Sub-Saharan Africa (SSA) is the ‘in thing’ now among investment professionals. There is no discussion on the next best investment idea that fails to mention the region. Many have likened its poise to China three decades ago and are thus positioning themselves for the growth in value that is likely to unwind over the next decade.
History seldom lies about what the future may hold and I am with the crowd here in expecting it to repeat itself. Smart money believes it and even journalists are sold to it – yet I find myself worrying about where Zimbabwe will be in a few years to come. For a nation birthed with so much promise, it is disheartening to see it out of tune with the melody that is the grinding rise of Africa.
The narrative of Africa’s changing fortunes has evolved. Gone are the days of recycling the ‘Africa Rising’ cover story for supposedly imaginative world renowned magazines – the continent has made strides from that. Sovereigns have demonstrated ability to craft and consistently stick with sound macroeconomic and monetary policies which has been rewarded by a huge wave of capital flow into the region.
The notion that Africa is all about the extractive sector has also since been dispelled and so is the belief that her challenges, political or otherwise, are different from what one finds elsewhere in the world. SSA’s customer is a capital magnet; consensus now is that they depict a real frontier laden with opportunity, hence the fast moving consumer goods (FMCG) rush that characterised the past two years. The region has evolved and so has the idea among those writing about it.
SSA in 2014
The year 2014 is likely to see the emergence of more progressive themes pertaining to SSA. My view is that key consideration will be made on strategies to entrench the gains amassed this far and foster sustainable growth going forward. Infrastructure development has captured the imagination of many financial engineers and indications are that they have cracked the code to channel private capital to Africa with Eurobonds standing in this regard. What will become topical going forward is how to deepen SSA’s access to this capital pool while expanding the number of nations benefiting from it. Even more paramount would be extending the same structure to quasi-government projects and private corporations in a manner that entrenches SSA’s robust growth.
The same can be said of regional integration which has the potential to quicken growth even faster than what we are witnessing now. Intra-regional trade has huge capacity to drive demand, while breaking down border barriers and is transforming smaller and fragmented markets into larger pools that huge corporations are happy to serve.
The focus going forward will be on entrenching benefits from this with corporates seeking deeper penetration into markets that they have established in. For instance, Shoprite will have to transform its Nigerian outfit which serves a population of more that 150 million with only seven shops compared to more than 600 in South Africa that serve 51 million. Serving the SSA consumer adequately in a manner that extracts maximum value possible will therefore be one big theme going forward.
Food security and conflict resolution will also be topical. The former simply because a hungry Africa will always be a strife laden continent. That Africa has the largest size of arable yet unproductive land compared to any continent has since been established. Efforts were already being made to open up opportunities to allow the land to be utilised, but the debate has since evolved to productivity of the land currently in use. Technology, including genetic modifications will take centre stage in 2014 as the pursuit for productivity continues.
Out of sync
Where does this all leave Zimbabwe? Why do I say the country is out of sync with its peers and worry for its future as it risks being left out of the current tide? The core of most growth themes playing out in SSA is missing in Zimbabwe. Where peers are busy crafting strategies to maintain access to global credit markets, especially in the wake of quantitative easing (QE) tapering; Zimbabwe has been in the throes of a crippling liquidity crunch for close to 18 months now.
While its fellow SSA markets are entrenching their positions as credible destinations for international debt capital, mainly via Eurobonds – Zimbabwe on the other hand is busy missing deadlines for the IMF’s staff monitored programme (SMP). As its peers grapple with productivity on farms, Zimbabwe appears years away from concluding its land reform programme, a clear prerequisite for meaningful agricultural investments to take place.
One can also talk of infrastructure development. Zimbabwe’s peers have used their access to international debt capital to quickly improve, especially roads and power generation infrastructure, a process that is moving at a snail’s pace in Zimbabwe. The story remains the same when one looks at consumers.
While purchasing power is growing and more people are graduating from extreme poverty in fellow African nations, Zimbabwe appears to be headed in the opposite direction. The country has already lost out on the recent upswing of the commodities super cycle – it is thus possible to remain stuck while everyone around you advances. To sum it up, Zimbabwe is likely to be an island of misery in a sea of opportunity, optimism and growth.
Sanctions and legitimacy arguments
Assuming that the root of Zimbabwe’s problems are in politics, you get one side proclaiming sanctions while another points to legitimacy as the key drivers. The fact however remains that a solution to both lies inside Zimbabwe and is within the means of Zimbabweans to control. Sanctions require a commitment to reforms that lead to their removal. Such reforms may never harm Zimbabweans and when they are implemented in the right spirit, even political foes will join hands in ensuring their removal.
The same can be said as regards issues of legitimacy which can be addressed within the confines of the Zimbabwean laws. I find it curious that an election whose challenge within the court of laws was withdrawn before determination remains labelled as illegitimate. Putting emotions aside, it should be the duty of all politicians to defend the sanctity of decisions of our own courts.
The tragedy that is Zimbabwe feeds off these squabbles between her own children. It has fared badly on numerous gauges celebrated for their ability to summarise the attractiveness of a nation for investment. The ease of doing business index, for instance, rates Zimbabwe alongside the war-torn CAR and below the coup prone Mali. This is linked to the propensity to fight each other as opposed to fighting for each other and the inability to fight for each other facing a common enemy with purpose.
SSA’s dawn has arrived. The region will grow and in the next decade it will produce new millionaires each year at a faster rate than any other region in the world – just like what China is achieving today. Zimbabwe will sadly not be a part of that equation.
Her dawn is yet to come, but time will not wait for her.