Global investors are increasingly taking note of
the untapped potential of sub-Saharan Africa,
particularly its unparalleled demographic edge.
According to a new report by
PricewaterhouseCoopers, Africa will be enjoying
faster economic growth than any other region -
and will have the world's biggest labour force.
Most major international corporations are already
active in at least one of the three largest cities in
sub-Saharan Africa - Lagos in Nigeria, Kinshasa
in the Democratic Republic of Congo (DRC), and
Johannesburg in South Africa.
However, PricewaterhouseCoopers (PwC)
economists believe investors should also be
getting excited about the "Next 10" biggest cities
in sub-Saharan Africa, namely Dar es Salaam
(Tanzania), Luanda (Angola), Khartoum (Sudan),
Abidjan (Côte d'Ivoire), Nairobi (Kenya), Kano
and Ibadan (Nigeria), Dakar (Senegal),
Ougadougou (Burkina Faso), and Addis Ababa
(Ethiopia).
According to PwC's latest Global Economy Watch
report, released on Thursday, the population of
these cities is projected to almost double by
2030, growing by around 32-million people. In
fact, the latest UN projections indicate that, by
2030, two of the "Next 10" - Dar es Salaam and
Luanda - could have bigger populations than
London has now.
Cities are the typical entry points for businesses
looking to expand into new markets, because
they enable closer interaction with customers in
a relatively small geographical area.
"The report projects that economic activity in the
'Next 10' cities could grow by around US$140-
billion by 2030," Stanley Subramoney, strategy
leader for PwC's south market region, said in a
statement.
This is roughly equivalent to the current annual
output of Hungary, Subramoney said, adding that
this was a conservative estimate that did not
take into account real exchange rate
appreciation, despite relatively strong projected
growth in these economies.
Roelof Botha, economic adviser to PwC, said
that, in addition to high rates of GDP growth,
rapid urbanisation and the so-called
demographic edge, "a number of other economic
phenomena in the region are starting to appeal
to the global investment community". These
include:
Significant new discoveries of mining and energy
resources, in particular gold and gas;
Substantial investment in infrastructure and
capital formation by the private sector, which
has witnessed an increase in the ratio of total
fixed investment to GDP from 17.7% in 2000 to
an estimated 23% in 2013;
Sustained growth in per capital incomes, which
has led to demand shifts that are benefiting
household consumption expenditure on durables,
semi-durables and services; and
The ability of a growing number of countries to
raise financing for infrastructure projects on the
international capital market, in particular Kenya
and Rwanda. Both of these countries have
recently managed to sell government bonds
globally at single-digit yields, which obviate the
need for excessive debt servicing costs.
It was factors such as these which had seen a
return to sound growth in foreign direct
investment (FDI) inflows into a number of key
African economies last year, Botha said.
However, according to PwC, there are three
issues that sub-Saharan Africa has been
struggling to resolve for a number of decades,
and which could slow the pace at which the
"Next 10" cities grow.
These are: the low quality of "hard"
infrastructure like roads and railways; inadequate
"soft" infrastructure like schools and universities:
and "growing pains" arising from political, legal
and regulatory institutions struggling to deal
with bigger, more complicated economies.
"The challenges that policy makers face is to
convert Africa's demographic dividend into
economic reality by overcoming these hurdles,"
Subramoney said, adding: "History suggests this
will not be a quick or easy process.
Infrastructure development is a key driver for
progress across Africa and a critical enabler for
sustainable and socially inclusive growth.
"However, investors should form their own plans
to mitigate these problems by supporting
infrastructure skills and development
programmes.".
the untapped potential of sub-Saharan Africa,
particularly its unparalleled demographic edge.
According to a new report by
PricewaterhouseCoopers, Africa will be enjoying
faster economic growth than any other region -
and will have the world's biggest labour force.
Most major international corporations are already
active in at least one of the three largest cities in
sub-Saharan Africa - Lagos in Nigeria, Kinshasa
in the Democratic Republic of Congo (DRC), and
Johannesburg in South Africa.
However, PricewaterhouseCoopers (PwC)
economists believe investors should also be
getting excited about the "Next 10" biggest cities
in sub-Saharan Africa, namely Dar es Salaam
(Tanzania), Luanda (Angola), Khartoum (Sudan),
Abidjan (Côte d'Ivoire), Nairobi (Kenya), Kano
and Ibadan (Nigeria), Dakar (Senegal),
Ougadougou (Burkina Faso), and Addis Ababa
(Ethiopia).
According to PwC's latest Global Economy Watch
report, released on Thursday, the population of
these cities is projected to almost double by
2030, growing by around 32-million people. In
fact, the latest UN projections indicate that, by
2030, two of the "Next 10" - Dar es Salaam and
Luanda - could have bigger populations than
London has now.
Cities are the typical entry points for businesses
looking to expand into new markets, because
they enable closer interaction with customers in
a relatively small geographical area.
"The report projects that economic activity in the
'Next 10' cities could grow by around US$140-
billion by 2030," Stanley Subramoney, strategy
leader for PwC's south market region, said in a
statement.
This is roughly equivalent to the current annual
output of Hungary, Subramoney said, adding that
this was a conservative estimate that did not
take into account real exchange rate
appreciation, despite relatively strong projected
growth in these economies.
Roelof Botha, economic adviser to PwC, said
that, in addition to high rates of GDP growth,
rapid urbanisation and the so-called
demographic edge, "a number of other economic
phenomena in the region are starting to appeal
to the global investment community". These
include:
Significant new discoveries of mining and energy
resources, in particular gold and gas;
Substantial investment in infrastructure and
capital formation by the private sector, which
has witnessed an increase in the ratio of total
fixed investment to GDP from 17.7% in 2000 to
an estimated 23% in 2013;
Sustained growth in per capital incomes, which
has led to demand shifts that are benefiting
household consumption expenditure on durables,
semi-durables and services; and
The ability of a growing number of countries to
raise financing for infrastructure projects on the
international capital market, in particular Kenya
and Rwanda. Both of these countries have
recently managed to sell government bonds
globally at single-digit yields, which obviate the
need for excessive debt servicing costs.
It was factors such as these which had seen a
return to sound growth in foreign direct
investment (FDI) inflows into a number of key
African economies last year, Botha said.
However, according to PwC, there are three
issues that sub-Saharan Africa has been
struggling to resolve for a number of decades,
and which could slow the pace at which the
"Next 10" cities grow.
These are: the low quality of "hard"
infrastructure like roads and railways; inadequate
"soft" infrastructure like schools and universities:
and "growing pains" arising from political, legal
and regulatory institutions struggling to deal
with bigger, more complicated economies.
"The challenges that policy makers face is to
convert Africa's demographic dividend into
economic reality by overcoming these hurdles,"
Subramoney said, adding: "History suggests this
will not be a quick or easy process.
Infrastructure development is a key driver for
progress across Africa and a critical enabler for
sustainable and socially inclusive growth.
"However, investors should form their own plans
to mitigate these problems by supporting
infrastructure skills and development
programmes.".
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