Emerging Opportunities for Business in Africa

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The new AfricA

EmErging opportunitiEs for businEss and africa

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The new AfricA
EmErging opportunitiEs for businEss and africa

FOREWORD
EmErging opportunitiEs for businEss and africa

The new AfricA

The world is waking up to a new africa. The predominant theme in the emerging narrative is no longer war, famine and disease but rather strong economic performance. The resources industry has played an important role in this shift but economic diversification is coming to many African countries, where an expanding consumer base is fuelling growth in other sectors. And measurable improvements in governance and human development suggest that these changes will be lasting. Investors are realising that africa is good for business. Strong economic growth, business friendly reforms, mature financial institutions and some large economies (South Africa, Nigeria and Egypt among them) add up to an enticing proposition. It is no wonder that foreign investment in Africa is showing strong growth and that returns on investment in Africa, both foreign and domestic, are among the highest in the world. Increased investor interest is having a beneficial impact on many African countries: business is good for africa. Investment is creating jobs which have a wide ripple effect. And foreign companies are helping to develop domestic industries through the transfer of skills and technology and by generating demand for extended supply chains. A sharper investor appetite for African opportunities is sparking a virtuous circle of developments. As companies wake up to Africa’s potential, they are making investments which develop local industries. As those economies grow, they present yet more opportunities to investors and spur governments to make their business environment more attractive to investors. Africa has turned a new page. The prospects look bright and this is only the start of the story.

Zahid Torres-Rahman director business action for africa

Michael Lalor partner Ernst & Young south africa

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CONTENTS
Africa’s prospects are improving sylvia solf, program manager, doing business, international finance corporation / the World bank group nancy dubosse, Head of research, Economic governance programme at idasa – the institute for democracy in africa Africa is good for business cynthia carroll, chief Executive officer, anglo american plc godfrey davies, chief financial officer, cdc group plc V. shankar, cEo for Europe, the middle East, africa and the americas, standard chartered plc Business is good for Africa graham mackay, chief Executive officer, sabmiller plc professor Ethan Kapstein, insEad chair of political Economy and Visiting fellow, center for global development initial conclusions: Thinking Differently 04 07 09 11 18 20 22 24 25 27 29

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photo: World bank

The new AfricA
EmErging opportunitiEs for businEss and africa

AFRiCA’S pROSpECTS ARE iMpROviNg
there is a new african narrative emerging. for decades, postcolonial africa has commonly been portrayed in pessimistic terms; economic stagnation, political instability, armed conflict, poverty, famine and disease are key themes in that narrative. However, the end of the cold War marked a decisive shift in africa’s prospects. this shift was given momentum by a longer-term process of political, economic and regulatory reform that was initiated in the 1990s. armed conflict reduced significantly, providing the relative stability required for economic growth and development. inflation was brought under control, foreign debt and budget deficits reduced, state-owned enterprises privatised, regulatory and legal systems strengthened, and many african economies were opened up to international trade. that has invigorated markets and commerce, and is increasingly conducive to business and investment. furthermore, widespread reform, together with steady improvement in political governance, the commodities boom, substantially increased levels of...
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