The Institute of International Finance, according to its maiden report on sub-Saharan Africa, said that the continent could maintain the 4.7% annual growth seen since 2007. Africa, regarded as the world’s second fastest growing region, has witnessed impressive growth and the IIF believes the region can attract even more investors.
According to George Abed, Head of the IIF’s Africa and Middle East, “After emerging Asia, Africa is the fastest-growing region in today’s world. Many countries on the African continent have achieved great progress in stabilising their economies and consolidating their rates of growth. What is remarkable about this outcome is that it has been achieved during a period of unprecedented global financial turbulence.”
A report covering seven of the region’s leading economies- Côte d’Ivoire, Ghana, Kenya, Nigeria, Tanzania, Zambia and South Africa- suggests that lower debt, better economic management, political stability and an extended resource boom will guarantee Africa’s steady economic rise.
The report also reveals that, excluding South Africa, the other six countries witnessed a total external debt decline of 45% of gross domestic product (GDP) between 2003 and 2011. However, South Africa continues to enjoy a bulk of the continent’s inward portfolio investments.
Emphasizing an increased interest in African government debt, Moody’s recently launched its first sovereign ratings for Nigeria, Kenya and Zambia. The ratings measure how likely a country is to err on its debt and go further to determine a government’s cost of borrowing. Moody’s gave Nigeria the highest rating of the trio, at Ba3, just below investment grade.
The IIF Head has however, warned African governments to be careful still, saying, “We should keep in mind that Africa’s recent strong performance has been materially aided by massive debt relief and a sustained commodity boom. The future global environment may not be so accommodating”.
The IIF represents leading banks and financial institutions around the world, notably those who hold large amounts of government bonds.
Still, the basics seem to be in place for Africa to witness the kind of remarkable growth that has caused regions like South East Asia and Latin America to blossom.