Subscribe to Research and Insight Newsletter
Interested in receiving more content by email?
The Sub-Saharan region of Africa has grown at more than 5% for the last 10 years and grew at 4% during the financial crisis when most of the developed world plunged into depression. Can the region continue with this impressive growth and what are some of the opportunities?
SA has seen the rand weaken on a recent slew of bad news ranging from Moody’s rating downgrades of both SA’s and its key corporates’ debt (see “Ratings update: Moody’s indicates further downgrades may follow yesterday’s downgrade of SA government bonds”, 28th September 2012, contact details below), S&P’s downgrade, violent strike action and increased political tensions, to worsening global economic activity and renewed concerns over the euro zone debt crisis.
Lately, economists have been worried that China’s sky rocketing growth trends are doomed for a hard landing crash. Recent GDP numbers have put these fears to rest, at least temporarily. However, future growth will have to be managed carefully and the Chinese government has to maintain a delicate balance in order to avoid a crash and burn scenario, particularly the impact on the rest of the world.
With many developed economies having lost their lustre and China and India displaying some cracks in their growth stories, where else can investors look for the next opportunity? Perhaps the dark continent of Africa offers some light and reasons why returns could be higher than previously anticipated.
The good news is that South Africans have become more affluent (on average) since the ANC came to power in 1994. This cheering fact may appear at odds with the bearish views sometimes dispersed on SA, but the hard data confirms it.