This Business News Weekly focuses on macro-economic developments and finance in Africa. First, the UN Economic Commission Executive Secretaris launches his ideas for moving industrial production to Africa, which will bring great manufacturing opportunities. Second, blogger Mladen Prpich shares his ideas on how businesses can benefit from the immense population growth on the continent. And finally, the news about the worst performing currency in Africa, the Ghana Cedi.
Manufacturing in Africa
Carlos Lopes, Executive Secretary of the United Nations Economic Commission for Africa, sees great opportunities for manufacturing in Africa as the new industrial location for the world. Lopes was addressing ministers at the Africa Regional Consultative Meeting on the Sustainable Development Goals in Addis Ababa, Ethiopia.
To Lopes, Africa can prove that climate change is better tackled by moving industrial production next to where the resources are. “Not only would we reduce CO2 emissions and deal effectively with green technology leapfrogging, but we could also add value to commodities,” he said, adding that Africa has the option to choose technologies that may be too costly for others. Lopes also proposed opportunities in two other sectors where Africa can lead: energy and agriculture.
He challenged the ministers to define solutions that do justice to the inter-generational social contract that defines Africa’s sustainable development goals, stating: “Our actions are being watched by the younger generation already – they are not waiting to be actors in this debate; they already are.” Lopes told the gathering that sustainable development is about reframing the global development agenda in ways that will give both present and future generations the autonomy to be active forces in their own destinies. “Africa has within its reach, the capacity, the people, resources and opportunities to lead the way on sustainable development,” he said.
Africa’s population will quadruple – how business can benefit
In Africa, the population is set to quadruple in the next 90 years. Financial institutions and insurance companies should take note of the challenges and opportunities of this population growth, warns Mladen Prpich, Head of Xuber (Insurance Software) in his blog.
But businesses from the West can only benefit from this growth when their business models are relevant, when their products are innovative and when strategies are targeted. Prpich: “Think about having people on the ground to listen to what is going on coupled with the statistical evidence. Having both will give you a real advantage”, the blogger says. “Be innovative by identifying profitable market segments, development of products and use of technology and media. Look for the gaps in your markets. What is the problem and how can you help solve it?” And: “Once identified, target your products to specific demographic groups and adapt them to shifts that are taking place within that group. Don’t declare a strategy for the next five years without revisiting often. In order to be fluid, you need to be flexible enough to move quickly with your target areas.”
Ghana Cedi worst performing currency in Africa
The Ghana Cedi is the worst performing currency in Africa this year. It has overtaken the South African Rand, Ecobank Research states. The Ghana Cedi has neared a 17 percent depreciation to the US Dollar on the forex market as against 16.2 percent depreciation by the South African Rand.
Analysts say the Ghanaian currency is under further pressure from large fiscal and current account deficits. The further decline of the West African currency comes despite a long term debt raised by the Bank of Ghana.
Bloomberg reports that Ghana’s debut as an oil exporter in 2010 fueled the fastest economic growth on the continent. It also spurred a rise in imports that are paid for in dollars, adding pressure on the cedi as traders seek notes to exchange.
According to the country’s second-biggest bank, Ghana Commercial Bank Ltd., dependence on imports keeps the cedi volatile, which makes planning and projections for earnings very difficult. Ghanaian exporters haven’t taken advantage of the depreciation to sell their products abroad in dollars to earn more cedis, he said.