Renaissance Capital is an investment bank focused on the emerging markets of Russia, Eastern Europe, Central Asia and Africa.
Speaking at its second Annual Pan-Africa Investor Conference in Lagos recently, Stephen Jennings said, “I think it is probable that in the coming decades large parts of Africa will outpace the growth enjoyed by Asia. In the 1950s and 60s it was Asia that was considered the over-populated, politically incompetent, war-riven basket case.”
Jennings argued that, “its hard to imagine now, but in 1970, per capital GDP in China was less than that of Africa. The catch up between Africa and Asia can spur economic growth which can be just as transformative for Africa as it has been for Asia. Already the IMF expects Liberia, Ghana, Ethiopia, Botswana, Mauritania, Angola, Tanzania, the DRC, Uganda, Niger, Libya, and Mozambique to be amongst the 25 fastest growing economies in the world over the next 5 years.”
Using data from the World Bank and IMF, he said Economic growth in Africa has averaged 6% over the last decade, greater than that enjoyed by India between 1995 and 2005.
“Today eight of the 20 fastest growing economies in the world are from Africa,” he said.
According to Jennings, this resurgence across Africa is broadly based. He said between 2000 and 2008 economic growth accelerated in 27 of Africa’s 30 largest countries.
“Remarkably, of 43 sub-Saharan countries only Madagascar had negative growth last year in comparison with more than a dozen such economies in the mid-90s. The naysayers’ tired refrain, ‘what about Zimbabwe’, holds little weight today,” he added.
He said in 2009 despite the massive collapse in virtually all commodity prices Africa was the only region of the world not to record a single quarter of negative growth.
“Just compare the performance that year of two oil-dependent and supposedly hopelessly managed emerging markets: Russia which suffered a 7.5% economic collapse and Nigeria which achieved a stunning 7% growth rate,” he noted.
He also pointed out that Africa’s macroeconomic performance has improved very significantly. “Between the 1990s and the 2000s inflation has fallen 64%; government debt by 28% and fiscal deficits by 60%,” he said.
Citing a report on China in Africa written a few weeks ago by Renaissance’s Global Chief Economist, Charles Robertson, he said the GDP boom in China and Africa over the past decade has been exceeded by even faster growth in Chinese-African economic relations.
“While Chinese trade with the world has risen eightfold, with Africa it has seen a tenfold increase, from $11 billion in 2000 to $129 billion in 2010, and unlike China’s trade with most of the world, it is Africa that has the upper hand in this trading relationship. By 2015, trade turnover could have reached nearly $400 billion, with Africa’s surplus around $40 billion,” he said.
Jennings indicated that Renaissance Partners, the bank’s principal investment arm, together with Kenyan partners is building a new multi-use city for 63,000 residents and 30,000 daily visitors on the outskirts of Nairobi.
“The next stage of the project, called Tatu City, involves $250 million of investment in roads, water, sewerage and electricity distribution. As we prepare to break ground in Tatu city, we are beginning to roll out similar projects in Ghana, Angola and the DRC,” he said.
By Emmanuel K. Dogbevi