region seems to be a late entry into the mining sector, with new findings of minerals, gas and oil. This has stood them in good stead as economies have done well, given that they are primarily, but not exclusively, focused on non-commodity factors. While Nigeria and Angola were suffering from the oil price slump, East African countries such as Kenya, Ethiopia, Rwanda and Uganda were experiencing very good economic growth and benefitting from a low oil price.

Ethiopia wants to boost its economy through the development of its mineral resources sector. The government wants to increase the sector's contribution to GDP, from 1.5% currently to 10% by the year 2025.

Kenya recently discovered a rich gold stream. Realizing that Kenya's oil finds have limited potential, it's getting big on minerals. The government believes Kenya is sitting on significant mineral wealth, encompassing gold, diamonds, iron ore, coal and titanium.

The DRC remains one of the most important sources of cobalt, used in the manufacture of mobile phone batteries. Cobalt prices hit a nine-year high in January 2018, at $80,000 per tonne, and although the prices dipped recently, they are still around 60% higher than in March last year.

The article was first published on The New African Magazine in its April 2018 issue. Republished with permission from IC Publications.

The author, Johan Burger, is the director of the NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation. Johan can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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