Question

Africa is moving away from a destination for development aid towards one of trade and investment. It has become a region that offers major (business) opportunities. It is the principal, if not the only, continent where enormous transformations are expected to take place in the coming decade. What has happened in Africa that has turned it from a hopeless continent to hopeful one in less than a decade? Briefly outline four (4) factors why Africa is known is an Emerging market

Answer 1

Introduction

The last 20-25 years of growth patterns in the world have shown how Asia has dominated the market place and has shown the world its capability in terms of constant growth and infrastructure and communication development. Countries such as China and India have cultivated their societies over this growth model and this has largely helped each one. Foreign countries such as the United States, Germany, and Russia etc. have heavily invested in the Asian sub-continent and beyond to allow for technological developments to take place which have benefited both the host and the country which is investing.

Up until the last decade or so, Africa was never considered for investment due to the rapid rise of Asia, this however is changing fast, and the continent is fast transforming into a developing or developed one and is on the path of stable growth. It is this reason that the region is also called the next best investment destination.

Case Specifics:-

Most countries across the African continent were extremely poor with little to no access to facilities such as modern healthcare, nutrition, social benefits, education etc. But this phenomenon has largely changed ever since businessmen started seeing the enormous opportunities that exist in the African continent.

The following are factors which have helped in the rise of Africa and its constant growth and development.

(1) Massive Capital Inflow and Investments:-

China for an example has invested billions of dollars into the African Continent for the development of technology, infrastructure and communication in most countries. This has resulted in rapid growth of countries which mean that they are now stable for investment. One of the main reason why companies would shy away from investing in the African continent is because they were lacking these elements which are critical for survival and growth of companies.

Once infrastructure has been developed, funds have started flowing into the country leading to change in the society and rapid development respectively.

(2) Availability of Resources and Land:-

No one has ever denied the fact, that Africa is one of the richest regions when it comes to availability of resources and land. This land though, has never been invested upon properly or utilized with modern technology to maximize the overall production and productivity of the nation.

This however has changed due to investment as mentioned above. That multiplied by the fact that land availability and natural resources are abundant in the area have made it possible for investors to bring in money and earn thus making the continent a favorable place for investment

(3) Low cost of Production:-

It is a known fact, that in countries wherein manpower availability is abundant, and where the labor force requires significantly lesser amount of money to conduct its operations, investments will flow. The major reason why countries such as China and India have developed so much is because of the simple fact that their overall cost of production is very low and man power is available at cheap rates.

The same factor now is facilitating the development of Africa. The country has majority of its population living below poverty line which readily are looking to work for a very small fraction of the salaries that would be needed to give to the western counterparts the fact that production can happen due to increased investment and availability of resources has lifted the continent into being a lucrative destination for investment.

Political Stability and fall of Corruption:-

From the 2000's, many countries of Africa like Ghana, Mauritius, and Namibia etc. have seen stable governments year after year and the end of radicalization and extremism. Any country for elevation of its economic status requires such steps which are constantly being taken in the African Continent by regimes year on year. This has also made some areas in particular, lucrative for investment and have made the African continent an emerging market respectively.

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