Africa’s economy is projected to continue growing at between 2% and 3% above the global average over the next five years, helping it retain its position as one of the key emerging markets for 2015.
However, competition from other emerging markets across the globe would continue to increase.
Speaking at a Johannesburg Chamber of Commerce and Inudstry presentation in Johannesburg, Gordon Institute of Business Science (GIBS) dynamic markets centre director Dr Lyal White cited five “drivers and shapers” of the continent’s future growth, as identified in the GIBS 2015 Dynamic Market Index (DMI).
These included elections; commodity prices; terrorism and insurgencies; Ebola; and the end of the Millennium Development Goals and the introduction of Sustainable Development Goals. “[This year] is a very important year for Africa. . . [as] we are starting to see these countries are developing their own agendas, [which] is very positive. But it has to be done in a progressive way and one that will deliver the right areas of growth and development,” he said.
However, while sub-Saharan Africa’s growth had outstripped global growth for the past 15 years, this has slowed down somewhat, owing to a number of challenges, including the drop in commodity prices.
The DMI measured the performance and progressive change of the institutional structure and economic capabilities of countries. Specifically, the GIBS DMI was the end result of a study that assessed countries’ institutional evolution and measured how countries were performing in terms of developing competitive business and living environments across political, social and economic spheres.
Further, the DMI assessed and compared institutional change and its underpinning contribution to economic dynamism.
Meanwhile, White cited a study by political scientist Ian Bremmer that showed that there were seven emerging countries that had higher growth rates than any other country in the world. These were India, Columbia, Indonesia, Poland, Malaysia, Mexico and “surprisingly” Kenya.
“Kenya, in terms of perceptions, is a very important country on the continent; it has, since 2007, put in place a number of reforms to build competitiveness. However, it doesn’t come out very well when you look at the data behind industry and comes out poorly in [the DMI], but what you find on the ground is that there is [an entirely] different sentiment.”
White said these countries did not have extravagant growth rates and were not at the forefront of strategic investments, but they were dynamic.
Further, he noted that there was increased modernisation in these countries’ economies, which have also not relied entirely on commodities for economic growth. “These countries, besides others, are going to outperform the Brazil, Russia, India, China and South Africa (Brics) [grouping] – the previous high-flyers in the emerging world,” he believed.
White further noted that many companies and countries were wondering if the Brics economic grouping was coming to an end. “It isn’t the end of Brics per sé, but it is time that we start looking at the next tier of development”, which included the seven economies in Bremmer’s study.
“The story about emerging markets isn’t about this year, it is about long-term prospects and that is what we should be looking at, more so than anything else,” he noted.