Long Term Economic Growth Prospects For Africa

By M. Isi Eromosele

The key reasons for Africa’s recent growth surge are improved political and macroeconomic stability and microeconomic reforms. In several African countries, catastrophic civil wars were stopped, creating stable environments necessary for sustained economic growth.

The economies of Africa have grown healthier as governments worked hard to lower inflation, cut foreign debt and shrink current account deficits. African governments have increasingly adopted policies that encourage free market practices.

State-owned enterprises have been privatized, trade barriers have been reduced, corporate taxes have been cut and regulatory systems have been strengthened. The above crucial steps have enabled a strong private sector to emerge and prosper.

Accumulatively, these structural changes has fueled exponential growth in African productivity which has enabled many companies to achieve greater economies of scale, increased capital investment as well as become more competitive on a global basis.

Future Economic Prospects

At Oseme Consulting, we believe Africa’s long-term growth prospects are strong, fueled by external trends in the global economy and internal changes in the continent’s societies and economies.

As global demand for natural resources such as oil, natural gas, minerals and other natural resources continue to grow; Africa’s profits will continue to rise. Africa is blessed with extraordinary abundance of untapped riches, including 10 percent of the world’s known oil reserves, 40 percent of its gold and 85 percent of the earth’s chromium and platinum group metals.

The global demand for raw materials keeps growing rapidly, especially in the world’s emerging economies of Asia, whose trade with Africa has quadrupled in the past ten years. African governments are implementing new variances of economic partnerships with viable companies as well as other governments, even as the global economy experience new shifts and trends.

These new types of mutually beneficial partnerships require these companies and governments to provide up-front payments, make infrastructure investments and share management skills and technologies. Foreign direct investment in Africa has increased from $9 billion in 2000 to $82 billion in 2010.

Long-term growth in Africa reflects interconnected social and demographic trends that creating new opportunities for domestic growth. In Africa, there has been an incredible rise in urbanization around the continent’s metropolitan areas.

Another key element that has contributed to Africa’s growth is the continuing rise in its middle-class consumers. In today’s Africa, urbanization levels are close to China’s and greater than India’s.

At this time, 40 percent of Africans live in the cities of the continent and this will continue to grow. As more educated Africans move to the cities, their income are rising. The number of Africans with discretionary incomes will rise by 40 percent within the next decade.

Africa’s labor force is correspondently increasing. As universities proliferate throughout the continent, more of its young people are getting well educated and gaining more relevant business and technical skills.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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