According to a recent report, Africa is considered to lead global economic growth in the conceivable future. it is the home of almost two billion people with rising household spending and growth in foreign direct investment. The continent is rich in natural resources with a majority young productive population, the potential is huge. it is also the fastest-growing region in the world and projected to grow by more than 4.8 % of its GDP. This growth includes demand in the domestic market due to the rise of the middle-class population.
With these statistics in mind, why is it that international companies with good prospects exit from the African market? Recently a report suggested that 34 stores under the Massmart holdings in South Africa intend to close due to salary increase and other related issues. What can be done to help them remain operational and stay profitable as a going concern? What is the role of government and trade institutions including the labour unions in assisting businesses do well and employees secure their jobs?
There are huge potentials in other African markets and opportunities for international traders like Massmart to tap the potentials of emerging consumer-based economies on the continent. International brands should be encouraged to do well not only for their customers but also for economic growth and prosperity.
The Parent company of Massmart holdings is Walmart International and they confirmed their commitment to all existing operations in sub-Saharan Africa.
The African continental free trade agreement ACFTA has opened up opportunities for multinationals to diversify into unchartered markets especially emerging economies like Angola, Ethiopia, Kenya, Nigeria, South Africa, and Rwanda.
According to the International Monetary Fund, Angola’s economy will contract for a fourth straight year in 2019 yet investors are happy with the reforms by its central bank especially the devaluation of the Angolan Kwanza by 32% against the US Dollar. This has led to the ease of foreign exchange shortages that were crippling businesses since the fall of crude oil prices five years ago.
Ethiopia is the fastest growing economy in the world but the inflation rate has increased by over 20% with shortages of foreign exchange. The Nobel peace prize winner for 2019 and Prime Minister of Ethiopia Abiy Ahmed recently secured a three-year loan of US$2.9 billion from the IMF to enable the state-run economy to open up to international investors. The Ethiopian central bank is currently evaluating the overvalued Ethiopian currency, the Birr and Investors see this move as the most progressive in Africa.
The growth rate for Kenya in 2020 is forecasted to be 5.8% making it one of the continents best-performing economies on a long term while Nigeria’s foreign reserves dropped by 14% since July, yet the Naira remains stable said the Central Bank Godwin Emefiele and its economy remains one of the best for trade.
South Africa has seen investors pull out about US$10 billion from the stock exchange amid fears of the crisis at power utility ESKOM and a worrying sign that rating agency Moody’s might cut the country’s investment grade to junk. However, investors will be quick to return as soon as reforms in the Power sector yield positives while the East African state of Rwanda has one of the continent’s fastest-growing economies which is expected to grow by 8.5% this year.
By Abiodun Abidoye
Member Southern African Freelancers Association
The 2nd National Peoples Assembly of the Economic Freedom Fighters South Africa held at the NASREC expo centre in Soweto elected new leadership with only President Julius Malema and Deputy president Floyd Shivambu returning to their previous position.
The top six executive position and elected members are;
President: Julius Malema
Deputy President: Floyd Shivambu
National Chairperson: Veronica Mente
Secretary General: Marshall Dlamini
Deputy Secretary General: Poppy Mailola
Treasurer General: Omphile Maotwe
The Economic Freedom Fighters is the fastest growing political party in South Africa since it got into parliament in the 2014 National Elections.
Share your opinion about the outcome of this 2nd EFF National People’s Assembly.