African cities are the next big markets for investors thanks to the rising consumer spending and massive infrastructure investments.
According to a new report by the Economist Intelligence Unit, eight of the world’s 20 fastest growing economies will be African.
Tanzania not in the list.
“A recent survey conducted by The Economist Group of 217 global companies based in 45 countries revealed that expansion in Africa is a priority for two thirds of them within the next decade,” notes the report released last week.
The report notes that although Africa’s growth story has revolved around commodities, Africa’s growth is now becoming more diverse because of the “peace dividend” being realised after years of armed conflict and military rule that has given way to democracy.
There is also rapid urbanisation as half of all Africans are under 20 and are rapidly moving to cities. According to the Habitat, more than 40 per cent of Africans now live in urban areas.
Other growth drivers include improved governance because of greater accountability that comes hand-in-hand with democracy, and the slow strengthening of institutions; growing trade that is replacing aid, thanks to the growing trade relations with China.They also include the rise of technology exemplified by the rise in the number of mobile subscribers in Africa that exceeded the 0.5 billion mark in 2010, allowing companies greater access to consumers.
The infrastructure investment largely by Chinese companies is improving the state of roads, airports, and railway lines, fixing critical infrastructure component that is attracting foreign investors and sparking more domestic investment.
MasterCard African Cities Growth Index 2013 indicates that Accra, Lusaka and Luanda, the capital cities of Ghana, Zambia and Angola respectively, as the Sub-Saharan African cities that have the highest potential for growth over the next five years.
The index was developed in the final quarter of last year and analysed 19 cities across Sub-Saharan Africa ranking them according to their growth potential between last year and 2017.
“Growing urbanisation, combined with the fact that the center of global economic gravity is shifting to dynamic emerging markets such as those found in Africa, means that the continent’s cities will play a much bigger role in driving the economic growth of their respective countries,” said Michael Miebach, president, MasterCard Middle East and Africa.
Among the 25 cities that the Economist Intelligence Unit’s report identifies as being the growth frontiers include Cape Town, Durban, Johannesburg, Nairobi, Tunis, Dakar, Cairo, Tripoli, Addis Ababa and Casablanca among others.
And as for Dar ES Salaam. Let us hope for the best. I would love to see it on the list.