Africa shrugs off a fourth economic crisis in a decade

An indigenous consumer goods Factory in Kenya:
 Local Manufacturers gained from Africa's changed fortunes

GOING BY THE SHEER NUMBER OF Reports about Africa’s economic response to the Eurozone crisis, the continent has weathered this one.  

If so, the continent has shrugged off the fourth major economic crisis in a decade or so.

Ours is a sturdy continent that weathers down crises that are crippling economies elsewhere in the world. And to attest to her resilience, the continent has in some instances exploited these crises to its advantage.

For instance, the current drivers of economic growth in the continent are; retail commerce, transportation, telecommunications and manufacturing. In many instances, homebred players lead the pack especially in Finance, telecoms and manufacturing- a majority of these leaders are home bred, some as young as  below ten years old. The oldest among the players is probably just about 20 years old.

Take the rapid expansion of commercial banks for instance. In the second half of the 2000 decade, the fastest growing and expanding banks in Africa were homegrown. These include, Nigeria’s Ecobank and UBA, each of which has spread its wings into more than10 countries in the continent. There are indications that Nigerian Banks will soon dominate the African Financial market. Kenya Commercial Bank, Equity and Co-operative bank are spreading their wings outside Kenya. This rapid expansion comes amidst the collapse of major banks in the West, some of which had to be rescued through government intervention in the face of the 2008 financial meltdown in the West.

In the transport sector, African airlines have thrived as others close shop or are acquired by others. Kenya Airways, Ethiopian Airlines, Egypt, Air and South Africa Airways have kept the African flag in the skies  while major airlines such Alitalia have folded their wings. Although SAA flew into a storm in the early 2000s, it has emerged from its ashes. Kenya airways and the Ethiopian have thrived amidst gloom in the industry and are now rapidly expanding their destinations. In the land transport sector, A

Ethiopian and KQ:
They thrived amid gloom in the industry

frica has invested heavily on roads and Railways line over the past decade, this increasing activity in the land transport.

In the telecoms sectors, the top three players in Africa are homebred. South Africa’s MTN is the giant in the US$30 billion a year telecoms market in Africa where it has spread into 21 countries. It is a major TNC with a major presence in Middle East. Orascom of Egypt comes as distant second with nearly 78 million subscribers. Orascom has a major presence in Algeria, Egypt, Bangladesh and Canada.

The majors together with their smaller relatives, a majority of who are home bred, have pushed the Mobile penetration to 64 per cent. Many of these companies expanded because of the dotcom meltdown in 2001. The meltdown arrived just as Africa was opening up the telecoms sector for the private sector. Since the Major players in the West were steeped in debt- some estimates place it at US$380m billion- they could not take advantage of the opportunities opening up in Africa.  Thus homebred companies grew and expanded.

The expansion of these major employers, coupled with good commodity prices in the decade 2000s, drove the growth of a strong middle class in Africa.  The middle class spends and estimated US$680 billion on consumption each year. Part of this expenditure goes to local Manufacturers of consumer goods. This has sparked off a growth in demand for manufactured goods mainly from local manufacturers. The local manufacturers distribute their goods through local out let such as Supermarket chains that have posted an impressive growth in the last decade or so.

 The commodity prices were partly responsible the growth between 2000-08 but was edged out by the growth of local enterprises which reduced profit repatriation. Africa has witnessed a rapid growth of highly profitable local enterprises, spread across all sectors, which boosted employment, tax revenue collection and domestic investment as they invested in further growth. 

Africa has just completed the first d10 years of sustained economic growth averaging about 5.6 per cent. In that period six of the world’s ten fastest-growing countries were African, says the Economist. “In eight of the past ten years, Africa grew faster than East Asia, including Japan.

And this feat appears to set to continues over the next five years or so. Projections show that in the next five years, probably further, the seven fastest growing countries in the world will be in Africa. The seven Include; Ethiopia, Mozambique, Tanzania, Ghana, Nigeria, Congo and Zambia. These, the crystal ball says, will post average growth above 6.5 per cent.

In fact, says IMF projections, Africa will be the fastest growing continent in the next half- a decade with an average rate of around 5 per cent.