Africa Rising: Economic Development And Growth Nodes In SADC Region

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VENTURES AFRICA – “Fortune favours the brave.” Well, not always. Sometimes it can prove you to be ill-informed and lacking in judgement related to economic development in general!

It is with pride that I am writing this article with reflection on a printed edition of the The Economist regrettably labelled Africa “the hopeless continent” a decade ago, a fundamental and profound change has taken hold of the reigns for keeping the global economy’s head above water.

There are “Elephants” in the room scaring off probable foreign investors that would otherwise be streaming into the US and European economies. Firstly, looking back at the re-runs of governmental investigations into the banking and financial roles that led to a meltdown, proves that the focus on “greed” proved a distraction to the colossal impact such ignorant decisions would have had. Then, we consider PIIGS (Portugal, Ireland Italy and Greece) and the phenomenal implications the financial meltdown has had on these countries, coupled with the lack of foresight in fiscal bail-outs that did not work – at all. I would be watching the IPO of Facebook with interest over the next month or so. So far the share price seems overstated.

So let’s not rub too much salt on this wound as Africa itself needs to prove “herself” fit to reap the rewards of what “she” sows NOW.

In addition to considering SADC as an investment destination, cognisance should be given to the following factors for economic growth;

– Water

– Energy

– Climate

In general, the SADC region has remained unscathed in comparison to other regions in Africa. The energy sector, albeit short on sufficient energy brings the prospect of foreign direct investment (FDI) as considered in South Africa due to the energy shortfall. Water resources remain stable in comparison to that required for scalable trajectory of infrastructure growth. Water in particular, was a concern in Zimbabwe.

Other factors of concern are the overall backing system and status quo companies may have if debt is a requirement to stimulate growth. Liquidity in Zimbabwe is not the first choice and the Zimbabwean government does not have a lender of last resort resulting in liquidity dearth.

Economic Development and Growth Nodes

A look at the mineral resources sector has shown that Zimbabwe is a pretty good bet. China has long seen the potential of this sector and made significant investments. But let’s not thank China just yet!

Estimated economic growth for Zimbabwe stands at 9.4 percent and the mining sectors seems set to gain a trajectory to 15.9% with agriculture slightly behind, rising to 11.6%. Subsistence farming in Zimbabwe has not have bad “pickings” itself, with maize showing gains in the south-east of the country. Emerging markets show above average growth of 5.4% due to the contracting eurozone while Zimbabwe stands out….this time not as a sore thumb. The development of supply chains from industry in Zimbabwe has growth nodes for various players in surrounding countries.

Another “windfall” for development is land. Theory suggests that land has significant potential in SADC based on the following indicators;

– Most countries have extreme spatial inequalities – 50 percent of US GDP is produced in 2 percent of space; 82 percent of the EU’s GDP is produced in 36 percent of its area.

– Convergence between developed and undeveloped regions takes a long timeConvergence between regions more successful where poor regions are functionally linked and connected to centres of economic activity.

– Regions and countries with unequal spatial economies converge at about 2 percent a year (if at all).

National Spatial Development Perspective

Africa’s youth, what potential “she” bears herein? Africa’s population is set to double in the next 40 years moving a median of young people into productive years. This has the potential to create a more competitive spirit among Africa’s new ‘diamonds’, by opening up markets to become more competitive as well. In turn this makes education more competitive and has the ability to reduce the cost of education. Should the Department of Education and Training – Green Paper adopt a clever strategy, it could lead education strategy into the SADC region with a positive spill-over effect.

Commodities from 1981 to 2010 that cause growth spurts in SADC are mainly due to the fact that Africa holds half of the world’s Gold reserves, a third of ‘her’ diamonds, produces a significant portion of global copper, Colton, platinum, just to name a few. The supply chains in these markets do not have predominant African ownership. This has led to monetary seepage into the ‘developed’ economies. For all her life, Africa has made the developed world, what it is today. And it all started with Slavery.

With HIV/AIDS, malaria and TB causing significant deaths throughout Africa, new markets exist for competitive pharmaceutical solutions as opposed to a grant/donor system, which by the way is paying a huge role in saving lives.

Thus infrastructure should be used as a carrot to attract FDI instead of Government making direct investments into such projects. Forming partnerships could assist SADC government through NEPAD to aid this process. Infrastructure should also be implemented as a sustainable option to tax payers and not leading a development trajectory as the pool of resources across the board needs to feed the tax system to recoup any investments.

What Africa, will you do with your opportunity?