The Economist explains: Why Africa is becoming less dependent on commodities

Posted: January 12, 2015 in economy
Tags: , ,

FOR DECADES commodities have shaped Africa’s economic growth. When prices were high, growth was good; when prices dipped, so did the continent. But that is slowly changing. Despite big commodity-price falls this year—oil is down by 50%—the continent will probably grow by 5% in 2015 (and more in the following years). While lots of African currencies lost value in 2014, they have performed much better than during other periods when commodity prices were falling. Few African countries will fall into recession in 2015—unlike other commodity exporters such as Russia and Venezuela. Why is Africa doing better than many expected?Two reasons stand out. First, the continent’s economic growth is coming from other places. Governments have worked hard to make life easy for investors. The World Bank’s annual “Doing Business” report revealed that in 2013-14 Sub-Saharan Africa made more regulatory improvements than any other region. Mauritius is 28th on the bank’s list of the best places to do business. Rwanda, which 20 years ago was in the throes of a civil war, is now a better place for investors than Italy. When moneymen believe that their time will not be wasted or their cash stolen, they will invest. After two decades of stagnation, Africa’s total investment as a percentage of GDP increased after 2000. Foreign investment into Africa rose by 5% in 2012 and 10% in 2013. Foreign …

via Economic Crisis http://ift.tt/14LKONl

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