Pretoria - Prospects for growth in Africa are looking good, with the continent now being better managed, says Reserve Bank Deputy Governor Daniel Mminele.
Africa, which had typically been seen as the dark continent, was doing better, even after the onset of the financial crisis in 2008.
Part of the explanation for Africa’s resilience to the financial crisis was related to the rise in commodity prices, said Mminele, who was speaking at the Institute of International Finance (IIF) Financial Summit on Monday.
“Africa has been increasingly better managed, with the improvements in governance helping to promote an overall conducive environment to growth and development. There has been a steady rise in the contribution of domestic demand to gross domestic product (GDP),” he said.
Many African countries were experiencing a rapid growth in the middle class. Estimates by the African Development Bank (ADB) show that consumer spending by the middle class reached US$680 billion and accounted for 25% of Africa’s GDP in 2008. The figure is projected to reach US$2.2 trillion by 2030.
“On the supply side, the rise of the services sector has been one of the defining characteristics of the structural change in African economies. Telecommunications, banking and the retail sector have been flourishing in many countries.
“This has contributed to the improvement in Africa’s growth prospects, which in turn, has attracted the attention of foreign investors.”
Leaders have also paid attention to growth constraints on the continent, however, infrastructure bottlenecks still persist.
Africa is also seen as an attractive FDI destination by those multinational investor groups that are keen to benefit from the intra-Africa trade opportunities that currently exist.
Investors that already have operations in Africa are looking to expand their footprint on the continent to ensure that they benefit from the favourable growth prospects.
“As expected, multinationals from South Africa have seized the opportunity to expand their production networks across the continent. The number of projects in Africa originating from South Africa has increased by over 500% in the past decade,” said Mminele.
Between 2010 and 2013, South African multinationals made foreign direct investments (FDI) investments in 18 African countries. In 2012, South Africa invested in more new FDI projects in Africa than any other country in the world.
However, the challenge of education and training remained in the pursuit of development on the continent.
Central banks, Mminele said, could make a contribution to growth.
“While most of the structural reform imperatives fall outside the mandate of central banks, I believe that central banks, by keeping inflation in check and creating an environment of financial stability, can make a meaningful contribution.” - SAnews.gov.za
