The Incredible Investment Potential Of Africa

AFRICA

A Golden Union

Africa’s 1.3 billion people live and work in a $3.4 trillion economy, compared with China’s 1.4 billion people and $13.6 trillion 2018 gross domestic product.

That $3.4 trillion is only a portion of the continent’s potential, however.

Intra-regional trade accounted for only 17 percent of African exports in 2017, according to Reuters. That’s in contrast to 69 percent in Europe and 59 percent in Asia.

Now leaders believe the newly launched African Continental Free Trade Area (AfCFTA) might help improve things.

“The eyes of the world are turned towards Africa,” Egyptian President Abdel Fattah al-Sisi, who serves as chairman of the African Union, said at a recent summit in Niger that included representatives from the 54 nations in the trade bloc. “The success of the AfCFTA will be the real test to achieve the economic growth that will turn our people’s dream of welfare and quality of life into a reality.”

The trade pact got a boost at the Niger summit, reported the Associated Press, when Nigeria, Africa’s largest economy, agreed to ratify it. France 24 explained how Nigerian trade unions and business groups had feared competition from foreign workers, but officials opted to join the bloc to enjoy lower tariffs on commerce with other African countries that many argue are suppressing local economies.

Benin has also agreed to join the new trading bloc. Only Eritrea has yet to join.

The bloc comes at an interesting moment in economic history as the developing world’s economic clout grows. China’s gross domestic product is on track to surpass that of the US in the coming years. African leaders believe it’s high time their people gained their share of the proceeds from the worldwide pie.

“Economic progress is what makes the world go around,” said Nigerian President Muhammadu Buhari in a statement posted online after he signed the deal, CNN reported. “Our position is very simple, we support free trade as long as it is fair and conducted on an equitable basis.”

Institutions, rules and offices – the bloc will be headquartered in Ghana – still have to be finalized.

Critics also pointed out that the agreement wouldn’t necessarily lead to new roads, power stations and other infrastructure overnight.

But investors are eager. Many are looking to hedge their holdings in the United States, where the economy has had a run that sometimes appears too good to be true, and Europe, where Brexit, Italian solvency, Deutsche Bank’s troubles and other issues have undermined confidence.

“In the context of escalating geopolitical and market uncertainty in developed economies, investors are increasingly likely to explore opportunities in ‘frontier’ markets,” wrote CNBC.

In unity, there’s wealth.