Africa News blog

African business, politics and lifestyle

South Africa overshadowed by growth of the rest

May 27, 2010

KENYA DRAUGHTSouth Africa’s place as the sole economic giant in Africa is set to decline in coming decades as its growth is outstripped by countries to the north that have emerged as some of the fastest growing in the world.

As part of a package of Reuters reports on Frontier Markets, my colleague Ed Cropley takes a look at the importance for South Africa’s future of positioning itself as a springboard to the rest of the continent.

Although South Africa has been one of the best long term investments in the world over the past century, the next century looks less promising.

South Africa accounted for nearly 40 percent of all economic output in the sub-Saharan region in 2000, according to International Monetary Fund figures.

That share will drop to 28 percent this year, in part because South Africa’s economy was caught in the global recession. It will shrink further as countries such as Nigeria, Ghana and Uganda notch up growth of 7 percent or more compared to the 2.3 percent expansion forecast for South Africa in 2010.

Some South African companies are leaping on the opportunities – MTN, Standard Bank and Shoprite are obvious examples – but others may be slower to catch on.

“South African companies need to wake up. A lot of opportunities are already being stolen from under our noses, and not just by the Chinese — it’s the Indians, the Brazilians, the Russians, the Canadians, Australians,” said Duncan Bonnett, of consultancy Whitehouse and Associates.

For more on the big changes – and risks – in the new Africa, there are interesting reads here on Ghana’s prospects as it becomes an oil producer “Ghana bids to break Africa’s oil curse” and the cautionary tale for investors in Nigerian banks “Nigeria: a lottery you might just win”.

Comments

I’m glad to see my opinion duplicated by someone with far more experience than I, in this field.
Companies, as you say, may be slow starters, but I am really concerned about how slow and lumbering the South African government appears to be.
We don’t have oil, while several other African countries now do. I beieve they will overtake us simply by virtue of that fact.
But our government is also so busy looking inward, that it’s only just catching up to consider planning for such things as eco-friendliness, power and water issues, PPPs among African countries, etc.
Mining gave us a head start over a century ago, but I think we will lose out on funding opportunities as well as finding that international firms look elsewhere to seat their HQs.
We may not have the biggest population (i.e. market), but were it healthy, we could give Nigeria, Angola, etc. a run for their money. Unfortunately, the fact is that too much of our population is economically inactive due to unemployment, to make the running.
I have always believed that all this country ever need, in 1994, was jobs, jobs and more jobs. Because we so missed out on that, our market has become far less important to the world than it could have been.
All we really have in our favour are interest rates that are marginally higher than those in developing countries.

Posted by MLH | Report as abusive
 

Sorry. The second-last word should have read ‘developed’.

Posted by MLH | Report as abusive
 

The explosive growth in the several sub-Saharan countries mentioned does not need to threaten SA’s regional economic hegemony– it is not a zero sum game. You’re right to emphasize the necessity of expanding South Africa’s influence in sub-Saharan markets, thus entrenching SA as the “gateway to sub-Saharan Africa”, but companies are already taking these steps.

South African giants such as MTN and Standard bank operate all over the continent. Adcock Ignam (pharmaceuticals), Barloworld (power), Old Mutual (Banking), Sanlam (insurance) and dozens of other South African companies are buying their way into other African markets.

While Nigeria, Angola, Ghana, Uganda and others will certainly eat into SA’s sub-Saharan market share, those countries will not have SOuth Africa’s financial and ICT infrastructure for some time.

Next week I plan on publishing an article on SA as the Gateway to sub-Saharan Africa at http://blog.saibl.co.za/.

Thanks for the article!

Posted by SAblogger | Report as abusive
 

Nigeria is truly the commerce house of Africa. Like mentioned in the article, South African companies are doing well in Nigeria. Personally, I believe Shoprite is doing great and adding great value in terms of quality service. But for MTN Nigeria, yes they are making money but the quality of the service they are rendering to Nigerians is nothing to write home about after a decade of operations in Nigeria. Read more here: http://evergoodproductions.com/mtn-niger ia.html

Posted by Naija-News | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •