BRICS on the Heels of Africa

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If you are used to thinking of Africa as a dark spot on the economic map of the world – a continent rife with ethnic conflicts, corrupt dictatorships, religious strife and hunger – think again. You should rid yourself of this stereotype once and for all, believes Charles Robertson, chief economist at Renaissance Capital and lead author of a book on the investment appeal of the New Africa, The Fastest Billion: The Story Behind Africa’s Economic Revolution. According to him, at the end of the last century the continent went through a long period of stagnation, but now stands to get on a faster growth track and ultimately bridge the gap with the most developed regions of the world, whose economies have slowed down significantly as a result of the global economic crisis.

Indeed, for the last several years the African region has remained a world leader in terms of GDP growth rate. Libya, the fastest-growing economy in the world, grew 21.9% in 2012, and will continue to show the same rate in 2013 according to Deutsche Bank. Notwithstanding that this dynamic development might be spurred on by the country’s post-war recovery, the rates of economic expansion shown by other African countries also impress. According to the World Bank, last year the GDP of sub-Saharan African countries – excluding regional leader South Africa – showed on average 5.8% growth, with a third of them showing a growth rate in excess of 6%.

Deutsche Bank forecasts that in the near future, or at least by 2017, Africa will match the Chinese economic growth rate, which remains the most dynamic economy in the world.

It is not just the current favorable environment on world commodity markets that accounts for Africa’s successes. Thanks to economic reforms, democratic transformations and strict financial discipline, in recent years many countries in the region have managed to significantly improve their image with investors, as confirmed by the sustainable increase in investments as a share of GDP. Furthermore, competition for a chance to invest on the African continent, which apart from being rich in natural resources is transforming itself into a promising market for finished goods, is becoming stiffer. And the BRICS countries are certainly not outsiders in this rapidly accelerating race for Africa.

Suffice it to look at the following (far from exhaustive) list of companies from Brazil, Russia, India, China and South Africa that have already invested and continue to invest significant amounts in the African economy, and study the map prepared by BRICS Business Magazine jointly with the Russian Academy of Sciences Institute for African Studies. We can be sure that each year there will be fewer and fewer uncharted areas on it. Those companies that have not yet staked their claim in Africa should get a move on; otherwise they risk missing out on these opportunities.

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