South Africa is Ranked Africa’s Leading Economy
South Africa has edged margins ahead of Nigeria to become the continent’s leading emerging economy. The Emerging Economies report, released this week by Grant Thornton, has showed how the rapidly growing country is increasingly regarded as an investment hotspot.
According to the report, which determines countries that are ripe for foreign investment, South Africa is now placed at 14th on the global rankings scale and is the only African country to finish inside the world’s top 15 economies. Countries were assessed on a number of key criteria, including populations, wealth, economic size, involvement in world trade, growth prospects and speed of development.
The report was also highly significant for fellow developing African nation, Nigeria, which ranked second in the continent. The sub-Saharan country moved up the rankings by nine places since the last assessment; and economic forecasters suggest that it is not far behind its successor.
Two other African countries were also ranked in the Index; they were Egypt and Algeria, which finished 22nd and 26th respectively.
Earlier this month it was reported that South African business confidence was also on the rise. The five month high in investor confidence levels was attributed to high vehicle sales and the expansion of the manufacturing sector. The South African Chamber of Commerce and Industry also praised credit growth, saying that it had made “positive contributions to business confidence.”
Business growth returns
All this will come as good news for Africa’s businesses. Business confidence in Africa has suffered many knocks in recent years, despite many of its countries showing promising economic prospects. In the summer of last year, international newspapers reported on Africa’s drug trafficking problem. The Huffington Post reported that Latin American drug cartels were increasingly using Africa as a route through which to smuggle cocaine into Europe. The drug problem raised questions over Africa’s security and business confidence in several regions declined. That said, small business are filling gaps and are helping, slowly, to overcome drug problems that have blighted the continent. It is hoped these will grow to help themselves, but also to untap Africa's potential and get more people off drugs. Such positive drug programmes are working all over the world, so there is no reason why they cannot work in Africa too.
Western Africa’s increased global trading ensured that confidence didn’t stay low for long; many countries recognised that the continent’s potential far outweighed its insecurities. Even the ongoing political instabilities in East Africa, Mali and the Democratic Republic of Congo have done little to wipe away international business interest in the continent. Confidence in Africa has already been on the up since last summer; the Global Pulse Index, from the Young Presidents Organisation, showed that Africa’s business confidence is currently the highest in the world – with a score of 67.6 overall.
Results from the last quarter of 2012 show that confidence in the continent has increased by 6.4 points – making up for a shaky third quarter. This recovery was largely linked to the ongoing economic developments in South Africa. The Index, which surveys top business executives, revealed that a whopping 81 percent of African CEOs expected that their sales would increase throughout 2013 by more than ten percent. Just two percent expected their sales to decline.
Booming technology sector
Manufacturing and automotive are not the only sectors that are doing well in South Africa – and indeed further afield in the continent; the technology sector is currently experiencing a boom in many of Africa’s developing economies. Along with other emerging technology centres, such as Kenya, Ghana, Angola and Nigeria, South Africa is being hailed as one to watch for keen investors. IBM has recently opened a South African branch, shortly after the company’s boss, Ginni Rometty, praised Africa’s technology opportunities. The Economist reported just last week that many technology companies were following IBMs lead by hedging their bets on Africa. The company also recently invested in Senegal, opening an office in the country’s capital, Dakar. “IBM believes Africa will bring in billions,” wrote the news site’s reporter. Senegal is just IBM’s latest conquest, however; since July 2011, when it won a $1.5 billion contract to provide an Indian mobile phone company with IT services from 16 African countries, the technology giant has opened offices in Angola, Tanzania, Mauritius and Kenya.
Business looks sure to hot up for Africa even more in 2013. South Africa is poised to cement its reputation as a global player; at this year’s BRICS Summit it plans to strengthen its relationships with Brazil, Russia, India and China in order to take advantage of the notion that emerging nations are soon expected to outperform developed nations.
by Jennifer Little