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Ernst & Young (EY) has released a new report, titled Africa 2030: Realising the Possibilities, which argues that the continent is in fact showing tremendous progress despite lingering scepticism.
The report points to the staggering growth rates enjoyed by the majority of the continent’s countries and stresses the importance of fostering entrepreneurship.
EY argues that entrepreneurship provides one of the main engines of growth in any healthy economy. Alongside new products, services and solving problems, it will be the main driver of the job creation required to realise inclusive, sustainable growth.
“For organisations genuinely committed to shared value and collaborative partnerships, the promotion of local content and enterprise development should clearly be a key business priority,” the report says.
As shown earlier this year, this growth also means that investment in the continent is growing more positive by the day. Foreign direct investment projects into sub-Saharan Africa grew at a compound rate of 19.5% between 2007 and 2013, it found.
EY looks a handful of key factors that have been contributing to the continent’s significant growth. First off, the report notes that Sound Macro Economic Management and structural reforms that have been implemented in the 1990s are starting to pay-off.
The second indicator of success points to trade. International Trade certainly has also been a massive flag for tracing success indicators. With China having the biggest appetite, exports amounts to around US$300-billion.
Africa has come to develop a large focus on Business Regulation, and the ease thereof.
Focusing only on sub-Saharan Africa, the World Bank’s research shows that 45 out of the 46 economies they track have improved their regulatory environments for doing business since 2005. In fact, the report points out, among the 50 economies that have made the biggest improvements over that period, the largest share is in Africa.
The third point EFY looks at is Diversification of industries. It notes that although the continent is known for its natural resources, this sector has contributed less than a third of Africa’s growth since 2000. Looking to foreign direct investments in 2013, Technology, media and telecommunications clocks in 20%, Retail and consumer products 17%, Financial services 15%, Business services 12%, Metals and mining only 2%, and Coal, oil and natural gas 3%.
The fourth point focuses on Political Reform. The report uses democracy as an indicator for stability. It says that since 1990, we have seen over 35 ruling parties or leaders changing through a democratic process compared to only five between 1960 and the fall of the Berlin Wall in 1989.
Lastly, EY points out the important role Technology has been playing in sub-Saharan Africa. This year, the mobile ecosystem GSMA Sub-Saharan Africa Mobile Economy 2013 will contribute approximately 7.1% to SSA’s GDP, with that proportion rising to over 8% by 2020. In comparison, that contribution in Asia-Pacific is less than two percent.
The report believes that the next wave of change is being driven by growing levels of internet access. Although internet penetration levels remain relatively low in Africa, with about 20% of Africans expected to be online by the end of 2014, that proportion has grown from only 10% in 2010. EY also refers to affordable smart devices like MTN’s Steppa, which bridges the gap between the online and offline world.
The report says that nothing is guaranteed for a successful future. “There are still many challenges ahead, not least of which is a robust structural transformation — required across many economies — that will not only lessen dependency on commodities, but also expand the private sector, increase productivity levels and, most of all, create jobs,” it says.