Post-commodity, there are bright spots for investors in Africa – IHS

Crash in commodity prices has made the need for African countries to diversify their economies more pertinent. But often times, governments have found it difficult identifying the right way to diversify and the right industries to focus on. IHS says African governments should look no further than telecoms, power and transport infrastructure.

“The commodity super cycle may have ended, but there are certainly bright spots for investors across sub-Saharan Africa,” said Natznet Tesfay, director of sub-Saharan Africa analysis at IHS Economics and Country Risk.

Economic diversification and technology’s role as a growth engine are the focus areas for the 2016 World Economic Forum (WEF) on Africa where IHS announced the bright spots for economic diversification.

“There is a lot of buzz at this year’s WEF around how countries can take advantage of new technologies to grow and diversify their economy,” Tesfay said.

He noted that while many African countries aim to transform through the development of manufacturing and service hubs, they have had mixed success in first building reliable critical infrastructure which are key to the growth of the hubs they aim to build. However, he insisted that opportunities abound for investors across the region in key growth industries such as power, renewable energy, transport and logistics, ICT and light manufacturing. This, he suggests can set them on the path to long-term, resilient growth.

According to IHS analysis, Cote d’Ivoire, Tanzania, Kenya, Ethiopia and Rwanda are leading the region with commitment to laying foundational infrastructure to underpin key growth industries.

“Governments with a clear path for investment are already seeing the fruits of their labor,” Tesfay said.

“We see growth of above 6 percent in these countries and we are forecasting growth rates above 4 percent forecast for Tanzania, Kenya and Uganda for the next 10 years.”

Telecoms has strong foundation for growth in East Africa; More than 600,000 people to migrate to key urban areas in Kenya’s Rift Valley 

IHS