Arab Today, arab today african growth no mirage say banks as optimism grows
Last Updated : GMT 06:29:56
Arab Today, arab today
Arab Today, arab today

African growth no mirage say banks, as optimism grows

Arab Today, arab today

Arab Today, arab today African growth no mirage say banks, as optimism grows

Johannesburg - AFP

Africa\'s recent robust growth is sustainable and the continent can attract even more investors if it plays its cards well, an influential group representing the world\'s top financial institutions said on Wednesday. The Institute of International Finance said that the world\'s second fastest growing region could maintain 4.7 percent annual growth seen since 2007, according to its maiden report on sub-Saharan Africa. The powerful institute represents leading banks and financial institutions around the world, notably those who hold large amounts of government bonds. \"After emerging Asia, Africa is the fastest-growing region in today\'s world,\" said George Abed, head of the IIF\'s Africa and Middle East department. \"Many countries on the African continent have achieved great progress in stabilizing their economies and consolidating their rates of growth. \"What is remarkable about this outcome is that it has been achieved during a period of unprecedented global financial turbulence.\" In a report covering seven of the region\'s leading economies, the IIF said a potent cocktail of lower debt, better economic management, political stability and an extended resource boom had proven to be an economic elixir for the long crisis-plagued region.For six of the countries -- Ivory Coast, Ghana, Kenya, Nigeria, Tanzania and Zambia -- the report said total external debt declined from 62 percent of GDP in 2003 to 17 percent in 2011. In South Africa, the picture has been muddier, but Africa\'s largest economy continues to receive the bulk of the continent\'s inward portfolio investments. With attractive rates of return compared with those found in industrialised nations, investors have predominantly focused on buying sovereign bonds. In another sign of the increased appetite for African government debt, Moody\'s on Wednesday launched its first sovereign ratings for Nigeria, Kenya and Zambia, which all handily beat troubled Greece in the creditworthiness stakes. Predicting that African governments would increasingly turn to markets to fund public programmes, Moody\'s gave Nigeria the highest rating of the trio, at Ba3, just below investment grade. The ratings judge how likely a country is to default on its debt and go a long way toward determining a government\'s cost of borrowing.\"Moody\'s believes the continent\'s growth will be characterized by increasing utilisation of international capital market finance,\" Jacques Els of Moody\'s South Africa said. Such a trend might have been unthinkable just a decade ago, when debt relief and aid for African nations topped the headlines. But the IIF also warned that African government must keep on their toes. \"We should keep in mind that Africa\'s recent strong performance has been materially aided by massive debt relief and a sustained commodity boom. The future global environment may not be so accommodating,\" said Abed. Continued political stability will also be key, he argued. Yet the foundations appear to be in place for Africa to experience the type of transformative growth previously enjoyed by South East Asia and Latin America. A report by McKinsey consultants, also released on Wednesday, noted African households were becoming ever-richer as the continent\'s economies surged forward, offering enormous untapped growth opportunities for consumer companies. A McKinsey & Company study showed 84 percent of Africans were \"exceptionally optimistic about their economic future\" -- with urban Africans already spending more on apparel and food than those in Brazil, China and India on average.

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