Commerzbank Study: Africa’s Economies Continue to Gain Ground

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Countries benefit from the commodity boom and political stability

– Growth impulses above all in the Sub-Saharan region

After the crises of the past, the economies of many African countries are clearly heading for growth. Political and economic stability has increased above all in the countries of the Sub-Saharan region. “Medium-term growth potential in Sub-Saharan Africa ought to be about six per cent per annum in the years ahead”, a new study by Commerzbank, the second largest bank for private and corporate customers in Germany, reveals. According to the study, countries which manage to attract foreign investors could actually see even higher growth, since investments like these frequently initiate or boost growth momentum. With an economic growth forecast of 5.4 per cent for 2012, the region is now already ranking directly behind front-runner Asia.

The commodity boom and the turnaround to stability-oriented economic policy have increased the crisis-resistance of many countries in this region. Some of the states have thus already recorded notable surpluses in current account and government budget. The prerequisites for further economic growth, according to the study, are a stable political framework and a large population which allow higher economies of scale with fixed investment costs, plus good availability of commodities. Countries which meet these criteria include in particular Nigeria, Ghana, Angola and Mozambique. “The greatest challenge for Sub-Saharan Africa is the demographic development. The labour force potential, which is growing strongly because of the high population growth, can only be absorbed by the creation of additional jobs”, says Florian Witt, head of the Africa department in Commerzbank’s corporate banking. He remarks that this can only succeed if the depth of value added is decisively increased – and that, specifically, prevailing conditions call for such an increase mainly in the commodity-processing industry and in the processing of agricultural products.

The signs point to a sustained positive development: “In the larger cities a middle class is forming with a demand for increasingly higher-quality products. The services sector and in particular finance will also benefit from this”, adds Rainer Schaefer, head of Commerzbank’s Country Risk Analysis and one of the authors of the study. He expects both the development of the infrastructure and housing construction to give the building industry special momentum, and sees opportunities above all in renewable energies, as well as in information and communication technology.

However, in addition to the pleasing developments the study also reveals a whole series of negative aspects. For instance, in some Sub-Saharan states – such as Sudan and Somalia – civil war and economic chaos still prevail. Moreover, bureaucratic obstacles and corruption often curb economic development. Overall, 26 African countries have benefited from the debt relief initiative of the World Bank and the International Monetary Fund since 2004. In return for the debt relief, these countries had undertaken to follow an economic policy based on fixed criteria. This was also backed by the turnaround in development aid, away from loans and towards non repayable grants, after the assistance loans in the eighties and nineties had led to the over-indebtedness of many African countries

With 6 representative offices between Cairo and Johannesburg, and 500 bank customers and 250 institutional customers, Commerzbank is the no. 1 German-speaking bank for corporate customer transactions in Africa. It has now been active there for 60 years, maintaining business relations with banks and state institutions in 50 of the 53 countries on the African continent. It cooperates above all with governments, local banks and central banks.

The study can be downloaded under:


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Source: Commerzbank AG – Press Release – 27 June 2012