The World Bank predicts that Africa’s GDP will grow by 4.8 percent in 2010, ahead of Europe, North America, Central Asia and Latin America. In other words, only China and South Asia are predicted to grow faster than Africa. The idea that Africa will experience fast growth over the long term has also been validated by my previous employer, Goldman Sachs, which places Nigeria and Egypt in the “Next Eleven,” a list of countries whose economies will lead the world in GDP growth by 2050.
Understanding Africa’s fast growth is spreading beyond the world of developmental economic wonks. In February, Newsweek published an article which said, “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.”
Significant waves of repatriation among Africans who were educated abroad constitute another factor contributing to the rapid rise of Africa’s growth prospects. This is a circular theory: the more opportunity that Africa’s educated forces perceive there to be at home, the more of them return. And those who return inspire more expatriates to return. These expatriates bring with them education and experience from the world’s most competitive academic and professional organizations in Europe, North America and Asia. With this new talent back at home, Africa’s institutions and entrepreneurial ranks both stand to benefit from the increased management capacity that the ex-pats take home with them.
And how do you measure all of this today? One metric is the performance of the 15 African Stock Exchanges. The results of those 15 exchanges can now be tracked online daily on Africa.com, thanks to a collaboration with Liquid Africa, an investment banking boutique with offices in London and Johannesburg.
To global investors, I propose the following food for thought. All of the global markets have taken a beating this year. Nonetheless, if you had invested $1,000 in the all shares index of the Johannesburg Stock Exchange on January 1, 2010, your investment today would be down roughly 3 percent, versus a much greater loss if you had made the same investment in the London-based FTSE 100 (down more than 7 percent), the Global Dow Index (down roughly 11 percent), the Japanese Nikkei (down approximately 8 percent), or the Shanghai Composite (down more than 17 percent).
As an investment banker, I know that money, and minds, travel to where the financial returns are. If Africa continues to deliver superior financial returns, it will increasingly capture and hold onto the attention of Western and Eastern minds in the years to come.
Teresa Clarke is Chairman and CEO of Africa.com, the most comprehensive and fastest growing website portal focused on Africa. Africa.com is now providing daily quotes online of 15 African stock exchanges as well as curated corporate finance news and a comprehensive listing of capital markets, corporate finance, and mergers and acquisitions across the continent of Africa, in collaboration with LiquidAfrica.