Data & Intelligence
Investing in Development in Africa
Posted On: 31 Oct 2016 | Investisseurs & Partenaires
Sustained economic growth since the early 2000’s
The past decade has seen a turnaround in African economic growth. From 1980 to 1989 Africa’s Gross Domestic Product (GDP) grew by an average 1.8% per year. Between 1990 and 2000 GDP growth increased by 2.6% per year and by 5.3% per year between 2000 and 20101 . This economic growth is producing a growing African middle class that is now estimated at 350 million people2 , creating a strong demand for development in industry and infrastructure.
An encouraging yet fragile African context
In the past two years, however, growth has been more moderate. Reasons for this slowdown include a drop in many commodity prices, probably due to closing an exceptionally long cycle, as well as also macroeconomic mismanagement leading to excessively rapid public debt increases, and high inflation and exchange rate instability in an international context where borrowing conditions have tightened for most emerging economies. The global economic environment is affecting African countries differently. In resource-rich countries, growth has slowed down as lower commodity prices have strained government budgets and affected investment, while oil importers are benefiting from lower inflation and less pressure on current accounts. Countries developing their domestic market through “real economy” initiatives have experienced better economic performance, mostly due to domestic factors, including private consumption, public infrastructure development and private investment.