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How Africa is Becoming the New Asia
February 19, 2010

China and India get all the headlines for their economic prowess, but there's another global growth story that is easily overlooked: Africa. In 2007 and 2008, southern Africa, the Great Lakes region of Kenya, Tanzania, and Uganda, and even the drought-stricken Horn of Africa had GDP growth rates on par with Asia's two powerhouses. Last year, in the depths of global recession, the continent clocked almost 2 percent growth, roughly equal to the rates in the Middle East, and outperforming everywhere else but India and China. This year and in 2011, Africa will grow by 4.8 percent—the highest rate of growth outside Asia, and higher than even the oft-buzzed-about economies of Brazil, Russia, Mexico, and Eastern Europe, according to newly revised IMF estimates. In fact, on a per capita basis, Africans are already richer than Indians, and a dozen African states have higher gross national income per capita than China.

More surprising is that much of this growth is driven not by the sale of raw materials, like oil or diamonds, but by a burgeoning domestic market, the largest outside India and China. In the last four years, the surge in private consumption of goods and services has accounted for two thirds of Africa's GDP growth. The rapidly emerging African middle class could number as many as 300 million, out of a total population of 1 billion, according to development expert Vijay Majahan, author of the 2009 book Africa Rising. While few of them have the kind of disposable income found in Asia and the West, these accountants, teachers, maids, taxi drivers, even roadside street vendors, are driving up demand for goods and services like cell phones, bank accounts, upmarket foodstuffs, and real estate. In fact, in Africa's 10 largest economies, the service sector makes up 40 percent of GDP, not too far from India's 53 percent. "The new Africa story is consumption," says Graham Thomas, head of principal investment at Standard Bank Group, which operates in 17 African countries.

Much of the boom in this new consumer class can be attributed to outside forces: evolving trade patterns, particularly from increased demand coming out of China, and technological innovation abroad that spurs local productivity and growth like the multibillion-dollar fiber-optic lines that are being laid out between Africa and the developed world. Other changes are domestic and deliberate. Despite Africa's well-founded reputation for corruption and poor governance, a substantial chunk of the continent has quietly experienced this economic renaissance by dint of its virtually unprecedented political stability. Spurred by eager investors, governments have steadily deregulated industries and developed infrastructure. As a result, countries such as Kenya and Botswana now boast privately owned world-class hospitals, charter schools, and toll roads that are actually safe to drive on. A study by a World Bank program, the Africa Infrastructure Country Diagnostic, found that improvements in Africa's telecom infrastructure have contributed as much as 1 percent to per capita GDP growth, a bigger role than changes in monetary or fiscal policies. Shares of stocks in recently privatized local airlines, freight companies, and telecoms have skyrocketed.

Entrepreneurship has increased at the same time, powered in part by the influx of returning skilled workers. Just as waves of expats returned to China and India in the 1990s to start businesses that in turn attracted more outside talent and capital, there are now signs that an entrepreneurial African diaspora will help transform the continent. While brain drain is still a chronic problem in countries such as Burundi and Malawi—some of the poorest in the world on a per capita basis—Africa's most robust economies, such as those in Ghana, Botswana, and South Africa, are beginning to see an unprecedented brain gain. According to some reports, roughly 10,000 skilled professionals have returned to Nigeria in the last year, and the number of educated Angolans seeking jobs back home has spiked 10-fold, to 1,000, in the last five years. Bart Nnaji gave up a tenured professorship at the University of Pittsburgh to move back to Nigeria in 2005 and run Geometric Power, the first private power company in sub-Saharan Africa. Its $400 million, 188-megawatt power plant will come online this fall as the sole provider of electricity for Aba, a city of 2 million in southeast Nigeria. Afam Onyema, a 30-year-old graduate of Harvard and Stanford Law, turned down six-figure offers in corporate law to build and run a $50 million state-of-the-art private hospital with a charitable component for the poor in southeast Nigeria.

Many experts believe Africa, with its expansive base of newly minted consumers, may very well be on the verge of becoming the next India, thanks to frenetic urbanization and the sort of big push in services and infrastructure that transformed the Asian subcontinent 15 years ago. Just as India once harnessed its booming population of cheap labor, Africa stands to gain by the rapid growth of its big cities. Already the continent boasts the world's highest rate of urbanization, which jump-starts growth through industrialization and economies of scale. Today only a third of Africa's population lives in cities, but that segment accounts for 80 percent of total GDP, according to the U.N. Centre for Human Settlements. In the next 30 years, half the continent's population will be living in cities.

Nowhere is this relationship between the consumer class and urbanization more apparent than in Lagos, Nigeria, a megalopolis of 18 million that has the anything-goes pace of a Chongqing or Mumbai. On Victoria Island, the city's commercial center, real estate is as expensive as in Manhattan. Everywhere you look, there is construction: luxury condos, office buildings, roads, even a brand-new city nearby being dredged from the sea that will hold half a million people. "Everything is in short supply, so everything's a high-growth area," explains Adedotun Sulaiman, a venture capitalist and chairman of Accenture in Nigeria. "In terms of opportunities, it's just mind-blowing." Aliko Dangote, Africa's richest black entrepreneur, has also cashed in on this consumer culture, with a net worth of $2.5 billion, according to Forbes. His empire, which began in 1978 as a trading business that imported, among other things, baby food, cement, and frozen fish, is focused on Nigeria's burgeoning domestic growth, producing cement for shopping and office complexes; renting luxury condos; making noodles, flour, and sugar; and now expanding into services such as 3G mobile networks and transportation. "There's nowhere you can make money like in Nigeria," says the 53-year-old Dangote. "It's the world's best-kept secret."

Not anymore. A recent study by Oxford economist Paul Collier of all 954 publicly traded African companies operating between 2000 and 2007 found that their annual return on capital was on average 65 percent higher than those of similar firms in China, India, Vietnam, or Indonesia because labor costs are skyrocketing in Asia. Their median profit margin, 11 percent, was also higher than in Asia or South America. African mobile operators, for instance, showed the highest profit margins in the industry worldwide. As a result, foreign multinationals like Unilever, Nestlé, and Swissport International report some of their highest growth in Africa. So even as foreign direct investment fell by 20 percent worldwide in 2008, capital in-flows to Africa actually jumped 16 percent, to $61.9 billion, its highest level ever, according to a report by the Organization for Economic Cooperation and Development. Even Chinese companies are thinking of outsourcing basic manufacturing to Africa. The World Bank is now helping China set up an industrial zone in Ethiopia, the first of perhaps several offshore centers akin to the sprawling free-trade zones that opened up China's economy in the 1980s.

Still, Africa remains at the very frontier of emerging markets. Despite its gains, the difficulty and cost of running a business there are the highest in the world, according to data from the International Monetary Fund. Couple that with pervasive corruption—Transparency International calls the problem "rampant" in 36 of 53 African states—and it's no wonder Africa is often regarded as a toxic place to operate. But World Bank president Robert Zoellick says that in the aftermath of the economic crisis, long-term investors have recognized that "developed markets have big risks too." Like China and India, Africa is exploiting that fact, and perhaps more than any other region it is illustrative of a new world order in which the poorest nations will still find ways to steam ahead.



http://www.newsweek.com/2010/02/18/how-africa-is-becoming-the-new-asia.html
 

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Lots of nonsense there though. Africa grew the strongest in 2009 outside China and India? What about Indonesia? What about Vietnam? Bangladesh? And plenty of smaller countries as well.

Africa will grow 4.8% for 2010, which we are led to believe is the highest in the world outside Asia? Dozens of countries outside Asia will grow faster than that.

The domestic market in Africa is the largest outside China and India? How do they figure that out? One thing is the wrong notion that Africa should somehow be treated as a single market, while other regions or continents should be treated seperately, the other thing is that it is just plain wrong.
 

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Africa is far away from achieving another Asia.

Not only are the growth rates less, but there is still a failure of growth in the manufatcuring sector which is imperative for economic remodelling and employment.

What IS happening, is that many countries of Africa are becoming not the "New Asia" but the "New Latin America". I see worrying signs of increase social segragation, gated communities, and violent robberies in many cities on the continent.

This is not surprising because a lot of the growth that has been seen in Africa is not in labour-intensive manufacturing sectors. People are moving from the rural areas to the urban areas, but there are no jobs for them in the cities either!

so you have hundreds of thousands of formally unemployed young men who see crime as a viable option to "social mobility".
 

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Discussion Starter · #6 ·
Has Africa's manufacturing revolution started?
While most developing regions were laying the foundations of a manufacturing-driven economy, Africa continued to rely on the export of low-value raw materials. But it now seems that the trend is changing and local value addition is increasing - from cutting and polishing diamonds to exporting finished manufactured products. Sarah Rundell reports.

Eurostar, an Indian-owned diamond trading and cutting company, is one of the latest businesses to open a factory in Botswana; it cuts and polishes diamonds in the capital Gabarone. Botswana accounts for an estimated 27% of global diamond production, but until recently the delicate art of polishing and cutting happened overseas. Although Africa is home to five of the top seven global diamond producers, the bulk of exports remain rough or uncut stones.

But this is changing as a new trend begins to take root. Over the span of a few years, 16 factories, like Eurostar, have set up in Botswana while six have sprung up in Namibia. It is the beginning of a new industry, adding value to gems back home. Botswana now competes with manufacturing centres such as India, which employs one million people in the polishing business, and can now add around 40% to the value of its sparkling export. "They are taking the rough diamond and turning it into a finished product. This way Botswana is able to compete with other polishing centres and it has created a whole new industry," says Mervin Lifshitz at the Botswana Diamond Manufacturers Association.

Botswana's burgeoning diamond-polishing industry is indicative of a wider effort across the continent to add value back home and boost Africa's own manufacturing sector. Economists have said for years that without a strong manufacturing industry - South Africa has the most vibrant - countries will struggle to reduce the cost of manufactured imports, create jobs and accelerate industrialisation.

How healthy is Africa's manufacturing sector?

Companies say power supply is the biggest challenge. The World Bank's December 2009 Kenya Economic Update estimates domestic manufacturing loses almost 10% in potential sales due to power outages and transport bottlenecks. It is making Kenyan goods uncompetitive, warns Betty Maina at the Kenya Association of Manufacturers (KAM). "With energy cost constituting over 40% of total manufacturing costs, Kenya's products are increasingly finding it difficult to compete with those from other countries, especially Asia," she says.

It is a similar story in Nigeria, where companies rely on their own generators. This helps ensure power supply but the cost is unbearable for many, causing factories to close or temporarily shut and lay off staff, says Alhaji Bashir Borodo, the president of Nigeria's Manufacturers Association.

"Manufacturing is dying in Nigeria because of the power supply," bemoans Lagosian entrepreneur Seyi Boroffice. "The government still believes it can fix the problem but it has to be driven by the private sector."

It is a call being answered. Nigerian energy firm Oando has invested Ni6bn ($i04.6m) through its subsidiary Gaslink in iookm of distribution pipeline to service over 90 customers in Lagos's industrial centres. It is part of an overall massive investment to provide Nigeria's industrial and commercial centres with a reliable and cheap fuel option, the company says.

In South Africa, where state-owned power utility Eskom produces 90% of its electricity supply from coal-fired power stations and struggles to meet demand, companies say they are exploring other power sources. A near-collapse of the grid in January 2009 shut the country's gold and platinum mines for five days and sent metals prices soaring.

The recession has not helped manufacturers. Inflation and consumer belt-tightening has led to increased competition from cheaper imports. Mohit Manglani, president of the Carpet Manufacturers Association of Nigeria urges the importance of buying local: "It is the only way to encourage manufacturers to continue to produce high quality and affordable carpets in this country. Patronising locally made carpets will save the country foreign exchange as well as create job opportunities. We believe in the Nigerian manufacturing sector and we encourage more consumption of locally made carpets," he says.

Local brands thriving
Domestic demand is fuelling new industries. Lagos-headquartered mattress maker Mouka says sales grew by 40% in 2007 and 50% in 2008 on the back of Nigeria's growing middle class and lifestyle changes. The manufacturer has three factories around the country and employs around 600 people producing foam mattresses, pillows and foam material for industrial use. Manglani says carpet manufacturers in Nigeria have invested over N5bn ($33m at today's exchange rate) in the industry in the last two years in state-of-the-art machinery and technology in response to domestic consumer demand.

Manufacturers with strong brands are thriving, argues African equity analyst Christopher Hartland-Peel at investment banking boutique Exotix. Strong sales for Nigeria Stock Exchange-listed (NSE) manufacturers of soaps and beauty products - such as PZ Cussons Nigeria, Unilever as well as GSK Consumer Nigeria (part of GlaxoSmithKline and makers of brands including Aquafresh toothpaste), prove it. "Multinationals play a big part in the domestic manufacturing sector," says Hartland Peel. "They have introduced low-cost manufacturing of valueadded products based on very strong domestic demand."

Industry research group Canadean says Nigeria is one of the top 10 fastest-growing drinks markets in the world. British drinks company Diageo manufactures and sells more Guinness in Nigeria than in any other country apart from Britain.

But it is not just foreign manufacturers that are doing well. McDonald's-style fast food chain, Mr Biggs, part of NSE-listed United Africa Company of Nigeria, has grown from io outlets to 125 in 10 years.


Breweries are amongst the strongest exporters. Kenya's East African Breweries exports its Tusker brand to markets in the UK, US and Japan. Its bottling plant exports 15-20% of production regionally.

Also in East Africa, Nairobi-listed Bamburi Cement, Athi River and East Portland Cement export 15% of their products overseas. Flower producers add value selling readymade bouquets to Europe and to new markets in Australia, Japan, Russia and America, says the Fresh Produce Exporters Association of Kenya.

Regional exporters will get a leg-up from the East African Community Customs Union due on stream in July 2010. Tanzania, Kenya, Uganda, Rwanda and Burundi will all allow the free movement of goods, services, people and capital within the bloc. This will offer the region's manufacturers enlarged market size, economies of scale and increased intra-regional trade.

However, protectionism is stili a worry. Governments such as Uganda have already given in to internal pressures to protect their industries from imports to save jobs. Kenyan firms say they struggle to sell processed animal products and galvanised iron sheets into Uganda for example. Nevertheless, the union will enable manufacturers to target crucial regional markets, says KAM's Maina. "Last year, Kenya's exports to Africa accounted for Kshi24bn ($1.6bn) compared to $9om earnings from Europe. The value of exports to Uganda alone topped $42m - less than half of the earnings received from exports to Europe."

Expanding manufacturing base

China is also investing in Africa's manufacturing sector, relocating factory work such as toy and shoe making from China to start-up projects in Zambia, Nigeria, Mauritius and Ethiopia in special economic zones.

During the February African Union summit in Ethiopia, the World Bank's president, Robert Zoellick promised to back African manufacturing with expertise and cash. "If you look back at the growth of East Asia, starting with Japan, and then Korea and Taiwan and Southeast Asia and China, they've used the model of basic manufacturing to slowly move up the value-added chain." He said that the World Bank would look for opportunities to co-invest and build infrastructure with China.

Africa's manufacturers say governments need to do more. Tokunbo Talabi, managing director of Lagos-based Superflux International that makes envelopes, wants the government to support businesses through tax breaks and incentives. "I don't think the Nigerian government values Nigerian companies enough. It feels to us like they are happy for a foreign company to come over here and take away our business rather than to support domestic business."

Red tape and hidden costs are a common complaint. The Manufacturers Association of Nigeria cites a recent hike in shipping costs by the Nigerian Ports Authority as an example.

For other manufacturers, like Botswana's new diamond polishing and cutting factories, staff training is the biggest challenge. "Investors have to put lots of time and money here," says Lifshitz.

Despite the obstacles caused by inadequate infrastructure, high transport and production costs, red tape and the lack of skills, manufacturing in Africa is still profitable thanks to a huge domestic market and a growing export market. Africa will only really begin to move towards prosperity if and when its manufacturing output matches that of the strong emerging markets. Has the process started in earnest?

Africa's manufacturers need the support of local consumers to build their businesses.

Africa will move towards prosperity when its manufacturing output matches that of the strong emerging markets
SIDEBAR

Betty Maina (right) says Kenya's regional exports outstrip those to Europe.



Domestic manufacturing loses almost 10% in potential sales due to power outages and transport bottlenecks
SIDEBAR

Africa's manufacturers need the support of local consumers to build their businesses.

Africa will move towards prosperity when its manufacturing output matches that of the strong emerging markets

http://www.allbusiness.com/economy-economic-indicators/economic-indicators/14104948-1.html
 

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Sorry, I'm too lazy to read everything. Although many experts believe/think Africa is on the verge of becoming the next India (Asia.)" For me, I think Africa is far from that!
 

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Discussion Starter · #8 ·
Industrial Revolution going on in Africa.
Some people don't know that their is a begin of an Industrial Revolution going on in Africa. A lot of countries are starting to build their industry.
For example in Nigeria they now manufacture their own car parts, part of motors and in 5 years they will build for 100% their own motors.
A lot of western products are been copied. The same what happend 20 years ago in China before their Industrial Revolution is now happening in Nigeria.

Quote:
Western scientists confirm the beginning of an industrial revolution in Nigeria. For example in the city Nnewi, 300 kilometres at south of the capital Abuja, their are more then thirty industrial companies who are making car components. On average each company has a small hundred employees in service.

Industrial revolution: African tigers


Les Celliers de Meknes is one of the many industrial companies in Morocco. The firma is owned by Brahim Zniber, who produces especially foods: soft drink, cattle fodder, vegetable oil, textile. Also car components ' The industrial revolution in Morocco stands in the start block-systems

The industrial revolution in Morocco is beginning to start' , according to Bouchaara . ' Except local companies also the foreign investments are growing . Renault builds in Tanger one of the largest car factories in the world. Within ten years our economy is at the level of Spain.' The infrastructure has improved enormously. We have recently a fantastic new motorway from Tanger to Marrakesh. ' Morocco is not the only country in Africa where the industry is starting to begin. Except in a number of other countries in North Africa industrial companies are also strong in rise in particularly Nigeria, Ghana, Ethiopia, Sudan, Mozambique and South Africa. In Nigeria much industrial companies rice slowly from a deep valley. Because of the enormous income from the oil-export other sectors were neglected for decades. The current government tries to change this . Johnny Ekewuba, marketing manager of the Nigerian Ibeto Group. Its company, that especially manufacters car components . ' We grow 5% a year. The products of the Ibeto Group still remain cheap. A set of their brake block-systems costs 300 naira or less than two euro, what ten times are cheaper than in the Netherlands. The beto Group even already started to exports components to the foreign countries. In neighbouring countries Cameroon and Niger Nigerian car absorbers, oil filters and brake block-systems from Nigeria are evrywhere . ' Also we export to India and Great-Britain.'


African economies grew the previous time more strongly than economies in Europe. Except with the industry also companies in the agrarian, financial sector and communication . The coming years the economies are expected further to increase.



Of lot of influential improvements have taken place the previous years in Africa, like the extension of mobile network . In a large number African countries the network were build by the Sudanese businessman Mo Ibrahim, director of Celtel. ' Western investors claimed that it was risky to invest in Africa ' , says Ibrahim : ' I found that fear exaggerated and decided to show that they were wrong.' Good telecommunication is very important for companies. Cable phones in Africa have always had problems ' , thus Ibrahim. ' A connection was expensive, there were technical problems'. Current mobile network is, however, more reliable.' Also Internet has come thanks the mobile network for much more Africans available. Cell Celtel was a huge success., in 2006, he sold his company to an investor in Kuwait, and the the name was changed in Zain. Ibrahim got 3.5 billion dollar,and is now one of the richest Africans in the world. Ibrahim is now seeking to invest in other things ' The foodstuff industry in Africa has huge potential'
 

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This is the 2nd newsweek article that I've seen praising African development. Nothing wrong with that though.

All of this is somewhat believable, and I fully agree that manufacturing will take off soon. Power supply has been the biggest hurdle in most countries, and once this is overcome then the sky is the limit. I'm actually placing my bets on Nigeria becoming one of the continent's first industrial giants. But unlike Asian nations, when manufacturing takes off in Africa it should be led by local companies, not large multinationals looking for cheap labor. I am sure they will come, and them being there would obviously benefit the development of industry sector, but in the long-run what African manufacturing needs is companies such as Foxconn, Hyundai Group, Mahindra Group, Huawei, and Li & Fung (though they don't manufacture). All locally grown and powerful.
Lots of nonsense there though. Africa grew the strongest in 2009 outside China and India? What about Indonesia? What about Vietnam? Bangladesh? And plenty of smaller countries as well.

Africa will grow 4.8% for 2010, which we are led to believe is the highest in the world outside Asia? Dozens of countries outside Asia will grow faster than that.

The domestic market in Africa is the largest outside China and India? How do they figure that out? One thing is the wrong notion that Africa should somehow be treated as a single market, while other regions or continents should be treated seperately, the other thing is that it is just plain wrong.
Africa has the largest domestic market outside of India and China b/c it has a billion people and growing. Disregarding this I do agree with you. ALL articles I have seen on Africa have lumped the entire continent together. Thus giving you the appearance as if it's one country. This needs to stop, but I don't think it will until larger African nations grow enough to capture sole attention. Asia is still referred to as if its one many times, such as how Asia will overtake Europe and NA in wealth, etc. etc. I say give it another ten years or so before there are a batch of countries on the continent that can distinguish themselves from others.

And individually, some African nations grew faster or around the same pace as Indonesia, Philipines, Bangladesh, nations in latin america etc. Nigeria's growth was above 7% last year, Ethiopia clocked in 8.7% growth, Tanzania 6%, Mozambique 6.3%, Egypt 4.9%, Morocco 4.9%, etc. Obviously, there were countries that grew faster than Africa's as a whole 4.8% growth.
 

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Discussion Starter · #11 ·
I saved this to remind folks.

South Africa is not only an industrialized nation, but is also a technological advance nation. And in many fields it is even leading the rest of the Wolrd. A few excample would be solar panel development, the meerkat station station is one of the Wolrds most advanced, military hardware even the American military buys hardware from south Africa like the apc vehicle the best in the wolrd. The krooivalk attack helicopter better than the appache according to Pentagon. These are just a few of their technological advancenment known around the wolrd. In aqua culture they are building the technologicaly most advanced shrimp farm in south Africa right now and China is trying to copy cat it but will be managed from south Africa. In short south Africa is a technological industrial power house. Oh don't forget the electric car develop in south Africa with first Wolrd quality and has recently rejoined the space satellite race and is acquiring nanotechnologycapability..














Ethiopia launches electric car despite power shortages




Electric car
Many Ethiopians will struggle to afford a Solaris Elettra



Ethiopia has launched an electric car, despite suffering from power shortages. It is only the second African country to do so, after South Africa.



Two versions of the Solaris Elettra will be manufactured in Addis Ababa, costing around $12,000 and $15,000.

The cars will be sold in Ethiopia and exported to Africa and Europe.


But some doubt if Africa, where erratic power supplies, low levels of personal wealth and poor infrastructure are common, is ready for electric cars.



Carlo Pironti, general manager of Freestyle PLC, the company producing the Solaris, told the BBC's Uduak Amimo in Addis Ababa that Ethiopia's electricity shortages were not a major obstacle to operating an electric car.



"Ethiopia in future will have lots of power supply," he said.


"In any case, the car can be recharged by generator and by solar power."



Taxes on cars in Ethiopia can be more than 100% and many Ethiopians with low incomes will struggle to afford an electric car.



To overcome this problem, Mr Pironti says his company will develop a credit system for less affluent customers.


Six Solaris Elettras will be produced every week for the next three months, rising to 30 per week when Freestyle's factory in Addis Ababa is fully operational, he says.


Mr Pironti says he wants to take the Solaris "from a green country to a green world," referring to the company's plans to export the car from Ethiopia to Africa and beyond.




But Wayne Batty, senior writer at South Africa's Topcar magazine, believes only a small percentage of Africa has the necessary infrastructure to support an electric car.


Mr Batty told the BBC's Focus on Africa programme that electric cars are fine for short trips of 40 to 50 km (25 to 31 miles), but African countries lack the recharging points for longer journeys.


Ethiopia's electric car comes after Rwanda launched its first bio-diesel bus last week.



It is currently building a huge hydro-electric dam on the Omo river and hopes to become a major exporter of energy when that is completed.


http://www.goodnewsafrica.net/2010/03/31/ethiopia-launches-electric-car-despite-power-shortages/
 

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there is no question that africa is changing, most countries just got there independence 50 years ago, and at that time they didn't have no doctors, no teachers, no scientist.....

in 1960 for exemple morocco had only only one profesor, and we use to import teachers from egypt, syria, france..... and in that year we had the first 5 moroccan pilot....

in the first 30 years after the independence it was the cold war and african countries in between fighting for the others, morocco with algerie lybia.... angola with south africa.....

so the whole change came after 1990's, that decade was mostly for politics and the opening for the ex communist for morocco and the more liberal for countries like angola....

i think the real change didn't start coming till 2000's and i think this will be an african centry if we work togother and not against each other trying to creat new countries like in sudan, morocco..... the world is making powerful groups and not tiny countries that will be controled by foreigners.

"i choosed morocco and angola as exemple cause one was for free market and angola were for socialism, and bought are changing fast" .
 

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After the Asian tigers, will it be the turn of the African lions?




INTERNATIONAL. Sub-Saharan Africa is likely to remain the second-fastest growing region after Asia in the near future, predicts Sanusi Lamido Sanusi, governor, Central Bank of Nigeria, but “we can catch up with Asia, as the prospect of Africa as the last unexplored territory in the world and the potential of growth remain.”


For this to happen, Sanusi says Africa needs to put in place the right policies, address its infrastructure deficit, and provide the right environment and incentives for businesses and capital to come in. “That includes policy consistency, political stability, the fight against corruption, and improved efficiency in business processes. If we did the same thing that the Asians, such as the Indonesians and the Malaysians, did and if we did it right, we should be able to repeat the experience.”

Raadiya Begg, director of INSEAD Africa Initiative, says exciting developments are taking place in Africa. Out of an increasing number of opportunities for investment in a variety of sectors, there is a focus on growth sectors related to development such as healthcare, alternative energy, logistics, finance, agriculture, technology and telecommunications.

“Take wireless telecommunications, for example. Mobile telecommunications has levelled the economic landscape, and led to the rapid growth of mobile banking and internet usage,” says Begg. “Improved access to information has had profound economic impacts such as more highly competitive pricing – farmers, for instance, are now able to access real-time prices of goods to make informed decisions on whether to participate in a trade; increased worker productivity; and business models geared towards the less wealthy segments of the population.”

Another area of development is in venture capital. “The viability of small and medium enterprises (SMEs) is essential to the health of any economy and the frontier markets are no exception,” argues Begg. “It is the growing entrepreneurial companies that create a multiplier effect.

It is not possible to create sustainable business with microfinance alone. Due to a virtual absence of capital, an equity base in the capital structure, which is almost non-existent in the developing world, is required. Thus, to achieve real impact on societies, expanding venture capital opportunities is a very practical approach.”

Nigeria - a case in point

Citing developments in his own country, Sanusi says the Nigerian economy is about to move to the next level with power reforms, which will bring about rapid growth in manufacturing and processing, as well as double-digit GDP growth.

In the last six years, the economy has been growing at a rate of seven to eight per cent per annum, mainly on the back of growth in agriculture, wholesale and retail trade, and services.


Chronic power outages have, on the other hand, held back economic growth. “Once we address the power infrastructure problems and put the right policies in place, we can easily get to double-digits,” he told INSEAD Knowledge, on the sidelines of The Economist’s Emerging Markets Summit held here recently.

While Nigeria is the leading oil and gas producer in Africa, oil and gas account for only 11%-12% of GDP. So the great potential for growth really comes from agriculture, manufacturing and services, with a lot of room for diversification, says Sanusi. “In the oil and gas and agriculture sectors, there is a lot of upside in processing. This is the country that is the number one producer of cassava in the world. Besides being used for consumption, cassava is now also used as ethanol biofuel feedstock. So there are opportunities for innovation and virgin territories that have not been explored.”

Begg concurs: “As Africa’s biggest oil producer, Nigeria boasts tremendous oil resources and business dynamism. However, of greater interest, is the growth in non-oil output, which is increasing steadily -- such as telecommunications. Nigeria has the eighth fastest telecommunications market in the world and the fastest one in Africa. Together with Kenya, they account for roughly half of Sub-Saharan Africa’s total mobile telecoms revenue.”

Nigerian banks have been consistently outperforming their counterparts in South Africa and Ghana over the past two years, Begg told INSEAD Knowledge. Other sectors showing considerable growth potential include the agricultural sector, building and construction, as well as the hotel and restaurant sectors. “This is barely touching the surface of growth potential that Nigeria has to offer. It has even made a mark in the film industry -- Nollywood, the Nigerian film industry, is the third largest, not far behind Hollywood (US) and Bollywood (India).”

Implications for Western competitors

Africa presents unique first-mover advantages for western organisations that recognise serving ‘bottom of the pyramid markets’ as more than just corporate social responsibility, says Begg. New markets in regions such as Africa present companies with opportunities to innovate their value chain. Companies are forced to refocus their strategic growth efforts and change the way they think about doing business, moving towards providing solutions to customers’ needs instead of ‘pushing products’.

To achieve sustainable growth, organisations venturing into markets such as Africa need to have a long-term view of doing business in the region and aim for a triple or at least double bottom line. “It is not a region for quick wins,” says Begg. “Patience and nerves of steel will take you a long way too.”

China-Africa trade


South Africa and Nigeria are now China’s largest African trade partners. The Chinese have traditionally been involved in construction, textiles and light manufacturing, however they have now gone into oil and gas in Nigeria and would also like to get into power and extractive industries, says Sanusi. “While the Chinese have been active in Nigeria, they are at this moment nowhere near being the biggest investor or trading partner of the country, but (China) is increasing its presence.” The country’s biggest trading partner is the US, followed by France.


Some have expressed concerns about China’s investments in Africa. However, Sanusi says he has never understood “why anyone should have concerns about anybody investing anywhere. We need to continue to attract investments but the investments need to be in the real economy. Diversification of investment resources is useful for African countries.”

He says he would be concerned if there were an undue concentration and over-reliance on one partner, but feels that anything that allows capital to come in from different parts of the world on terms that are not detrimental to the long-term economic interest of the country should be encouraged.

Tainted world views?

Think of Africa and many think of a region rife with crime, poverty, poor health, and poor infrastructure. Are these conditions keeping investors away? Sanusi doesn’t think so. In fact he believes these difficulties provide opportunities for people to come in and address these issues.

Poverty only gets alleviated with investments and economic growth, he argues. And if you’ve got a country in a post-conflict situation that has had an economy that’s badly managed, and it suddenly finds good governance, places like Zimbabwe, Angola, Nigeria, Sierra Leone, for example, offer tremendous opportunities for investments as things improve
.

“I don’t think the reality of Africa is exactly the same as the perception; a lot of that is exaggerated, probably based on incomplete information,” says Sanusi. “I’ve had many people comment on Africa who’ve never been there. They are making comments based on what they heard many years ago and they have no idea of the amount of changes that have taken place. Go to places like Mozambique, Angola, Botswana, Ghana, Senegal. A lot is happening in terms of governance, democracy, the fight against corruption, reforms. Many people are not aware of the changes in Africa.”

So how do you change perceptions? Sanusi says one way is to continue doing the right things and doing them consistently. Another is to look the world in the eye and say this is simply not true.

With so much going for Africa economically, will it be the turn of the African lions after the Asian tigers? “I hope it will be, and the first lion will be Nigeria,” says Sanusi.

Note. The Economist’s Emerging Markets Summit was held in London September 15-16, 2010.

This article is republished courtesy of INSEAD Knowledge (http://knowledge.insead.edu)

Copyright INSEAD 2010.
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Ill believe African manufacturing is booming when I see it. No predictions, just proof.

Ghanas manufacturing sector grew by 1% this year for example. The only nations in Africa achieving high growth in these sectors are those coming from a low base- Angola, Rwanda, Ethiopia etc. When I see counries with more established manfacturing sectors- Ghana, Nigeria, Kenya, Tanzania etc grow at at least 6 or 7% annually, then Ill believe.

In contrast, Vietnam is (or was before the crisis) managing near 10% annual growth in this sectot
 

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Just wait and see
 

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You have high growth rates. Yet thats like making up for lost time. For example most countries before recession grew a lot better then what you are growing at now.
Yes Good for Africa but it's not quite the economic miracle as China is. China is dominant throughout the world. Collectively Africa doesnt have this dominance or influence. i.e investing in other countries.
 

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For manufacturing to take off, there has to be heavy investment in electricity production. How many countries are taking that seriously?
You can't expect manufacturing to boom with frequent power cuts. No country can develop on the back of generators.
 

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Ill believe African manufacturing is booming when I see it. No predictions, just proof.

Ghanas manufacturing sector grew by 1% this year for example. The only nations in Africa achieving high growth in these sectors are those coming from a low base- Angola, Rwanda, Ethiopia etc. When I see counries with more established manfacturing sectors- Ghana, Nigeria, Kenya, Tanzania etc grow at at least 6 or 7% annually, then Ill believe.

In contrast, Vietnam is (or was before the crisis) managing near 10% annual growth in this sectot
Wait and see, then. Nigeria will surely see its manufacturing base increase. Everyone knows its bound to happen, Nigeria already has the entrepreneurs looking into increase their manufacturing or get into it. I wouldn't even say it's a prediction there, just something that is bound to happen. Like China overtaking the US eventually.

I am sure Kenya, and Tanzania will see manufacturing rise as well. Not everyone is like Ghana, or should be grouped in with in, in slow industrial sector growth, you know. ;)

And it seems like you've contradicted yourself. You've said the only countries seeing manufacturing growing at a high pace are coming from a low base. Well, isn't Vietnam coming from a low base as well? Surely it isn't as developed as China, or even Indonesia and Thailand in this sector.
 

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Ill believe African manufacturing is booming when I see it. No predictions, just proof.

Ghanas manufacturing sector grew by 1% this year for example. The only nations in Africa achieving high growth in these sectors are those coming from a low base- Angola, Rwanda, Ethiopia etc. When I see counries with more established manfacturing sectors- Ghana, Nigeria, Kenya, Tanzania etc grow at at least 6 or 7% annually, then Ill believe.

In contrast, Vietnam is (or was before the crisis) managing near 10% annual growth in this sectot
manifacturing sector is growing in morocco, and industries in general grow for more than 6%.

GDP - composition by sector:
agriculture: 19.2%
industry: 31.3%services: 49.4% (2009 est.)

31% of the GDP is not so bad, and the growt will be crazy in the next 5 years with the new tanger med port and 5000 hectar of free zones.

morocco is now building good base for the growth of it industry, there is huge port in construction and some of them started there service, and behind those port there is free zones with 1000's of hectar dedicated to manifacturing and all kind of industry, from building 1/5 million cars a year to building part of boing and airbus, or the building of the wind power and the green energy in general.....

this is just an exmple but the whole contry have new strategy from agroalimentair "food processing" where we rank in some top position world wide like in fish can, olive...... to export of textile product and fashion and modern artisanat.....
 

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èđđeůx;65891999 said:
Wait and see, then. Nigeria will surely see its manufacturing base increase. Everyone knows its bound to happen, Nigeria already has the entrepreneurs looking into increase their manufacturing or get into it. I wouldn't even say it's a prediction there, just something that is bound to happen. Like China overtaking the US eventually.

I am sure Kenya, and Tanzania will see manufacturing rise as well. Not everyone is like Ghana, or should be grouped in with in, in slow industrial sector growth, you know. ;)

And it seems like you've contradicted yourself. You've said the only countries seeing manufacturing growing at a high pace are coming from a low base. Well, isn't Vietnam coming from a low base as well? Surely it isn't as developed as China, or even Indonesia and Thailand in this sector.
Vietnam cant be considered as coming from a low base any more, maybe in 1999 yes, so theres no contradiction whatsoever Im afraid. Look at the factories they have and the range of goods they produce, but this sector is still growing fast. Only SA surpasses this in SS Africa so compared to SS Africa Vietnam is coming from a much higher base. Manufacturing makes up 20% of their GDP for example, in Nigeria its 3% I think.

What do you mean "not everyone is like Ghana"? they ARE whether you like it or not. Unless that is, you are going to show me that Tanzania's or Nigeria's manufacturing sectors are growing very fast, which of course we know that you cant because they simply arent.

There is no real evidence to show a boom in African manufacturing, south of the Sahara anyway. Im not saying that it wont happen but I reiterate, that, as of now, there is no real evidence.
 
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