Africa a new bulging market

Investing markets, that were once considered as solid and a good choice for investments, became rigid and unprofitable. As a result business people were forced to look for alternatives for their investments. But where are these alternatives for money investments? According to the article Bulging in the middle that was published in the magazine Economist, the new bulging market is Africa. The article describes Africa as a place of opportunity and development. This report presents an overview of the article and its views on Africa. As the article says, Africa was once seen as a casino for capital market, but now it seems less risky. Old associations about Africa as poverty, hunger and corruption are being changed with opportunity, development and hard work. According to Economist changes in Africa are seen in many areas. For example in the GDP growth, risen trust in bonds from some African countries, built infrastructure, raised living standard etc. Describing the facts that support positive changes in Africa, tree things have to be mentioned: bond market, IMF report and opinions on Africa. Analyzing the bond market, it can be seen that there is a big opportunity that Africa can exploit. As an example of a good praxis Economist mentions Nigerian bonds that were added to American benchmark. Consequently new funds were created for so far nonexistent local infrastructure. Clearly Africa can be seen as an alternative for diversifying asset classes. Additional positive evidence is the IMF report, which shows Africas GDP growth, that is 5% from predicted 5.4% in this year. Furthermore the forecast for 2013 shows that it may nudge up to 5.7%. Moreover the IMF report indicates the increase of foreign direct investment for about 50% in the last 7 years. Another aspect is the rise of prosperity. The World Bank research shows, that if Africa was one country, it would already be middle income, since Africas average income per person are 1,700 dollars. Despite of the statistics most Africans are still pore and even local managers havent got a high living standard. What is more Africa is still considered as risky for having food crisis. Focusing on Africas economic rise, there are several reasons that can be considered. For one thing Africa started from a very low basis as well technologically as in its infrastructure. The article describes four main causes of economical rise. First one is rigid population growth, second one is rapid urbanization, third one is enormous progress in technology and the last, fourth one better efficiency of governance and economic management. Because of these, one hand visible changes but on the other hand small ones, people in all arent

convinced in cogency of these indications. Some of them think that the African golden age is being overblown. Others believe that everything is true, but it has to be look at with longterm prospective, because the easiest ways to make money have already been exploited. Another point of view on Africa is from the working prospective. Investors are looking for people, who would be prepared to work for them in Africa. As a consequence for the increased offer of job opportunities, the article reports that salaries for Africas positions have gone up by 30% in the past year. Due to this Africa became an opportunity for people with education but relatively little experience. Apparently, Africa is becoming an interesting location for people with capital that are running away from low interest rates and grim job prospects. Although Africa is achieving high growth targets, strengthening their economies and becoming more transparent, the problems with corruption and political instability have to be considered. Regarding to investments, it has to be mentioned, that the opinion is divided on this issue. Some think that investments are harming Africans natural development and that investors focus too much on their profit and not on consequences that the changes have on local people and their style of living. The article also mentions that the Western and Asian ideas and practices take root in Africa, but if we think about them, we have to remain critical. Exploitation of workers and not carrying for natural environment are also common practices in those areas. Similar to that, what can be expected from management consultants and investment bankers that have little experience and go to Africa with a goal to get to work on a higher level? Especially if we already know that governance and economical management in Africa have a high rate of corruption. For this reason it should be wise not only to invest in urbanization and infrastructure but also in people and their education, so that they could be able to take care of themselves and invest in their own land. To sum up, Africa is an opportunity that should be seen not only as a destination for money and managers that want to take advantage of its goods and problems, but as a project of creating wealth and better living environment for all participants as well investors as skilled workers, that want to succeed with hard work, as well as with ethical and responsible behavior.

Sources:

Bulging in the middle. A boom in sub-Saharan Africa is attracting business talent from the rich world (20th Oct, 2012) Retrieved from: http://www.economist.com/news/middle-east-and-africa/21564856-boomsub-saharan-africa-attracting-business-talent-rich-world

Tapiwa Mhute: Alternatives to aid: Efficacy of the bond market in Africa (2th Oct, 2012) Retrieved from: http://www.consultancyafrica.com/index.php? option=com_content&view=article&id=1128:alternatives-to-aid-efficacyof-the-bond-market-in-africa-&catid=87:african-finance-aeconomy&Itemid=294