Africa-doing well, risks remain

May 26, 2010

Africa is doing well but there are a few worries around the corner. These include the impact of the euro zone debt crisis, the need for an orderly exit from domestic easing policies and overdependence on commodities, says Henri-Bernard Solignac-Lecomte, head of the Organisation for Economic Co-operation and Development’s operations effectiveness unit.

The OECD, together with theDRC African Development Bank, published an upbeat report on Africa this week, saying the continent will grow 4.5 percent this year and 5.2 percent next.

Solignac-Lecomte told an audience including financiers, journalists and environmentalists at a Royal African Society breakfast meeting in London this morning:

“We are not sure what is going to happen to the recovery in OECD countries and that has an impact on Africa which remains extremely exposed to demand in those economies. A key challenge is how these (African) countries can smoothly exit from counter-cyclical policies…having greater diversification of trading partners, Asia in particular, has worsened sectoral diversification.”

Copper producer Zambia has increased its dependency on unprocessed commodity exports due to Asian demand, Solignac-Lecomte said.

And perhaps reflecting some of the difficulties Africans face in the developed world, Solignac-Lecomte replaced AfDB economist Alex Mubiru as speaker, after Mubiru failed to get a UK visa in time.


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One senses Africa is very much at an Inflexion Point. The Continent’s Face continues to turn East. China [over $100b in less than Ten Years] and India are two serious Anchors beneath us. Remittances have overtaken Foreign Aid. And beneath it all, the Mobile Phone has been the Catalyst for enormous activity at the Bottom of the Pyramid, which I estimate to be worth no less than 2% of SSA GDP.
These Big recent phenomenon Macro Trends put Africa in a different place to where it was two years ago and difference expands each year you scroll back. I think Africa is in the throes of a very powerful one off Convergence with the c21st and that it has the Big Mo this time around.
Clearly Europe is in a great deal of bother and the Currency set to be repriced further. There are certainly pockets which are very soft Underbellies [Flowers and Fresh Vegetables are the clearest example] but Africa is at much less risk to Europe than it has ever been.

Aly-Khan Satchu

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Here’s an excerpt from Today’s (May 26, 2010) edition of the Wall Sreet Journal discussing this same trend, a rising Middle Class in Africa!
“Foreign consumer-goods companies including Coca-Cola Co., Nestlé SA and Unilever PLC have been in Africa for decades without much competition from local players. Now, home-grown companies are expanding aggressively across the continent, eager to accommodate a growing middle-class among the billion-person population.”

“Among the most prominent of these consumer upstarts: African retailers such as Nakumatt Holdings Ltd. of Kenya, the top supermarket chain in East Africa, MTN Group Ltd., Africa’s largest cellphone provider, and South African restaurant chain Spur Corp. Nakumatt has expanded into three neighboring countries while 348-restaurant chain Spur has opened in seven other African countries.” 052748704912004575252593400609032.html?m od=rss_whats_news_us#project%3DSLIDESHOW 08%26s%3DSB10001424052748704026204575266 923888531694%26articleTabs%3Darticle

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