Business and Finance
Investors should get in on Africa growth
Dr. Ngozi Okonjo-Iweala Managing Director of the World Bank. Many investors are overlooking growth opportunities in Africa where some fast-growing economies offer potentially lucrative investments in infrastructure, telecommunications and agriculture, a top World Bank official said.
While investment funds have flowed into emerging markets and some frontier markets in recent years, many African countries enjoying growth are struggling to attract the attention of a broad range of investors, said Ngozi Okonjo-Iweala, a managing director at the World Bank.
"If you look at investment on the continent, it's more and more emerging economy countries that are coming in," she said. "The Brazilians and the Indians are moving in quite rapidly. South Africa is investing massively in other African countries."
But the healthy expansion in many of the region's economies is "still a little-known story," Okonjo-Iweala said, speaking during an emerging markets forum in Miami organized by the hedge fund Everest Capital. "And people still think the risk is too high."
Emerging markets have helped drive the global recovery, but investors now worry some emerging economies may be growing too fast.
Much of Africa, meanwhile, has enjoyed a decade of healthy growth and relative political stability, and the bank expects the region's economy to grow 5 percent in 2011.
Okonjo-Iweala, a former Nigerian finance minister, said she expects strong growth to continue in at least 10 African economies — Ghana, Liberia, Congo, Ethiopia, Mozambique, Angola, Tanzania, Nigeria, Zambia and the Democratic Republic of Congo.
"It's not just natural resource exporters or oil exporters — we are finding that growth is pretty widespread," she added.
Although commodities including natural gas, minerals and gemstones continue to be a magnet for some foreign investment, Okonjo-Iweala said investors should take a closer look at the power and agricultural sectors, along with Internet and cellular telephones.
Nigeria's moves to privatize several power stations and electricity distribution firms offers one possible opportunity, she said.
Explosive growth in Africa's cellular phone market, particularly in Kenya, should also garner attention, Okonjo-Iweala said, adding that more than 65% of the population now lives within reach of a wireless network, up from 1% 10 years ago.
"This is a real revolution. It opens up all sorts of possibilities because mobile phones have become the single largest platform that can be used for delivering services to the poor," she said.
The agriculture sector across the region is also ripe, she added. "Yields for many grains and other crops are one-third of those found in Asia, so people see potential to increase output for both domestic and export markets," Okonjo-Iweala said.
Still, she acknowledged that investing in Africa continues to present challenges, particularly on issues like excessive bureaucracy and corruption.
"But there is a general feeling that we are turning a corner in terms of opportunities," Okonjo-Iweala said.