Western governments and multinationals have played a significant role in Africa’s growth in the past, with the European Union being the continent’s biggest trading partner. But in a post-Brexit world, Africa will be looking increasingly to the East for investment and expertise.
Asia-Africa trade has been growing exponentially in the past decade. Alongside China’s ‘One Belt One Road’ initiative, more Asian economies are now showing interest in ramping up their African investments, attracted by rising urbanization and consumerism across the continent.
Asia’s leading financial centers are keen to play a central role
The fact that Japan chose to host its annual Tokyo International Conference of African Development in Africa for the first time is just one example of the growing ties between the two continents. The conference in Nairobi at the end of August explored the potential improvements in Africa’s health system, paving the way for stronger multilateral cooperation and future trade partnerships.
Asia’s leading financial centers are keen to play a central role as finance, shipping and aviation hubs for increasing Asia-Africa trade.
Singapore’s expertise in consumer industries such as airlines, education and healthcare could pave the way for more Asia-Africa business collaboration. The city state is already sharing its experience in how to achieve sustainable economic development through its Singapore Cooperation Program, and we expect to see more growth-supporting initiatives like this in the future.
Improving Business Prospects
Of course, trade between Asia and Africa is not without its challenges, limiting near-term trade potential. Red tape and poor infrastructure make investing in Africa harder, but as relationships between African and Asian governments strengthen, long-term business prospects will improve.
While some people worry the slowdown in global growth and subdued commodity prices will impact Africa’s growth and investment potential, the continent is demonstrating resilience. Its key drivers for growth remain intact, including attractive demographics, urbanization and a continued rise in consumerism.
Côte d’Ivoire, Tanzania, Kenya, Senegal and Ethiopia are just some of the African economies currently performing well and Sub-Saharan Africa is expected to post growth of 4.1 per cent in 2017 and 5.2 per cent in 2018.
Africa has about 13 per cent of the world’s population, but only half of its citizens have access to electricity
Attractive opportunities abound, including in the power sector. Africa has roughly 13 percent of the world’s population, but only half of its citizens have access to electricity, therefore the opportunity for Asia to play a larger role in powering Africa is huge.
Investing in Africa requires strategy and commitment. However, given European growth uncertainties in the wake of the United Kingdom’s decision to leave the European Union, we expect Africa’s relationship with Asia to evolve. By investing in the growing opportunities and sharing expertise, Asia is set to play a bigger role in Africa’s future.
About Sunil Kaushal
Sunil Kaushal is regional Chief Executive Officer, Africa and Middle East, for Standard Chartered. He has held a range of senior management positions at the bank, including Chief Executive Officer, India and South Asia, Global Head of Small and Medium Enterprises and New Ventures, Head of Originations and Client Coverage, Corporate and Institutional Banking and Head of Corporate Banking, UAE. Before joining Standard Chartered, he held various roles in investment banking, corporate finance, commercial banking and foreign exchange at National Westminster Bank, SocGen-Crosby and American Express Bank. He holds an undergraduate degree in commerce from Bombay University and a postgraduate qualification as a chartered accountant from the Institute of Chartered Accountants of India.
Photo Credit: Christopher Herwig, Reuters