Hope for Africa
Although the BRIC grouping of emerging economies does not include a single representative from the African continent, many economic experts and multinational corporations see enormous growth opportunities across the continent. While most businesses are now aware of opportunities in countries such as Brazil, India, and China, corporations truly utilizing global expansion as a growth opportunity are looking beyond these popular markets. More than 12 African nations have seen economic growth exceeding six percent for six consecutive years.
IBM is one of the aforementioned companies that is zeroing in on Africa as a market for future expansion. One facet of the company’s growth target for 2015 is global expansion, focusing on new markets with a growing middle class. IBM expects these markets to make up at least 25% of its business within the next five years. It appears that many of these new markets are concentrated in Africa because IBM recently opened a procurement center in Ghana to service 17 countries in the region. The office will employ many local workers, providing the region with an additional economic stimulus.
Growth across Africa can be attributed to a variety of economic and demographic trends. Labor productivity has increased by nearly three percent each year, and trade between Africa and the rest of the world is up 200% since 2000. Inflation has dropped from 22% in the 1990s to roughly 8% today. Self-made billionaires such as Aliko Dangote (a Nigerian businessman valued at $10 billion) have made fortunes through various endeavors. The population of the continent is expected to double over the next 40 years, but lower fertility rates will create a “demographic dividend” as a high percentage of the population will be of working age.
This is not to say that devastating poverty in Africa has been eradicated. Many countries still experience severe income disparities between their wealthy and poor citizens. Disease and hunger are a major concern for a majority of families. More than ten percent of children born in Africa will die before the age of five. Much more progress is needed in Africa, but it is safe to say that it should no longer be labeled “The Hopeless Continent”, as The Economist called it in 2000.