Saturday, July 07, 2012

Boom times?

Zambia is expected to be among the top 10 fastest-growing economies in the world between 2011 and 2015. In fact, according to forecasts from the International Monetary Fund, it will be one of seven sub-Saharan African countries on that list, making Africa the fastest-growing continent over that time. No surprise, then, that multinationals are increasingly recognising the potential of the resource-rich region and its rapidly growing population. The United Nations has predicted foreign direct investment could more than double by 2014 to as much as $100bn (£64bn). Despite the recent strength of Zambia's economy, on paper at least, the proportion of the population living in poverty is still at 60 per cent, with this figure significantly higher in areas.

While the mine operators and the oil and gas drillers have long been alive to Africa's possibilities, a rising "middle class" means an opportunity for consumer goods companies. With consumer spending set to rocket to $2.2 trillion in less than 20 years, according to the African Development Bank, there has been no shortage of multinationals making their move into sub-Saharan Africa.

Unilever, whose biggest brands in the region include Sunlight soaps and Stork spreads, plans to nearly double its revenues from Africa within five years. The continent (excluding north Africa) was recently made one of the company's eight operating regions across the world, headed by Frank Braeken, who says he has seen "a tremendous surge in investor interest". Asda's owner Wal-Mart has recently spent $2.4bn on a majority stake in the South African retailer Massmart while earlier in the year Diageo, which already sells more Guinness in Nigeria than in Ireland, splashed out almost £150m on Ethiopian brewer Meta Abo.

 High incidence of poverty, hunger and joblessness are the major causes of instability in Africa, said Kenya’s Ambassador to Ethiopia and permanent representative to the Africa Union, Dr. Monica Juma said. At least one-fifth of all African people live in countries seriously disrupted by armed conflict and that sometimes it’s hard to till land, secure employment and earn money.Lack of the above will fuel poverty as a result of low productivity, a situation that may force the youth to cause instability as they do not have economic hope, they said.Juma told the forum that the shaky situation of under privileged, hungry people is fodder for extremism especially for people who want to survive. “Once unleashed, it becomes a vicious cycle that endangers not just one country but spills over, as has been seen in many countries in Africa,” she said, adding poverty, anger and hopelessness fuels the fire of insecurity and threatens peace. “They (youth) therefore end up being a ready reservoir for violence and terror when there are lack of economic opportunities, “ she said.

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