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Despite global factors impacting on emerging-market economies, it was only a matter of time before growth opportunities in Africa would be at the forefront of business leaders’ agendas again. This is according to Razia Khan, managing director and head of Africa research at Standard Chartered Bank, who spoke at the EY Strategic Growth Forum Africa held in Sandton on 5 November.
In the short term, the challenge would be to navigate the business environment, which is riddled with risks and hurdles.
Also speaking at the event, Markus Cornaro, head of the EU delegation in Southern Africa, reiterated that Europe still held a positive outlook for Africa. There is an “enabling environment” for business in the private sector, he said, adding that about 75% of foreign direct investment in the continent was European.
The long-term partnerships with Europe have the potential to create 500 000 jobs through new businesses, according to Cornaro. There is a healthy trade surplus, in favour of South Africa, with Europe.
Business leaders should not hold off decisions in anticipation of a decision by the US Fed regarding interest rates or what will happen next in China, said Cornaro. Structural reforms and transformative agendas can be continued regardless of growth in other parts of the world. “Risks are more of an opportunity and demand concerted actions.” The headwinds are minor, he said.
Regional integration
Regional integration among African countries was the next logical step for the continent as it would make trade engagements easier and quicker, said Youssouf Fadiga, special adviser to Côte d’Ivoire’s minister of budget. Diversification of trade should also be introduced as a lot of countries trade with commodities.
In a period of “muted” global growth and stronger headwinds, Khan said counter-cyclical fiscal policies are not being implemented, which is a concern. But he added that a lot is happening in Africa that will drive growth. This includes the increase in the working-age population. If a significant number of these young people can find jobs, it will benefit economic growth, Khan added. In addition, the introduction of reforms to create an enabling business environment will also unlock growth potential.
