Potential for investment in Africa? Dubai is looking into it!
The Dubai Chamber of Commerce and Industry, in collaboration with the Economist Intelligence Unit (EIU), has developed a study highlighting economic and investment potential in Sub-Saharan Africa.
Hamad Buamim, president and CEO, Dubai Chamber, said that the Chamber always strives to provide companies and investors with access to studies and research that will help them take informed investment decisions in target markets, namely the African market where the future of business is very promising.
He also highlighted that the increase in economic reforms, rising fiscal spending and ties with fast growing economies in Asia are the main factors supporting the economy in Sub-Saharan Africa; adding that the second Africa Global Business Forum (AGBF) this October, will shed light on the economic and investment realities in Africa. It will also give business leaders and decision-makers from Africa, Dubai and the wider GCC region an ideal platform to discuss business partnerships and opportunities. Buamim further stressed that this study is one in a series of studies on Africa developed by the Chamber, and is aimed at introducing businesses in Dubai to investment opportunities available in the continent. The study further informs that Africa holds 60 per cent of the world’s uncultivated arable land, but remains a net importer of several food products as well as processed foods. Encouraging growth in domestic production and reducing reliance on imports is a key goal to governments and investors. It states that investment opportunities are particularly significant in the telecoms sector. Although there are over half a billion mobile subscribers, most countries are still far from saturation and internet access is still almost non-existent in many countries. The study also emphasises that with the emergence of the middle class, formal retail is starting to develop, offering “value” products aimed at lower income customers while infrastructure needs are enormous, with an estimated $100 billion a year required by the power sector alone.
Focusing on Angola, the study states that high oil prices and increased production are forecast to keep the budget in surplus, with average real GDP expected to grow by 6.7 per cent up to 2017 as FDI inflows have increased in the past few years. Banking has developed rapidly, with a total assets growth of 45 per cent per year. However, the sector remains vulnerable owing to poor supervision and volatile liquidity.
On South Africa, the study states that the country’s business environment is among the most advanced in Sub-Saharan Africa and the private sector is well-established. Banking is well-developed and traditional mobile phone market has reached saturation point. The country remains a key destination for non-oil FDI which exceeded $5 billion. Economic growth is forecast to average 3.5 per cent per year up to 2016. Unemployment, income inequality, skills shortages and loose fiscal policy are key issues.
Nigeria is a strong destination for investments in telecoms and retail due to the large population (20 per cent of the Sub-Saharan population). It is also a key market to multinationals. FDI has exceeded $6 billion mainly in the energy sector. Owing to the investment in oil and gas, the economy will remain robust but will not be sufficient for a sizeable improvement in living standard. Growth is expected to continue until 2017 owing to the investment in the oil and gas sector. Non-oil growth will be robust, led by telecoms, trade and infrastructure. Ghana offers a relatively business-friendly environment, however poor infrastructure remains a major obstacle. Gold and cocoa are the dominant source of exports. Ghana is Africa’s second-largest gold producer and the world’s second largest cocoa producer. For retailers, Ghana has the potential to become the gateway to West Africa’s consumers, with GDP growth that will average 7.5 per cent annually until 2017, driven by the expansion of gold mines and burgeoning oil and gas sector.
On Tanzania, the study states that tourism is a vital source of revenue and the economy remains dependent on agriculture and mining. Real GDP growth is expected to average 7.1 per cent up to 2017, assuming tourism, agriculture, trade and investment pick up while growth in construction will be robust, led by investments in the gas industry and infrastructure projects.
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