Africa has achieved sustainable robust growth and the continent stands a very good chance of attracting more number of investors. This was stated on Wednesday by an influential group that represented the world’s top financial institutions.Africa, which was the world’s second fastest growing region, could maintain 4.7 percent annual growth seen since 2007, according to the Institute of International Finance in its first report on sub-Saharan Africa. The institute represents many of the leading banks and financial institutions around the world, primarily those who hold large amounts of government bonds.
George Abed, head of the institute’s Africa and Middle East departments said that after Asia, Africa is the fastest-growing region in the world. He added that many of the countries in the continent have achieved rapid progress in stabilizing their economies and speeding up their growth rate, and all this was achieved in a period of global financial turbulence.
In a report on the region’s leading economies, the IIF said a combination of lower debt, better economic management, political stability, and a period of economic growth had brought about this achievement. In six of the countries, namely Ivory Coast, Ghana, Kenya, Nigeria, Tanzania, and Zambia the total external debt had sharply come down from 62% of GDP in 2003 to 17% in 2011. South Africa, which is Africa’s largest economy, continues to receive the majority of the continent’s portfolio investments.
Another important indication of the increased liking for African government debt, was that Moody’s launched its first sovereign ratings for Nigeria, Kenya and Zambia on Wednesday. All these countries beat troubled Greece in the creditworthiness ratings. The ratings give a fair indication of how likely a country is to default on its debt and help in determining a government’s cost of borrowing.
Jacques Els of Moody’s South Africa said that Moody’s believed that the continent’s growth will be characterized by increasing utilisation of international capital market finance. However, the IIF warned that the African government must be on their toes. Mr. Abed was of the opinion that Africa’s strong performance has been assisted by massive debt relief and a sustained commodity boom. The future global environment may not be so accommodating. Continued political stability will also be a major factor, he added.
McKinsey Consultants, also released a report on Wednesday, which said that African households were becoming more and more richer as the continent’s economies surged forward, and offered tremendous growth opportunities for consumer companies. A study by them showed that 84 percent of Africans were quite optimistic about their economic future and already urban Africans were, on an average, spending more on apparel and food than those in Brazil, China and India.
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