05 Feb Africa in 2020 and the bright business opportunities beyond: the way we see it at Rand Sandton
January 2020 – The year 2020 continues to carry the promise of an Africa that is undergoing structural transformation, to ensure an inclusive and prosperous society of both today and tomorrow. Just like in the last decade, the current fundamentals suggest at least in the first half of this new decade, economic growth across Africa will continue to outperform that of other regions, with the continent continuing to be home to six to seven of the world’s 10 fastest-growing economies. Africa’s economy expanded by 3.4 percent in 2019 and is expected to pick up to 3.9 percent in 2020 and 4.1 percent in 2021 even though below historical highs of recent times. Besides growth’s fundamentals improving, there is a gradual shift from private consumption toward investment and exports raising further the possibility of accelerated structural transformation. For the first time in a decade, investment accounted for more than half the continent’s growth, with private consumption accounting for less than one third.
Unfortunately, recent African growth has been less than inclusive. Only about a third of African countries achieved inclusive growth, barely reducing both poverty and inequality. This calls for a renewed sense of purpose and collective action among African and global stakeholders to improve the voice and livelihoods of all Africans. This is doable given the blueprints of the Sustainable Development Goals and the African Union’s Agenda 2063 as symbols and frameworks encapsulating the shared energy and excitement around Africa’s potential. The continent must take advantage of tailwinds such as improvement in business environments, greater push for regional integration centered around the implementation of the African Continental Free Trade Agreement, and the transformational technologies of Fourth Industrial Revolution. These tailwinds are positioning Africa for enhanced trade, investment, and mutually beneficial partnerships. These realities have resulted in the recent unprecedented interest of an increasingly diversified group of external partners and investors for engagement with Africa.
It is critical to unlock the continent’s promise using its vast natural and human resources. More importantly, we must ensure job creation for the growing youth labor force. The lingering gaps in good and inclusive governance must be filled, and climate change as well as state fragility that threaten to reverse the hard-fought-for gains of recent decades must be tackled head on. Africa must take a few critical actions in 2020 to push itself to the next frontier.
Speeding up implementation of the SDGS and Agenda 2063 – African governments must strive to develop credible and inclusive policy frameworks. While the Sustainable Development Goals (SDGs) and Agenda 2063 will shape policy priorities for African governments and their partners, these must be realistically translated at the national and local levels into programmes of actions. Currently progress has been uneven both across countries and across goals, often hindered by a lack of coordination across national and local governments as well as the global system at large. Notably, while the progress in areas such as health and education show promise, persistent gaps in other areas, such as service delivery and infrastructure, hold the continent back from making true, sustainable gains. Given that financing continues to be the biggest hindrance to success, greater focus on domestic resource mobilization as outlined in the Addis Ababa Action Agenda is crucial for Africa to get beyond the finish line.
Peace and security: insecurity in several African countries such as the DRC, Mali, Niger, Burkina Faso and across much of the Sahel threatens to derail the potential of sustainable development for the continent. Insecurity weakens institution-building efforts and destroys physical infrastructure necessary for sustainable development. More broadly, good governance must be inclusive. Â Support for widespread democracy as well as the empowerment of women, youth and the disabled can and will bring gains for all. Indeed, it is comforting that the February 2020 Heads of State Summit for African Union is on silencing the gun and strengthening the development-security nexus in the implementation of Agenda 2063.
Keeping the young on sight: Africa is a very young continent. The dangers associated with the mismatch between demographic trends and job creation must be urgently tackled for the continent to reap any demographic dividends. With rapid population growth and urbanization, African leaders must design and implement policies that encourage job creation and inclusive service delivery. Governments must invest and create jobs in sectors such as agriculture, financial services and mining, as well as prepare young people for the jobs of the future through relevant skills mixes and improve the quality of living in Africa’s rapidly growing cities and at the same time deprived rural areas.
Sustainable use of our resources and climate stewardship: While it is comforting that Africa is endowed with vast resources, how these resources are transformed for development will remain a key policy issue. The threat of climate change demands sustainable use of our resources and strategic stewardship of all environmental assets. Food security is particularly lurking in the background as climate change threatens means of production and the nutrition of the continent’s people. At the same time, as the experiences of Mozambique, Malawi and Zimbabwe showed after Cyclones Idai and Kenneth showed, the perils of increasing and stronger natural disasters loom over the millions of people living in low-elevation coastal zones as well as inlands. We need comprehensive global and local action to foster mitigation and adaptation to climate change. Otherwise reforms and investments to enhance economic growth and human development will be brought to naught.
Technology, industrial transformation and the 4IR: Be it in agriculture, energy, financial services, mining and manufacturing, technology and innovation will remain critical for Africa to keep the forward momentum. Correctly, many policy makers now see the Fourth Industrial Revolution and its accompanying technologies as a pathway to solving the challenges facing the continent. Progress towards goals such as education access, climate change mitigation and adaptation, and inclusive service delivery must be enhanced by digital tools both already available and on the horizon. New technology—such as artificial intelligence— can and should, together with enabling and empowering policies, improve business, health care, education and the livelihoods of all. Harnessing the Fourth Industrial Revolution is crucial for Africa to compete and win on the world stage.  Emboldened by speedy implementation of the African Continental Free Trade Agreement, policies to encourage R&D, innovation and integration must be in place to propel the continent into new frontiers of business and human development.
Resource diplomacy: For far too long, the African continent has experienced parasitic co-existence with the rest of the world when it came of how its natural resources have been tapped and used. This relationship continues in many instances unabated. Africa must explore new commercial and diplomatic opportunities to redefine its natural resources governance. Through the African Mining Vision, Africa is creating new parameters in the natural space as it empowers itself from within and redefining how foreign partners looking to tap into this potential should be engaged. Africa must leverage its natural resources to define the landscape for a new development cooperation architecture.
Our work at Rand Sandton Consulting and the job ahead:  Africa is at a crossroad and with many unfinished businesses. We must constantly redefine the implementation priorities for the continent over the next decade as it seeks to deliver the SDGs. Our experts will endeavor to explore key trends that will affect Africa’s pursuit of better livelihoods for all and suggest solutions for structural transformation. In the course of the year, we will continue to track opportunities and challenges, offering recommendations for African and international stakeholders to create and support a strong, sustainable, and prosperous continent. We look forward to further exploring Africa’s priorities and developing business strategies for our clients and partners based on rigorous research reports, commentary, engagement, and targeted action.