Africa as a frontier in emerging markets

Africa has the potential to lead and direct global investments and take it rightful position in the global economy. Africa has experienced a tremendous growth rate over the last few years. Currently, the continent is rated as the fastest growing in the world. Whiles the world’s average growth for 2013 is estimated around 2.5%, Africa is estimated to grow at an average of 6% at the same time, with some countries expected to grow in double digits.

Africa, just as Asia and Latin America, is characterized among the emerging markets. What actually is an emerging market? And why is that most economists have proposed and highlighted the potentials of these emerging markets? How does Africa position itself to lead the emerging markets? Already, there are some major economies rising from these emerging economies.

Emerging markets are countries that are restructuring their economies along market-oriented lines and offer a wealth of opportunities in trade, technology transfers, and foreign direct investment. These are nations with social or business activity in the process of rapid growth and industrialization. Each of these countries is important as an individual market and the combined effect of the group as a whole is capable beyond all doubts to change the face of global economics and politics.

Emerging markets are regional economic powerhouses with large populations, large resource bases, and large markets. Africa currently has a population of over 1 billion people. This is indeed an asset for Africa to leverage on. This means a large market for domestic goods. Africa is again blessed with resources beyond measure with most of these resources untapped. Africa is capable of transforming the lives of its citizen if it can add value to its raw resources. Africa can indeed be a frontier in emerging markets with a strong labor force due to its youthful population. Africa can boast of a population with about 60% youths and this is even enough for the continent to attract the necessary economic success it so desires.

Emerging markets again are transitional societies that are undertaking domestic economic and political reforms. Africa has the potential to take it rightful position in the global economy. It cannot be argued that when there is a conscious and concerted effort to reform and transform domestic markets, the continent would be a destination of world’s investments. These transitions could be toward a developed market, market liberalization & privatization, institutional change and rather value added production.

Africa is one of the fastest growing economies in the world, with some individual countries in Sub-Saharan experiencing double growth rate digits. This is really an opportunity for the continent to transform this economic growth to economic transformation. Africa, just as any emerging markets are sought by investors for the prospect of high returns, as they often experience faster economic growth as measured by GDP. Investments in emerging markets come with much greater risk due to political instability, domestic infrastructure problems, currency volatility and limited equity opportunities.

Africa is experiencing a growing middle class. The middle class is estimated to triple more than one billion in the next half century meaning one in three Africans would be in the middle class bracket. A rising middle class means a larger domestic consumer market as they tend to demand more compared with the poor. The rising middle again means helping to shape political policies on the continent. The middle class are more likely to hold governments accountable for policy decisions.


How then, can Africa position itself to be a frontier in emerging markets? The potential is there, there is room for utilization of the continents resources. Africa can grow beyond the current pace and take it rightful role in the global economy. However, before the continent can take up this challenge, governments in Africa should have a defining going forward. Governments must identify clearly, what programmes and sectors they would want to engage directly or indirectly whiles creating the space for the private sector. The roles to be played by governments on the continent should be clearer for all participating partners of the economies. This would breed transparency in governments. Africa can be the hub of global investments if the necessary policies are formulated and implemented.

Controlling corruption is yet another critical issue for the continent to tackle if indeed there is any possibility of controlling global investments. Corruption is costing the continent more than double the amount of all aids received annually. All these monies are lost through various sectors of the continent including tax evasion and governments signing of secret deals.

Investment in infrastructures is to key to open up the economic space of the continent. Doing business is not only difficult but also expensive. This prohibits the continents prospects in terms of doing business and attracting investors around the world. Africa has the potential to attract global investments, but this can only be done if infrastructure issues both hard and soft are addressed to the core.

Structural reforms for financial, legal and political space should also be championed. Most of the continents sectors require conscious reforms to allow businesses to operate fully. The economic growth of the continent can continue to be on the rise if there are proper and convenient regulations for businesses and investments. Political disputes should be consciously handled not to serve as deterrent to foreign investments. Signs of political instability could stagnate or reduce the pace at which the continent would grow.

This is indeed Africa’s time to lead the emerging markets. The continent can be a frontier in emerging markets if policy makers and stakeholders deliberately make it so. Africa has a huge untapped potential and is determined to undertake domestic reforms to support sustainable economic growth. If this can be done and sustained then the continent would be on the verge of leading emerging markets.



Paul Frimpong
University of Ghana
Associate Chartered Economic Policy Analyst- ACCE-USA
Tel: +233 -241 229 548
Email: py.frimpong@yahoo.com

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