Business development in Africa to pay attention to in 2019 (Part 1)
The future of Africa economy is not something we can give our vote of confidence. This is as a result of the performance of some of Africas largest economies in 2018.
Nigeria alongside Angola has been striving very hard to recover slowly from a recession that was brought in place by falling oil prices. For the first time in a period of ten years, South Africa entered recession.
A developed economy opens up new perspectives for success, far from emerging forces and international trends.
The African Business Revolution book presents potential developments and opportunities throughout the continent based on interviews and research with hundreds of leading African continental company executives. The authors of the book suggested ways to achieve growths and benefits similar to the one that occured way back in China before its own period of explosive growth.
With very swift urbanization, the class of consumers will be significantly expanded with the amount of a person's or group's monetary income which is available to be saved or spent (on either essential or non-essential items), after deducting all taxes and other governmental fees, as predicted by the author, which will then result in a significant increase in the business and spending of consumer to $5.6 trillion in 2025 from $4 trillion in 2015.
Similar to the output of South Africa, Internet penetration is expected to increase the continent’s GDP by $ 300 billio over the same length of time.
Some of the key trends and stories to look out for in Africa in 2019 and after were selected with the assistance of the chairman of McKinseys Africa office and the co-author of "Africas Business Revolution" known as Acha Leke.
The survey carried out by McKinsey in 2011 on top 30 African economies showed that only 5 out of the 30 were not experiencing accelerated growth. The figure was found to increase to about 17 after the same countries were surveyed recently. The medium economies, such as Ethiopia and Côte d'Ivoire, have proved to be the biggest promises in preference to the powerhouse of the continents.
It was recorded that Côte d'Ivoire survived the civil war and financial crisis at the beginning of the decade. Due to this, Leke Acha chose them as a model for sustainable development. He made known the significant role that the government investment and infrastructure development based on partnerships with Chinese companies has to play in increasing country's productivity. He had the belief that the “great interest of investors” from the private sector can protect its economy. Growth along with achievements in sectors such as health and education will become more comprehensive in the nearest future.
The European Union is characterized by new nationalism in the member countries, but closer reestablishment of cordial relations is what African countries prefer. One of the worlds largest free trade group of countries acting together for political or economic goals with approximately 44 countries presently endorsed will be created by the Continental Free Trade Area (CFTA). Nigeria is the only country to have withheld itself out of the countries with major economies, and Leke Acha is of the opinion that there will be change to this status in the near future.
The removal of travel restrictions between African countries will motivate the completion of the deal. The research done by McKinsey revealed that the number of states that allow visa-free or visa-on-arrival access to all African countries have been recently confirmed to increase from 3 that it was in 1983 to 21 out of the 54 states. As a result of this, business and tourism visits has enjoyed great improvement. Among the main beneficiaries are Mauritius and Rwanda.
Leke Acha points to the gradual development of reform aimed at providing support for business as an excuse for optimism, since the times of approval and registration are accelerating and tariffs on the continent tend to decrease. The world bank make a list of top 10 countries that are most improved for ease of doing business, and a good number of four African countries made it to that list.
As many large and important businesses in Africa look forward to expanding and diversifying in many countries, Leke Acha realizes that it is highly required of the government to further reduce barriers. Part of what the government should look at as a basic requirement for easing the expansion and diversification of those major businesses include but not limited to the supply of good roads, power (electricity) and tax among others.
The government should be able to give good roads for easy transportation of goods and services. Electricity is also a very important part that must be looked into carefully. And talking about taxes -- these business companies should be taxed moderately since this is one of the things that discourage investors from investing in a particular environment.
Let's just hope for the best to happen in Africa and across the universe entirely in 2019. Your say would be much appriciated on this. Tell me how you think 2019 would fare for Africa in 2019?
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Also published on my Whaleshares blog