of Oxford International Consulting Reports Africa a Feasible Investment for International Development Consulting Firms

For international development consulting firms, Africa has become an attractive market to gravitate new business. In the past, because of corruption and highly volatile environments, international investors and international development consulting groups looked over Africa as a viable market. Nevertheless, oxford international consulting reports that Africa is a feasible investment for international development consulting firms. According to an article published by Business Live, Africa is actually ranked in the top 25 over a wide range of categories for recent international market studies.

Although oxford international consulting reports that Africa is feasible for international development consulting firms, Africa must slowly eliminate false perceptions about Africa's market.

“According to a study done by Oxford Economics on behalf of the global auditing and consulting firm, four of the world’s 25 Rapid Growth Markets (RGMs) were located in Africa. These were Nigeria, SA, Ghana, and Egypt.

Other countries in this RGM group included Russia, China, Kazakhstan, Chile, Brazil, Argentina, Indonesia, Malaysia Turkey and Poland.

The three main criteria to be included in the RGM is that a country had be large in terms of GDP and demographics, that it had a dynamic and rapidly growing economy and that it had strategic importance for business development.

According to the research RGMs would make up 50% of world GDP, 38% of global consumer spending and 60% of the world’s population.

Lalor said that sub-Saharan Africa was the second fastest growing region after emerging markets in Asia at just over 5% growth per year, while the Middle East and North Africa was just more than 4% and Latin America just above 3%.

Seven of the 10 fastest growing economies were within the 25 RGM countries with Ghana topping the list with a growth rate of more than 8%, which was higher than second on the list China with a rate of 7.8% and Nigeria took third place with 7.2%.

SA, with a growth rate of 3% took 21st place just below Ukraine and just ahead of Poland.
But, according to the research, Africa’s share of FDI was not growing with it having just received 4.5% of global flows in 2010 compared with 4.9% in 2009 and 5.2% 2008.

The top FDI destinations in Africa were Nigeria with US$108 billion, Egypt with US$107 billion and Algeria with US$68 billion.

By comparison, although SA attracted only US$46 billion in FDI flows in 2010, these were used to fund 632 projects, while 487 were funded in Egypt and 249 such projects were funded in Nigeria.
“The nature of these economies is very different,” Lalor said. “A lot of SA’s FDI’s went into funding service sector projects that create jobs and are sustainable long term. In the other countries their FDI’s went into developing their oil industries.”

Oxford Economics research shows that at the height of FDI flows into Africa in 2007/08 more than 250,000 direct jobs were created on the continent.

“As we well know in SA job creation is essential for our economy and FDI does create jobs,” Lalor said.

He said the negative perceptions about Africa run contrary to studies. For instance, many investors believed that doing business in Africa was more challenging than in other rapidly growing markets. However, the World Bank’s most recent Ease of Doing Business rankings placed 14 African countries ahead of Russia, 16 ahead of Brazil and 17 ahead of India.

While corruption did remain a challenge in Africa, Transparency International’s Corruption Perception Index had 13 African countries rated higher than India and 35 rated higher than Russia.”

Conflicting arguments might suggest that Africa be looked over as a investment candidate due to its low FDI (Foreign Direct Investments). Also some might suggest this because fundamental differences in Africa’s investment strategies. Other emerging markets invest the bulk of their income into products like oil.

Africa focuses more on their economic infrastructure and creating jobs. International Consulting News (ICN) staff suggests this is not a flaw in the fundamentals of Africa. Due to the low FDI, Africa can be seen as a big opportunity with low competition. Furthermore, with the new economical infrastructures and key investments to create jobs, there is additional incentive for international investors to re-look at the African market as a potential for new growth.