What Is Africa’s Future？

　　The “golden decade” of growth in Africa has passed

　　The Africa Rising narrative was underpinned not by sweepingand proactive economic reforms by Sub-Saharan African(SSA) states， but rather high commodity prices driven byChina’s stellar growth performance and more importantly，the extreme resource intensity of its growth model throughheavy spending in fixed asset investments. This was exacerbatedby the approximately $600-billion infrastructurestimulus spending package implemented by Beijing fromthe first quarter in 2009， in response to falling exports toWestern economies after the onset of the financial crisis.There has thus been a “coupling effect” of growth betweenChina and resource-dependent， often single resourcedependent，SSA economies， albeit at about a 3-4 percentdifferential. Strong growth performance of all emergingmarkets (EMs) prior to 2008 also supported African GDPquantitative growth.

　　Bottom line： SSA growth has been externallyand factor-driven and is now vulnerable dueto reduced commodity prices and negative EMsentiment.

　　The growth “model” needs re-thinking(and quickly)

　　The correct question to pose is “have African governmentstaken advantage of the last decade’s growth spurt tomove toward diversification and long-term investment intopeople and productive assets in the country？” They needto generate， retain and create opportunities for talent inthe domestic economy. For Africa to mimic Asia’s developmentaltrajectory， SSA states will need to forge proactivebusiness friendly growth models rather than aid-supportedreactive commodity price driven ones that result in nothingmore than dependency.

　　Bottom line： SSA governments may be able torely on commodity prices for headline (quantitative)GDP growth， but qualitative growth can onlycome from economic diversification.

　　The African Nation State has no future(in most cases)

　　I have often argued that the developmental failure of mostSSA countries lies in their governments’ inability to forge acoherent nation and unified social structure. It is very arguablethat imposed models of electoral and political governancehave only served to exacerbate the problem. Withouta nation-state - one which instills a sense of togethernessamongst its peoples no matter how ethnically， racially or religiouslydiverse， and provides equality of opportunity for all，there is no bedrock for long-term sustainable development.A country that stands out in recent history and that understandsthis and is laying the foundations for embeddeddevelopment is Rwanda. Where one finds failed economies，one will always find failed nations. In Sub-Saharan African，the examples of this are many. Rather than focusing on theregularly heard phrase of “institution building，” the real firstpriority should be nation-building.

　　Bottom line： Governments that proactivelyenhance the livelihoods of all citizens rather thana single group are the most progressive towardnation-building

　　Seizing the “first mover” corporate advantageThe most accurate “Africa Rising” story is the strategy ofconsumer-facing companies expanding their footprintsacross the continent to serve a previously untappedconsumer market. It is demographics-driven – capturingclusters of consumers and consolidating the businessthrough more efficient supply chain management. Thefirst-mover advantage is crucial in such fragmented SSAmarkets. But certain corporates are leading this process inkey sectors. MTN (mobile telecoms)， SABMiller (alcoholicbeverages)， Shoprite and Massmart (retail)， Huawei and ZTE(ICT)， MIH (broadcasting and media)， and G4S (security) arenotable first movers. Most of these firms are listed on theJohannesburg Stock Exchange， giving credence to the claimof South Africa being the “gateway” for the continent – atleast in stock and capital markets.

　　Bottom line： Not unlike other sizeable EMs suchas China and India， companies that are “firstmovers”and are able to consolidate and localizewill be the winners， delivering strong shareholderreturn.