Addis Ababa, 15 August 2014 (WIC) – Economists say the new investment opportunity hotspots in Africa are cities in Ethiopia, Sudan, Burkina Faso and Cote d’Ivoire.If you’re looking to do business in Africa, but you’re unsure of which emerging market to tap into, then Kenya, Sudan, Ethiopia and Senegal are among your best bets.
This is according to the latest PricewaterhouseCooper (PwC) Global Economy Watch report which projects that by 2040, sub-Saharan Africa will be the fastest growing economy in the region. It is also expected to be the region with the biggest labour workforce in the world, with high GDP growth rates expected to hit around $140 billion (nearly R1,5 trillion) by 2030.
The so-called ‘Next 10’ cities that economists have identified as ones to watch are: Ibadan and Kano in Nigeria, Addis Ababa in Ethiopia, Ouagadougou in Burkina Faso, Dakar in Senegal, Nairobi in Kenya, Abidjan in Cote d’Ivoire, Khartoum in Sudan, Luanda in Angola and Dar es Salaam in Tanzania.
Targeting cities that are projected to almost double in size in the next two decades is where the real opportunities for investment lie, the report suggests. UN projections indicate that the cities of Dar es Salaam and Luanda could have bigger populations than London has now.
“Cities are the typical entry points for businesses trying to expand in new overseas markets. This is because they enable closer interaction with customers in a relatively small geographic space, which in turn helps contain distribution costs,” the report states.
The PwC report echoes comments made in the International Monetary Fund’s regional economic outlook for sub-Saharan Africa report earlier this year, which stated that overall growth in the region would most likely remain among the top 30% in the world, driven primarily by large investments in infrastructure, mining and maturing investments.
Dr Roelof Botha, an economic advisor to PwC, says several “economic phenomena” in the sub-Saharan Africa region, such as new discoveries in gold and gas, heavy investment in infrastructure development and sustained per capital income growth are attracting global investment.
But, in order for these cities to deliver on their full potential, the report points to three major current “hurdles” that could derail the pace at which the ‘Next 10’ will grow.
The biggest challenge facing African countries is the poor quality of ‘hard’ infrastructure such as roads and railway, followed by inadequate ‘soft’ infrastructure like schools, universities and hospitals and the “growing pains arising from political, legal and regulatory institutions struggling to deal with a bigger and more complicated economy.”
“The challenges that policy makers face is to convert Africa’s demographic dividend into economic reality by overcoming these hurdles. 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 programs,” Stanley Subramoney, PwC South market region strategy leader said in a statement. (destinyman.com)