Botswana, Ghana, Kenya, Mozambique, Nigeria, Tanzania, Uganda, and Zambia account for about 40 percent of Africa’s population outside South Africa and almost one-half of its GDP. They all share a common economic trait: They are Africa’s emerging markets, according to an IMF report.

The same crucial developments that presaged the arrival of institutional financial investors in emerging markets in the 1980s are taking place in parts of sub-Saharan Africa today—growth is taking off, the private sector is the key driver of that growth, and financial markets are opening up. The global environment has played a key role. The search for yield, triggered by significant global financial market liquidity, has encouraged investors to expand their horizons…

This group of African countries compares favorably with the ASEAN countries (Indonesia, Malaysia, Philippines, Thailand, and Singapore of 1980 (see below). ASEAN was already experiencing strong economic growth in 1980 but, in many other areas, the ASEAN countries looked quite different than they do today—and the African candidates perhaps have lower vulnerability and greater economic stability than the ASEAN countries had in 1980. Growth in sub-Saharan Africa is strong, as it was in Asia. Unlike the high ASEAN inflation in the 1980s, inflation in Africa is single digit. High international reserves and low debt-to-GDP ratios—the result, among other things, of debt relief—characterize the African countries relative to the ASEAN countries of 1980. Government, however, comprises a larger share of the African countries than it did in the ASEAN countries.

The rise of some African countries to emerging market status gives them a tremendous economic opportunity. Access to capital markets is a key ingredient to high and sustainable private sector–led growth, and this access had long seemed out of reach for Africa; it is now a reality.

Source:
IMF: Africa’s Aspiring Second-Generation Emerging Markets. By David Nellor