The decline in commodity prices and waning Chinese consumption is likely to shift commercial focus from West Africa’s oil-rich economies to East Africa. This is according to Deloitte’s managing director of emerging markets and Africa, Martyn Davies.
“The centre of gravity of growth, and arguably the capitalist interest in the continent, will shift from the west to the east,” he said during a panel discussion at the annual African Capital Markets Conference held in Cape Town today.
He noted it is disappointing that Africa’s resource-rich nations did not implement the necessary structural reforms during the commodities supercycle that ran from the start of 2000 to around the end of 2012. The result has meant countries such as Nigeria and Angola remain dependent on oil for economic growth and are distressed due to the fall in oil prices – down around 50% over the last year, and 60% over two years.
Countries such as Kenya and Rwanda, on the other hand, that have experienced growth on the back of private sector investment rather than commodities, are likely to attract further interest in what Davies called the “post-commodities supercycle”.
“I hope that this will result in states in this part of the world doing the necessary things now – and I mean privatising,” he continued.
“We often talk about diversification and industrialisation and all these things but, ultimately, the state needs to create an enabling environment. These themes, initiatives, are ultimately driven by individuals – and individuals can perform that [function] once the state liberalises.”
However, in tough economic times states typically become more interventionist and controlling, warned Davies. “That is actually the problem.”
“The only country that I would say is progressive in this economic headspace of liberalisation, and is market driven particularly in times now, is Rwanda. I have seen other countries doing the reverse, and this is not going to solve the crisis, it is only going to perpetuate it.”