Africa Rising or Africa Uprising? Which is the true story of Africa today? This was the centre of the debate among major business executives, including media moguls, at the Bloomberg African Business Media Innovators conference in Johannesburg on Tuesday.
Under the “Chatham House” rules of the conference, the participants can’t be quoted by name. One senior executive said the growth of the Sub-Saharan African economy as a whole over the past decade had been “an almost staggering 50%”, versus just 23% for the world at large, and only 13% in the United States.
He said that the other significant macroeconomic statistic was that after peaking in 2008, average inflation across Sub-Saharan Africa had declined and was continuing to decline or stabilising at around 7,8%. “Rising GDP and declining inflation are a good convergence of statistics in Sub-Saharan Africa,” he said.
And he added that Sub-Saharan Africa – especially Kenya and Nigeria – was currently the best-performing bond markets among emerging markets. Bond investors in Nigeria had registered returns of 40% and those in Kenya 56% since 2014. This he said was surprising, especially in Nigeria since the price of oil, its major product by far, had dropped some 50% in that period.
He attributed these good figures largely to the demographics of Sub-Sahara, which was now some 634 million people but was growing faster than anywhere else in the world, especially the plus 15-year-old group which were the consumers of the future.
Equity, financial, consumer and material markets were generally outperforming all other emerging markets.
Another executive noted that Angola had just attracted US$7 billion in investors for a $1,5 sovereign bond issue in New York, despite halving its government budget because of the plunge in the oil price.
But another entrepreneur disagreed with these optimistic views, saying such macroeconomic data concealed the true economic picture of Africa.
He noted that Creditsuisse had just released a report which fundamentally rebuffed the generally-accepted statistic put out by the African Development Bank that Africa now has a middle class of about 200 million people.
Creditsuisse said the African middle class was actually about 18 million – which was 3,3% of the 500 million adults in Africa. “That sits very uncomfortably with the African narrative that the African Development Bank is putting out,” he said.
And he added that in his extensive travels up and down Africa, he had discovered that most Africans – living in townships and squatter camps – were not living the Africa Rising narrative.
“We ought to be cautious about the data we use,” he added. “We have gotten Africa wrong so many times.” He suggested that Africa needed to develop its own institutions to provide better economic data because most of the data now being used were produced by foreigners not Africans themselves.
And others said they believed that if Africa produced better data, it would attract more investment, as investors were wary about entering uncharted territory.
Another executive from a major multinational also qualified the optimistic figures about the African economies, saying both the equity and bond markets were thinly traded. He said Africa would need to spend US$90 billion a year on infrastructure for the next ten to 15 years if it really wanted to sustain the Africa Rising narrative.
That kind of money was not there. But that was the kind of investment needed to go beyond the financial investments which had produced the optimistic figures. Without this major investment in infrastructure, he worried, the African economy would slow down as the continent’s narrative changed from Africa Rising to “Africa is not such a good place to invest in –there’s a lot of risk and so on.”
Another executive said that if Africa could maintain slow, steady growth it would develop deep capital markets and vindicate the Africa Rising narrative – rather than the Africa Uprising narrative that was slowly starting to replace it because of conflicts on the continent.
This executive said he opted for the former narrative just because the demographics of Africa, with its fast-rising youth population made it such a promising consumer market.