Tags: Africa | foreign investment | China

Foreign Investment Key to Growth

By Tuesday, 09 June 2015 03:22 PM Current | Bio | Archive

African leaders are determined to take the continent on a new path, one not likened to the development of any other country or continent. This was the consensus after the 2015 World Economic Forum (WEF) Africa in Cape Town, South Africa.

Many of the speakers at the conference where on the same page, sharing phrases like “let’s stop trying to catch up to the rest of the world,” and “we must find the best African solutions to African problems.”

Solomon Assefa Director of IBM Research — Africa was speaking to the importance of implementing the right technology for Africa to grow and find its own prosperity.

Assefa compared JFK’s vision for America to win the space race in the ’60s to the importance of establishing a bold vision for Africa. He says that Africa needs to get behind this vision and implement in order to stop playing “catch up” and drive the continent to a new level.

The question is does Africa have the means to effect a vision of revolutionary proportions? Can it be done in the next decade? Will it realize an essential value contribution to the global economy and create a better life for its citizens?

The short answer is yes. Here is why.

The EY news organization released a report stating that foreign direct investment (FDI) into Africa will reach $55 billion by the end of 2015. It sounds meager in the grand scheme but it is the second highest FDI on any continent ever. To put it into context, 18 percent of the world’s FDI will be invested into a continent that contributes only 5 percent of the world’s GDP.

Technology has helped many African countries leapfrog fixed line infrastructure and directly adopt mobile systems.

Online education reaches more and more African students every year that otherwise would not have been able to contribute in a professional capacity.

In terms of doing business the World Bank announced that sub-Saharan Africa had more improvements in ease of doing business than anywhere else in the world.

The biggest influencer of Africa’s potential growth is undoubtedly the Chinese. China has stopped building at its usual frantic pace, leaving construction companies out of work. The solution to this is that China has set up a $62 billion African Infrastructure Fund. How it works is that the out of work Chinese construction companies are paid from the fund to build in Africa. African countries are as a result are allowed to pay back China at very low interest rates.

It is apparent that any sort of “Apollo” mission for Africa would rely heavily on foreign investment. Even more apparent is the availability and willingness of foreigners to invest and take advantage of high growth opportunities and tap into a vast new consumer base.

Watch Ashburton’s African investment fund manager Paul Clark, chat to The Money Show's Bruce Whitfield about African solutions to prospective investment on the continent.

Matthew Klynsmith earned a business administration diploma at CTI in Cape Town, South Africa. He now works at Strategic Options as an associate partner. To read more reports from Matthew Klynsmith, Go Here Now.

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African leaders are determined to take the continent on a new path, one not likened to the development of any other country or continent.
Africa, foreign investment, China
Tuesday, 09 June 2015 03:22 PM
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