Given the recent economic downturn and headwinds that the continent is experiencing- is Africa still offering opportunities to investors?
DHL has said that Africa still is one of the last frontiers for growth, and predicts that the region will “continue to grow as it has over the past decade due to the vast number of unexploited opportunities available for local and foreign investors”.
At the beginning of the year, World Bank’s January 2016 Global Economic Prospects reported that Sub-Saharan Africa’s real Gross Domestic Product (GDP) grew at its lowest rate since 2009 in 2015 with a growth of a 3.4 percent. This was down from the 4.6 percent and 4.9 percent growth that was reported in 2014 and 2013 respectively.
But Hennie Heymans, Managing Director of DHL Express Sub-Saharan Africa is optimistic of a better economic progression.
“The drop in GDP growth for the region over the past year shouldn’t deter investors,” he said adding that the continent will continue to thrive, albeit, at a slightly slower pace as previously experienced.
The economic slowdown experienced last year was as a result of compounded challenges including the drop in the demand for the continent’s commodities resulting in falling prices, and declining currencies. Political instability and El Nino which caused widespread drought were also major contributors to the drop.
Heymans noted that despite all these challenges, “the region remains abound with untapped prospects and offers growth opportunities in 2016 for those willing to seek them out.”
DHL’s positive outlook for Africa in 2016 and the coming year has been supported by the latest World Bank Africa’s Pulse which posited that: “The good news is that domestic demand generated by consumption, investment, and government spending will nudge economic growth upwards to 4.4 percent in 2016, and to 4.8 percent in 2017.”
According to the report, some specific regions like Cote d’Ivoire, Ethiopia, Mozambique, Rwanda, and Tanzania were listed as countries expected to sustain a growth of about 7% per year in 2015 throughout to 2017. This, the report said was due to large-scale investment into energy and transport projects, consumer spending, and investment in the resource sector.
Each country offers unique investment opportunities
DHL advised investors to enter each economy with an open mind and explore the unique opportunities.
While in Ethiopia investors can tap into the telecommunication sector which is growing rapidly, in Mozambique, the retail sector is offering huge opportunities, Heymans said adding that the latter has a growing middle class and shopping culture and with a limited availability of common products, this sector offers opportunities for both small and large businesses.
On the other hand, Rwanda’s ambition to become a regional Information and Communications Technology (ICT) hub, creates an insatiable market for communication devices and ICT-related equipment.
Although, there are great opportunities in the continent, Heymans underpinned that underdeveloped infrastructure and bureaucracy are some of the bottlenecks hindering swift growth. He pointed the case of Madagascar which could be a “potentially lucrative opportunity for investors due to the country’s coal, nickel and ilmenite resources, however, several legislative reforms are still needed.”
“The opportunities are clearly there, it’s all about having a long-term, sustainable focus on the region,” he concluded adding that the logistics company will continue to pursue the ultimate goal of seeing Africa thriving.
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