South Africa is championing Africa’s investment opportunities as the continent of 1 billion people adapts to a “new reality” in which emerging-market giants such as China and India drive global economic growth and trade.
Five months after it was invited to join the BRICS political group, which includes Brazil, Russia, India and China, Africa’s biggest economy is hosting the World Economic Forum in Cape Town from today. The theme of the meeting is “Shaping Africa’s Role in the New Reality,” with discussions focused on boosting trade among developing nations.
China’s trade with Africa grew 10-fold to $107 billion between 2000 and 2008, with the world’s most populous nation becoming Africa’s top trading partner the year after that, China’s Ministry of Commerce said in a February report. Africa’s trade with Brazil, Russia, India and China will climb to $530 billion by 2015 from $150 billion in 2010, according to estimates by Johannesburg-based Standard Bank Group Ltd., Africa’s biggest lender.
“Emerging economies are moving faster, becoming dominant,” South African President Jacob Zuma said at the conference today. “These are new voices we can no longer ignore. It is necessary now to develop very urgently the kind of partnerships with the world that are different from the past.”
The three-day meeting will be attended by at least six heads of states, including Zuma and Tanzania’s Jakaya Kikwete, and the chiefs of Barclays Plc’s Absa Group Ltd., Anglo Platinum Ltd., Nestle SA and other companies.
Indian Commerce and Trade Minister Anand Sharma is the highest-ranking official from that country attending the meeting, while China will be represented by Liu Guijin, special representative for African Affairs at the Foreign Ministry.
“In our hosting of WEF Africa, we will confidently say that South Africa is indeed responding to the new reality,” Finance Minister Pravin Gordhan said on May 2. “The country is ideally placed in the shifting poles of power and economic growth, not only as an emerging market, but also as a leading economy on a continent that has become an indispensible partner in the global economy and is home to approximately 15 percent of the world’s population.”
African nations are winning more investment and trade deals from emerging markets such as China, India and Brazil, displacing traditional markets of the U.S. and Europe. Africa now conducts half of its trade with developing economic regions, according to the World Economic Forum.
“Africa should trade with whoever they can get the best prices from,” Shantayanan Devarajan, the World Bank’s chief economist for Africa, said in an interview in Cape Town today. “It so happens that it’s the emerging markets that are growing rapidly at the moment. There isn’t much growth in the traditional partners, such as Europe and the United States.”
Developing countries are becoming a bigger source for investment into Africa, according to research by Ernst & Young LLP. Investment activity by emerging economies increased 13 percent annually between 2003 and 2010, almost double the 7 percent growth for developed nations, the business consulting company said in a report, titled Africa Attractiveness Survey, released yesterday.
“Developed economies will be overtaken by emerging economies in terms of investment into new projects in Africa by 2023,” the report said.