I stumbled across the following article on FT.com and was wondering if any strategy houses actually take assignments in sub-Saharan Africa (excl. South Africa). This is an area I'm really interested but it seems few consulting firms appear to have set up shop in Africa.
Can anyone shed a light on which consulting firms are likely to take projects in this area. Also, if any consultants have worked in this area i would be delighted if you could share your experiences
--------FT ARTICLE -----
Advance of sub-Saharan Africa's prosperity
By Francis Beddington
Published: Financial Times (London) June 12 2008 03:00
The focus on high-profile conflicts in Africa, such as the ongoing election in Zimbabwe and recent events in Kenya, misses many positive developments in the continent.
The number of armed conflicts has dropped dramatically, from more than 20 in 1999 to five today: for example, long-running civil wars in Angola, Mozambique, Sierra Leone, and Liberia have all come to an end.
Unnoticed by the media and much of the investment community has been a step-change in Africa's economic performance in the past five years. Real growth in gross domestic product in sub-Saharan Africa (SSA) averaged 4.1 per cent in 1997-2002; by 2007 it had risen to 6.6 per cent. More importantly, real incomes are rising and Africans are getting richer at an unprecedented rate. In 1997-2002, real GDP per capita rose at a rate of 1.8 per cent per annum. This was up to 4.6 per cent in 2007. At 1.8 per cent per annum, it takes 39 years for real incomes to double, but at 4.6 per cent per annum real incomes double within 15 years.
The cynics will dismiss these figures as coming off a low base. But all growth starts off a low base. SSA today compares favourably with where the Association of South-east Asian Nations countries stood in 1980, when the phrase "emerging markets" entered the vocabulary. Africa has lower inflation, higher foreign exchange reserves and a similar growth profile; it also receives more foreign direct investment and portfolio investment than Asean nations did in 1980.
What is driving growth in Africa? A common misconception is that it is just a function of commodity prices. But, with the exception of oil, commodities are something of a double-edged sword: while countries have gained from higher metal and soft commodity prices, these have been more than offset by higher import bills for food and energy. Indeed, some of the strongest growth performances have been seen in oil-importing, resource-poor countries such as Tanzania and Mozambique.
At the heart of the economic performance is a better policy environ-ment. Governments have ceased financing themselves by printing money and have -privatised many state enterprises. Most central banks target inflation. As a result, inflation has fallen to global norms and exchange rates are more stable.
Economic stability has seen a resurgence of private-sector investment, both domestic and foreign. In the late 1990s, investment as a proportion of GDP had fallen significantly below 20 per cent almost everywhere on the continent. Since then, investment has risen sharply and is approaching 30 per cent of GDP in most countries. In some, such as Ghana, Madagascar, it has passed into the mid-30s.
A new feature of this has been the involvement of other emerging markets as sources of FDI. China, India, Russia, Brazil and South Africa have been investors in sectors as diverse as mining and telecoms.
New technologies are throwing up new business models. The sale of pre-pay cards is a ubiquitous feature of any crossroads or traffic jam in any African city. In many countries, rather than send cash back to families in rural areas, city-dwellers are texting back air time, later redeemed for cash.
It is not only physical technology - such as a telecoms infrastructure - that is being adopted: financial technologies are penetrating just as fast and leading to rapid developments, especially in credit markets. A big feature of the past three to four years has been duration extension. Government yield curves in many countries now stretch to 10 years and in countries such as Zambia and Kenya stretch to 15. Duration extension is feeding into retail financial markets. In Zambia it is now possible to get a 20-year mortgage, when only five years ago the maximum duration was five years.
Anyone who has travelled in the region is well aware that Africa is not short on entrepreneurial spirit. Reducing the dead hand of the state and a supportive environment are releasing Keynes's "animal spirits" and African entrepreneurs are thriving. Ignoring Africa today is like failing to invest in emerging markets in 1990s, in south-east Asia in the 1970s and 1980s or in Japan in the 1950s.
The writer is head of research at Insparo Asset Management, a hedge fund based in London