The Wall Street Journal has declared
a "new gold rush under way for the African consumer" among
multinationals like Vodafone and Wal-Mart, as a burgeoning middle class
across the continent increasingly spends money on non-essentials like
cell phone services and retail goods.
The Journal cites
McKinsey estimates that there are now more middle-income consumers in
Africa than India and that consumer spending on the continent will
increase from $860 billion in 2008 to $1.4 trillion by 2020. "While
Africa's resource wealth continues to lure the bulk of foreign
investment," the article explains, "the rise of that new consumer class
is beginning to shift the balance."
So, is the African continent on the verge of a major economic shift from resources to retail?
- Economic Crisis Has Only Fueled Interest in Africa, claims
Chris Zambelis in Asia Times Online: "Amid sluggish demand in the West
and elsewhere due to the global financial meltdown, Africa is being
touted for its unrealized economic potential and business
opportunities." Zambelis explains the battle between the U.S. and China
in Africa and, more surprisingly, Iran's efforts to spread its
influence across the continent.
- But Africa Won't Become Asia Anytime
Soon, cautions the Journal's Peter Wonacott. Yes, "high commodity
prices have helped sustain robust expansion in Africa's resource-rich
economies," he says, "and with that, better infrastructure, improved
governance and the creation of jobs through private investment have
helped drive the growth of the middle class." But political turmoil and
rampant poverty frustrate economic growth, and "Africa ranks at the
bottom of the World Bank's Ease of Doing Business survey, which takes
into account such things as taxes, enforcing contracts and protecting
- Multinationals Should Invest in African Education, states Ndubuisi Ekekwe at Harvard Business Review:
The educational institutions remain underfunded, so it's difficult to to create knowledge and diversify the economies beyond minerals ... The current foreign investment model focuses on accelerating consumption and exploration of minerals. Few investors focus on building capacity. While the tech giants build factories and research centers in Asia, they open offices to sell products in Africa. The most common excuse for this is that African talents are not ready for research; yet, those talents are good enough when new mines are discovered.