Over the past few years, Nigeria was seen as a prime investment destination for foreign investment. It was even referred to as one of the last frontiers for economic growth and development. But growth has slowed due to the global economic downturn with fast growing economies on the continent like Ethiopia and Nigeria hit by drought and falling oil prices, respectively. Policies of some governments in Africa have also discouraged investors, making many already in the continent to leave and others who have managed to remain, constantly criticizing governments. But Africa will thrive, says Hennie Heymans, Managing Director of DHL Express Sub-Saharan Africa.
According to him, “The drop in GDP growth for the region over the past year shouldn’t deter investors. Africa will continue to thrive, albeit, at a slightly slower pace as previously experienced.”
The 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.
Heymans notes that 2015 was a rough year for Africa whose economic growth can be likened to that of the global environment which reported growth of 2.4 percent in 2015 (down 0.2% year on year).
“Compounded by a drop in the demand for the continent’s commodities resulting in falling prices, declining currencies, political instability and El Nino causing widespread drought, have all contributed to the region’s challenges. However, despite this, the region remains abound with untapped prospects and offers growth opportunities in 2016 for those willing to seek them out,” says Heymans.
Although the global economic downturn has affected Africa significantly, growing domestic demand as a result of consumption, investment, and government spending is expected to push up economic growth to 4.4 percent in 2016, and to 4.8 percent in 2017, per Acting Chief Economist: World Bank Africa Region, Punam Chuhan-Pole, who authored the latest World Bank’ Africa’s Pulse.
Being a global logistics brand operating in several African countries, DHL’s experience has shown that each country offers unique growth opportunities.
Heymans gives examples of opportunities in some countries in Africa. According to him, Ethiopia’s telecommunications sector is a large contributor to GDP. With a population of more than 90 million, the country can conveniently add to its 40 million mobile subscribers and 10 million internet connections (2015) and increase the sector’s contribution to GDP growth. Similarly, Mozambique’s retail sector could ride on a growing middle class and shopping culture to grow. Rwanda is also growing its technological space as it aims at becoming a regional ICT (Information and Communications Technology) hub. These three countries are not the only ones blessed with opportunities for growth and investments; there are more. However, most of them are hindered by underdeveloped infrastructure and bureaucracy.
“The opportunities are clearly there, it’s all about having a long-term, sustainable focus on the region,” Heymans says.