Emerging from the frontier

The year 2013 will mark a turning-point for Africa south of the Sahara. Often viewed as frontier markets, sub-Saharan economies are gradually advancing towards the top ranks of emerging economies hitherto dominated by South Africa and the brics (Brazil, Russia, India and China). In 2013 some “frontier” African economies will at last complete this transition—and become established members of the emerging-markets club.

Across the continent, economies have grown strongly, despite the global economic malaise, and I believe this growth will be sustained in 2013, led by the robust economic performance of Nigeria, Ethiopia and Angola, accompanied by sustained growth in Ghana, Côte d’Ivoire, Kenya, Uganda, South Africa and Tanzania. As before, economic growth in Africa in 2013 will be driven not only by its wealth of natural resources but also by continued investments in agriculture and manufacturing.

This transition of Africa’s economies will be marked by three distinct phenomena.

First, as global uncertainty continues to be the norm in 2013, trade and investment flows between Africa and the BRIC economies will expand and help spur growth. Infrastructure investments are still needed on the continent, especially in power generation, roads and railways. Much of this will be financed by other emerging-market economies, such as China, Brazil and India. In 2013 the issue will not be the usual trade-off of fiscal consolidation versus growth. Rather, it will be fiscal consolidation and growth, with priority investments concentrated in those areas, such as infrastructure, most likely to drive growth.

Africa’s growing economic ties with the BRIC economies, particularly China, are well known. As an example, the continent’s trade with China increased from about $10.6 billion in 2000 to $166 billion in 2012. In my own country, Nigeria, trade with China increased over the same period from less than $1 billion to $7.8 billion. In 2013 China will become the greatest influence on the continent as its new leaders deepen the strategic relationship with Africa beyond natural resources. At the same time, civil-society organisations in Africa will demand greater transparency from China in government-to-government relations, and more community engagement from Chinese companies.

Africa will become the next preferred destination for labour-intensive manufacturing

I see many opportunities here for private investors in Africa. As Asia’s economies slow and its wages rise, Africa will become the next preferred destination for labour-intensive manufacturing of products such as garments and shoes. Its large domestic market of 1.2 billion people will serve as a further attraction for low-cost, light manufacturing.

Development aid, though still important for humanitarian interventions, will definitely take a back seat to private investment. Africa will emerge as a more solid and respected member of the global community—less a recipient of aid than a recipient of private investment. The new focus will then be on how to leverage development aid to attract more private-sector flows.

Leapfrogging to the future

The second phenomenon will be an Africa that promotes stronger economic ties at home. “Africa investing in Africa” will become an important slogan for Nigeria, South Africa and Angola, and will encourage more African professionals in the diaspora to return to the continent to seek opportunity and contribute their skills.

Meanwhile, Africa will continue to be innovative in using existing technologies, such as mobile phones, in new ways to spur increased productivity, and to provide a better delivery of basic health and education services. As an example, the Nigerian government is implementing an e-wallet payment system in its agricultural supply chain, enabling rural farmers to purchase fertilisers directly from dealers and thus avoid corrupt middlemen.

The third aspect of Africa’s economic transition is a continuing struggle with weak institutions and weak governance. As a result, civil-society groups will need to become more visible, sophisticated and vocal, exerting pressure for more democratic institutions and for transparent elections, as well as for greater openness and less corruption in the management of public finances. Yet at the same time these civil-society groups will themselves face greater demands for accountability in 2013 as they play a larger role in shaping their countries’ futures.

But if civil-society groups will be important, so too will Africa’s women. They account for about half of the continent’s agricultural labour force and manage a large proportion of its small enterprises. As one of Africa’s women, I am confident that 2013 will be the year the continent becomes a destination of choice for global investment—a beacon of hope in a still-uncertain world.