Africa is expected to have the biggest labour force in the world and experience faster economic growth than any other region by 2040, according to a report by PwC.
The continent’s demographic edge over the rest of the world is expected to continue driving the current growth, which the World Bank also attributed among other things to strong household spending. A region with increasing population and a growing middle class with more purchasing power and taste for the luxurious things of life. Africa now has the fastest-growing middle class in the world. A 2012 report by UK-based consulting firm UHY said 34 percent of the continent’s population spends $2.20 a day, from less than a dollar a year or two ago.
Apart from the demographic edge and an encouraging GDP growth, forecasted by the World Bank to be 5.2 percent in 2014, “a number of other economic phenomena in the region are starting to appeal to the global investment community,” Dr Roelof Botha, economic advisor to PwC notes in the latest PwC ‘Global Economy Watch’.
From liquid hydrocarbons discovery in the deep offshore west of Ivory Coast, to oil discoveries in Kenya, Mozambique, Tanzania and Angola, Botha notes that significant new discoveries of mining and energy resources in Africa is sure to make the global investment community want to invest in the continent.
The PwC report noted that more CEOs around the world are beginning to recognize the untapped potential of sub-Saharan Africa and are now keying into the opportunities presented by different burgeoning sectors in the region.
Botha further expects 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 percent in 2000 to an estimated 23 percent in 2013, to appeal to foreign investors and increase investment on the continent. Net foreign direct investment (FDI) inflows to the region grew 16 percent to a near-record $43 billion 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; as well as the ability of a growing number of countries to raise financing for infrastructure projects on the international capital market are also expected to appeal to the global investment community.
Policy makers are however expected to device ways to address every hurdle on its way to converting Africa’s demographic dividend into economic reality.