Africa Is Poised To Power The Next Phase Of Global Economic Growth

Paul Taylor , SAP

When Vasco da Gama, the 15th century Portuguese explorer, landed in Kenya searching for a sea route from Europe to India, he found Chinese traders who had arrived in Malindi earlier that century following a series of expeditions sponsored by the Ming dynasty.

Today, five centuries later, as Western companies wake up to the enormous opportunities that Africa and its 1 billion population – the youngest in the world – presents, they are once again discovering that China has paved the way. Backed by Chinese government loans to African countries from, Chinese companies and an estimated 1 million plus Chinese workers have poured into Africa over the past decade, mostly in search of the raw materials to feed China’s voracious domestic economy.

Between 2001 and 2010, China’s Export-Import Bank extended $62.7 billion in loans to African countries, or $12.5 billion more than the World Bank. Over the same period, trade between Africa and China grew by more than 700 per cent with China replacing the U.S. as Africa’s biggest trading partner in 2009.

While some commentators have questioned China’s motivation for its interest in Africa, others argue that the Chinese appear to be primarily driven by commercial considerations and, by extension, that western companies could lose out unless they embrace Africa, described by many as ‘the last great frontier.’

In his recently published book ‘China’s Second Continent: How a Million Migrants Are Building a New Empire in Africa,’ Howard French, a New York Times journalist with extensive experience in both China and Africa, argues that the mass immigration of Chinese people into Africa is almost entirely driven by money rather than ideology. Deborah Brautigam, a Washington –based academic , makes much the same point while debunking other widely held beliefs in her blog China in Africa: The Real Story.

What is beyond doubt is that by modernizing Africa’s crumbling colonial infrastructure, the Chinese and a few pioneering Western companies have set the stage for Africa to help power the next phase of global economic growth.

Economic growth in sub-Saharan Africa this year is expected to be slightly higher than in 2013 at around 6 per cent, according to the International Monetary Fund. Africa as a whole already has a collective gross domestic product of more than $2,000 billion and is home to seven of the world’s fastest growing economies.