Africa: promise, opportunities, and challenges

AS GLOBAL economic conditions have become more challenging, Africa's remarkable development story of the past 15 years has lost some of its shine. However Africa's socio-economic fundamentals are strong. This is a young continent in an ageing world; by 2034, Africa will have a larger workforce than either China or India. Africa is urbanising rapidly, and consumer and business spending is growing at a rapid clip. The International Monetary Fund (IMF) expects Africa to be the world's second-fastest-growing regional economy over the next four years.

In Africa as a whole, GDP growth has slowed from 5.4 per cent between 2000 and 2010 to 3.3 per cent from 2010 to 2015. But look at individual countries, and we see a divergence in economic performance. Two groups of African economies have taken a significant hit on growth: North African nations caught up in the Arab Spring movements, and Africa's oil exporters. However, the rest of the continent has succeeded in accelerating growth to 4.4 per cent over the past five years from 4.1 per cent in 2000-2010.

This is still a continent on the move, with attractive opportunities for investors. Spending by consumers and businesses already totals US$4 trillion, and is growing rapidly. Based on the current trajectory of spending growth, this could be heading towards US$5.6 trillion by 2025, according to forthcoming research from the McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Co.