A growing population brings more potential consumers
Successful African countries in future will be those that manage to diversify their economies and bring about good and visionary leadership and governance.
This is already evident with some African countries making the transition from reliance on resources to value added economies and being relative stable.
In the 20th century, Africa was not a favoured investment destination. In the 13 years that followed solid growth was achieved in some African countries, although this has slowed down in recent times.
But according to Prof Professor André Roux, economics professor at the University of Stellenbosch Business School (USB), the outlook for Africa remains positive because of a growing number of consumers and a young population.
He was recently the guest speaker at the USB Executive Development (USB-ED) knowledge sharing breakfasts held in Botswana and Namibia.
"Although it differs from country to country, we can be positive about Africa. A growing population brings more potential consumers. It is estimated that by 2050/60 one out of every four consumers on the planet will be in Africa.
"Africa's population is also relatively young with half of it being under 20 years old, or half of the population by 2040 not being born yet. We can talk about a 'population dividend' with the working age growing faster than the young and the elderly."
Other factors are a movement to urban areas, and thus spending more to benefit the economy. Also evident is that more and more Africans are escaping poverty and are becoming middle income consumers. It is expected that by 2060 there will be 1 billion middle income consumers in Africa, equal to the current size of the American and European population.
Technology is playing a more important role in Africa with education, medicine and banking being at the forefront.
There is, however, another side to Africa with many structural problems in clean water, health, adult education, infrastructure and poor governance still persisting.
"One can look at Africa as a mixed balance sheet of good and bad," Roux pointed out.
Prospects for Africa should also be seen against the backdrop of five major world trends:
- The USA and Europe peaked in 2009/10 as western economic powers, being surpassed by the developing world consisting of nations such as China, India, Brazil, Russia and Indonesia. This could bring about an additional 3 billion middle income consumers by 2030, mostly from the developing world.
- The peak of globalisation and the development of resistance to it.
- A peak of world economic growth in 2009 and an expectation that it will be slower in years to come
- A rapid ageing in the population of the developed world
- The advent of the 4th Industrial Revolution with the peak of labour as an production factor and artificial intelligence and robots doing manual labour
"It seems that the world is heading for a 'new normal' with lower and stagnated economic growth and moderation," Roux said.
"The expectation is that we are on the doorstep of the 'age of consolidation' with moderate growth, more realism and sustainability – a better kind of growth than what we had before 2010 which was to a large extent based on spending via debt and the exploitation of resources."