Untapped potential in Africa

Michael Bear
AS markets focus on turbulence across the Eurozone it is important that we do not lose sight of the vast opportunities available to City firms in emerging markets.

This is one of my key messages as I lead a senior business delegation on a visit to four African countries: Angola, South Africa, Kenya and Nigeria.

Nelson Mandela once described the building of a home as “a joining of hands”. This maxim highlights the need for people from all walks of life and backgrounds to work together for the sake of progress.

Having been born in Nairobi, studied in South Africa and worked across the region I know from personal experience that Africa offers almost limitless economic potential.

I recognise, however, that in some cases the business environment is not as welcoming as it needs to be.

That is why I will be stressing that the UK’s efforts to promote commercial diplomacy in Africa should be seen as a recognition that our futures are bound together. The City has a major role to play given that it accounts for £42bn in net exports, half the UK’s deficit on trade and goods.

During his recent visit to Africa, David Cameron highlighted that “trade and enterprise have the power to change lives. What will lift millions out of poverty in the long run is economic growth”. The continent accounts for just 3.5 per cent of worldwide trade but in 2010 the continent’s economy grew by five per cent, and six of the world’s 10 fastest growing economies are African.

In fact, Africa is predicted to have the world’s highest average GDP growth over the next 40 years.

Such growth, however, brings its own challenges. Africa is experiencing the highest rate of urbanisation in the world: the number of city dwellers in Africa will double by 2030 to 750m.

The level of planning, resources and skills needed for this shift are truly immense. Nigeria, for example, is the world’s seventh largest country but according to one report has the same amount of grid power as Bradford.

As we have learned here in London, the success of a city is dependent on its infrastructure.

The City is a world leader when it comes to mobilising the capital needed for such high-value development. This is particularly true when it comes to planning, procuring, managing, and delivering projects utilising the public private partnership (PPP) model.

According to the World Bank, Africa currently spends $45bn (£27.3bn) per annum on infrastructure compared to the $93bn needed. Addressing this infrastructure gap can be a powerful engine for overcoming bottlenecks to economic growth and social change.

The City is home to many skilled hands that could work together with our African partners to make this vision a reality.

Michael Bear is Lord Mayor of the City of London