The africapractice annual business survey review 2009 reveals that Africa’s economies are on the upswing, and can expect to recover from the effects of the global financial crisis in 2010.
However, low access to credit, insufficient skilled labour, rickety infrastructure and poor legislation will continue to plague the business environment.
The survey was conducted in November 2009. It polled 37 business leaders who had invested in Africa, in the banking, beverages, media, mining, private equity and telecoms sectors.
About 83 percent of the respondents expect increased Foreign Direct Investment (FDI) flows from China in 2010; 69 percent had predicted reduced FDI flows in 2009.
The forthcoming FIFA World Cup is also expected to boost revenues, but over half of those polled believe that South Africa alone will benefit from it.
By contrast, more than one third believe US President Barack Obama’s administrative policies towards the continent will not change as the USA is disinterested in Africa, and that its economic impact here will not be significant. Africapractice is a strategic communications consultancy with offices around Africa.
Product and market diversification, particularly a shift away from export-led growth towards intra-African trade are expected to be key drivers for private-sector led growth.
This complements the respondents’ view that advances in information and communications technologies, rather than politics, will aid business opportunities.
Only 5 percent of respondents believed that political instability would pose a threat to business, but 35 percent believe the lack of talented labour would be their biggest challenge.
This points to the growing skills gap in Africa, as many of the continent’s nations are home to growing populations, the majority of whose citizens are under 25 years old, and have limited prospects for competitive education and vocational training. Still, 68 percent of leaders expect to significantly expand their operations in 2010.
The perceived low impact of local politics is a noteworthy development on the continent, especially given that elections – some potentially explosive- are upcoming in Ethiopia, Burkina Faso, Rwanda, South Sudan, and Uganda, among others. 16 percent of respondents, do however, view the East African Community Customs Union as a significant development for African business in 2010.
Agriculture, mobile telephony, internet and tech-based industries remain growth sectors; but big investments, perhaps from overseas will have to be mobilised to see them deliver their potential.
Business leaders surveyed were of the opinion that the technology sector could not grow given the existing state of infrastructure and energy.
Reducing cash dependency, accelerating flow of money through African economies and updating exchange controls were also on leaders’ wish-list for 2010.
They believe that access to financial services by the unbanked rural and urban poor in particular, will be essential to poverty reduction.