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AFRICAN ISSUES: ECONOMIC GROWTH What the Without solid growth in the continent’s EMERGING MARKET economies, the rise of Africa’s middle class and development of broad-based consumerism emerging will be no more than a dream. Mike Simpson DECELERATION: KEY TAKEAWAY investigates the slowdown in global emerging MESSAGES markets and its relevance to Africa. market FOR AFRICA African growth will not be slowdown FRICA RISING’, ‘THE RISE OF while the sluggish old-world economies significantly impacted by the emerging market deceleration, but it will slow down. The slowing of emerging market the African Consumer’, means for ‘A ‘Africa’s Middle Class Grows’. were viewed as yesterday’s growth and growth is cyclical and will pick up investment news. Then came what the again, perhaps as early as the end All headlines that warmed the heart of respected Economist magazine called ‘The of 2014. Great Deceleration’ in emerging markets. international and local marketers as they In the longer term, Africa and Africa looked to expand their customer base business experts are now coming forward other emerging markets will But a raft of African economic and amid widespread global enthusiasm for continue to have an advantage emerging markets in general. to suggest that the continent will continue over most developed countries, Everyone from Walmart to Samsung has been rushing to either enter or to grow despite this uncertainty. For where growth in the next 10 to marketers, the prospect of increasing 20 years is expected to be increase their footprint in Africa’s fast- consumer spending power and a growing zero or very low. developing economies – and consumers middle class remains a reality, albeit one Africa has the potential to and the cause of consumerism have that may develop more slowly. become an ‘economic miracle’ benefited as a result. “For emerging markets, it’s within the next 50 years. But can it continue? In the latter unfortunate that the US Federal Reserve’s Not all African countries will part of 2013 that enthusiasm for tapering of QE comes at the same time benefit from such a ‘miracle’; emerging markets began to wane. that economists and investors are revising there will be winners and losers. Growth decelerated and the developed their once-bullish views of emerging Economic diversification economies of Europe and North America market economies in general,” says Kevin and reduced reliance on – for so long in the doldrums – seemed to Lings, Chief Economist at Stanlib asset mining and oil are crucial for be looking a potentially better investment management in Johannesburg. “For years sustained growth. bet than at any time since the Great these markets have been seen as a kind Internally generated growth is Recession of 2008. This has been topped of golden boy; some of the BRICS (Brazil, more beneficial than relying on off by worldwide nervousness as the Russia, India, China and South Africa) export-generated growth. US government reduces the artificial economies were forecast to achieve African countries that can stimulation of the American economy growth rates of 6%, and it seemed to succeed in establishing world- through quantitative easing (also known many that an unstoppable success story class industrial corporations will simply as ‘QE’). was unfolding.” have a distinct advantage. So, if emerging markets are slowing But, notes Lings, in recent months this Greater economic openness, down as multinational companies and vision has been questioned as emerging more cross-border trade within investors seek comfort in their old markets have slowed and performance Africa and the creation of regional stamping grounds of the developed has been less robust than anticipated. economic blocs are key strategies economies, where does this leave Africa? He expects further uncertainty while for sustained growth. Is the dream of a rising continent with a Geographical location and growing middle class and enthusiastic a large population should not new consumers dead in the water? be the sole determinants as to Thankfully, it seems not. Certainly whether a country is a good things aren’t as they were a year ago The African middle- investment destination. – when Africa and a host of emerging class dream has not Expect education and economies including Brazil, India, Indonesia, South Africa, Russia and Turkey been dented healthcare to be two key growth – were being seen as the next big thing, and investment sectors. 10 strategicmarketingafrica First quarter 2014 First quarter 2014 strategicmarketingafrica 11