DHL: Africa’s slight economic slowdown will not deter investment

The World Bank’s January 2016 Global Economic Prospects reported that Sub-Saharan Africa’s real Gross Domestic Product (GDP) grew at its lowest rate since 2009 in 2015 with a growth of a 3.4 percent. This was down from the 4.6 percent and 4.9 percent growth that was reported in 2014 and 2013 respectively.

Hennie Heymans, Managing Director of DHL Express Sub-Saharan Africa, says that the company firmly believes that the African continent is still one of the last frontiers for growth.  The region will continue to grow as it has over the past decade due to the vast number of unexploited opportunities available for local and foreign investors.

“The drop in GDP growth for the region over the past year shouldn’t deter investors. Africa will continue to thrive, albeit, at a slightly slower pace as previously experienced.

Similar to the global environment – which reported growth of 2.4 percent in 2015 (down 0.2 percent year on year) – it was a tough year economically for Africa. Compounded by a drop in the demand for the continent’s commodities resulting in falling prices, declining currencies, political instability and El Nino causing widespread drought, have all contributed to the region’s challenges. However, despite this, the region remains abound with untapped prospects and offers growth opportunities in 2016 for those willing to seek them out,” says Heymans.

This is supported by the latest World Bank’ Africa’s Pulse. Author and Acting Chief Economist: World Bank Africa Region, Punam Chuhan-Pole, said on the report’s findings: “The good news is that domestic demand generated by consumption, investment, and government spending will nudge economic growth upwards to 4.4 percent in 2016, and to 4.8 percent in 20173”.

The report also highlights that specific regions have higher growth prospects than others. Cote d’Ivoire, Ethiopia, Mozambique, Rwanda and Tanzania were listed as countries expected to sustain a growth of approximately 7 percent per year in 2015-17. This was attributed to large-scale investment into energy and transport projects, consumer spending, and investment in the resource sector.

Heymans adds that more countries in the region could be thriving if not for underdeveloped infrastructure and bureaucracy. He points to the mining sector in Madagascar as one example. “This could be a potentially lucrative opportunity for investors due to the country’s coal, nickel and ilmenite resources, however several legislative reforms are still needed.