Ebola should not overshadow West Africa’s great progress and still untapped potential
Last week I was asked to make a presentation on West Africa to a number of senior executives of large multinational companies, keen in investing in our region. In spite of the panic displayed by some media outlets and the occasional cancellation of conferences and football matches due to take place in the region because of Ebola, they came to Abidjan, at the heart of one of the continental success stories, to explore business opportunities. Rising up from a long period of conflict, Côte d’Ivoire’s growth has approached double digits, recording a 300% increase of Foreign Direct Investments in 2013. Giants like EDF, Standard Bank, Yara, Heineken, DIAGEO, and other big names, gathered under Private Investors for Africa, a business coalition to contribute to the continent’s development. All are eager to jump on the ‘West African train’ – for some, to deepen their existing investments in the region, starting from one of its growth hotspots.
West Africa is indeed booming and projected to become the fastest growing region in the African continent, with an estimated growth for both 2014 and 2015 to exceed 7%, according to latest African Economic Outlook, a joint African Development Bank-UNDP-OECD publication. The region as a whole has made huge strides in improving its business environment, narrowing its distance with the best performing countries in the world, as shown by the Doing Business Report. While challenges still remain, starting a business in the region has become much easier over the span of just a few years, with the region moving from around 40% to 80% from the score of the world top performers, and improving upon all other doing business indicators(see graph). As the Bank’s latest West Africa Monitor reported, the region possesses one of the largest concentrations of minerals in the world and has a stronger largely untapped energy potential. With the exception of Burkina Faso and Cape Verde, virtually all West African countries involved in some form of exploration or production of oils or gas. The region is home to one third of Africa’s natural gas reserves. Iron ore, uranium, gold, bauxite, manganese and diamonds also complete the picture of a blessed underground. Beyond minerals, the story of the region is a story of increased diversification, with a strong agriculture and a boom in services and construction, which are building on the galloping rise of a middle class and larger consumer market.
Source: World Bank, Doing Business Report
While the spread of Ebola is so far largely confined to three countries and efforts to contain it in Nigeria are so far successful, the panic may scare off investors and have damaging impact such as what the world has experienced in 2002-2003 during the SARS outbreak. Just as SARS did not prevent East Asian tigers from being where they are today, the doom predictions of Ebola’s medium-term impact on the region’s prospects are largely overestimated. This is particularly true at a time new resources are being made available to the region and on the continent as a whole, to address its single biggest bottleneck: infrastructure. Thanks to the acceleration of US-led Power Africa program, AfDB’s Africa50 fund and the promises held by the new BRICS development Bank, more resources will be made available to support the region infrastructure and address its largest binding constraint. The region and the continent are at a tipping point to capitalize on past progress and accelerate its growth. Today’s Ebola outbreak should not overshadow the huge potential of the region and what it can offer in the years to come.