Sub-Saharan Africa: A bright spot in spite of key challenges
Comment of the Day

July 16 2013

Commentary by Eoin Treacy

Sub-Saharan Africa: A bright spot in spite of key challenges

Thanks to a subscriber for this interesting report by Claire Schaffnit-Chatterjee for Deutsche Bank. It is posted without further comment but here is a section
Improved macroeconomic management and increased political stability have underpinned strong public spending, especially on infrastructure and services. Investment has been an important driver of growth in much of SSA, although it remains low in a developing world context. FDI to SSA is strongly increasing.

A large consumer market is emerging. Consumer demand has grown rapidly in recent years, on the back of solid real income growth. Many SSA countries are expected to reach middle-income status in coming years.

Social development is improving but remains low and uneven. In spite of clear progress in health and education, the poverty rate is still close to 50% and around 30% of the population is undernourished. Inequalities remain striking.

SSA's population is growing fast, becoming more urban and experiencing a youth surge. On the positive side, this means lower dependency ratios, a major rise in demand and urban centres becoming potential hubs of innovation and employment. However, job creation is a particular challenge, in a context of skill deficits. Structural transformation has started, more through services than manufacturing.

Managing resource wealth is key to sustainable growth in SSA. Despite recent headwinds in commodities markets, new discoveries and further exploration promise strong revenue flows. They provide SSA with an opportunity to create employment and inclusive growth through value addition in all sectors.

The business environment remains challenging in SSA but the region is increasingly attractive for investors. Surveyed companies with an established business presence in SSA are happy with their situation. Investments in infrastructure/logistics and education, economic diversification, market reforms and improved governance are critical for SSA's long-term success.
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