For years, Africa has been viewed as a continent stricken by poverty with practically no chance of achieving sustainable economic growth. Just over 12 years ago, The Economist even labeled Africa as “The Hopeless Continent” plagued by war and disease. However, that paradigm is beginning to radically change. Over the past decade, Africa has been the second-fastest-growing region in the world with an annual growth rate of 5.1 percent. To the surprise of many, over 500 African companies have annual revenue of $100 million or more. How has Africa been able to turn around its fortune in such a short period of time? Many believe this economic turnaround can be attributed to greater political stability and reforms that have unleashed the private sector in many African countries. Though, the main source for this economic resurgence has actually been globalization as you will soon see.
In the modern age of globalization, business truly has no borders. In Africa, this simple fact has allowed countries to achieve growth previously thought of as unimaginable. After political reforms, the country of South Africa has opened up its borders to investment and trade. The new foreign policy of South Africa expresses that its national interests are better safeguarded if the country broadly focuses on the interests of the entire continent. South Africa has interacted extensively with the emerging markets of Brazil, Russia, India, and China (the BRIC countries) and now serves as a gateway into the African continent for these BRIC countries. The BRIC countries now constitute the largest trading partners of Africa and this trade is expected to triple to $530-billion by 2015. Because of this strong international trade relationship, South Africa is now an official member of the BRIC emerging market bloc.
It’s no secret that Africa has enormous growth potential as an emerging market due to an evolving consumer market. However, the continent is still faced with many challenges, so what is being done to take African growth to the next level? First, a free trade area covering 26 countries in Africa is currently being developed to broaden economic trade ties and deepen relationships among African countries. If successfully created, this free trade region will foster economic integration and sustainable development across the continent. Infrastructure is another key area that needs to be addressed by countries in Africa. South Africa has already used its status as an emerging market to encourage investments for African infrastructure development from the BRIC countries. The infrastructure sector alone will require $480 billion in investments over the next 10 years for Africa to meet its true potential.
Africa is a continent teeming with opportunities made possible by African determination, globalization, and investments from abroad. However, if Africa is able to sustain growth, it will continue to need to foster its international relationships. With major countries such as China and the United States showing interest in Africa, the continent seems well on its way to becoming an important player in global economic development.