Africa's hopes spring eternal

The Life: After decades of colonialism followed by civil wars and strife, has Africa's time finally come?

Yacoob Abba Omar, the South African ambassador, says investment in the continent is ready to take off. Jaime Puebla / The National

After enduring decades of colonialism followed by widespread civil war and strife, has Africa's time finally arrived?

The continent now has one of the fastest economic growth rates and highest returns on investment in the world.

Its collective GDP, which stood at US$1.6 trillion (Dh5.87tn) in 2008, is projected to increase to $2.6tn by 2020, while foreign direct investment inflows are tipped to reach $150 billion by 2015.

Investment from the Gulf region has the potential to become a major catalyst for this growth, while also generating a positive social impact.

The topic was the subject of a recent forum in Abu Dhabi organised by Insead, the graduate business school and research institution.

"The optimism which marked the beginning of the century, which some referred to as the beginning of Africa's renaissance or Africa's season of hope, is finally beginning to be realised," said Yacoob Abba Omar, South Africa's ambassador to the UAE. "While we may not be flying high yet, Africa is ready to take off."

The IMF forecasts that GDP will grow in sub-Saharan Africa by 5.5 per cent this year and 5.8 per cent next year.

Yet Mr Omar cautioned that 45 per cent of Africa's population still lived on less than $1 a day and GDP per capita was one-tenth of the world average.

Doubts also persist amid continuing problems with corruption, infrastructure and political instability.

But smart investors can still make significant gains, said Pasha Bakhtiar, the founding managing partner of Willow Tree Impact Investments.

He told the conference there were a growing number of entrepreneurs in Africa who were business oriented and could use private capital.

"We spend a lot of time in Kenya and Uganda and it's shocking to see to us the extent of unemployment among the young in these countries, which are all harbouring bright well-educated [people], but have no access to capital," Mr Bakhtiar said.

Africa is attracting the interest of big private-equity firms, but most entrepreneurs are not looking for multimillion-dollar investments. That creates opportunities for other investors willing to seize the initiative to fund small businesses.

"Capital for us is basically the lubricant that is going to make these economies function in an autonomous manner going forth. If you want sustainable development and sustainable investment into these small and medium enterprises it's going to have to come from the private sector."

The Gulf region should be able to position itself to become a leader in terms of contribution to socio-economic development in Africa, he said.

"There is no reason why this region should not become the main catalyst for growth in those countries, in my opinion."

Willow Tree is looking at a group of Ugandan entrepreneurs who are developing a business plan to set up private health clinics. Those clinics will then subsidise rural ones that provide free health care to those who cannot afford it.

"What's happening is you're getting the top middle class subsidising the health care at a very high level on a rural basis. It's a fantastic business plan. In India this has been deployed very profitably," said Mr Bakhtiar.

Beau Crowder, the director of programs for Dubai Cares, spoke about an initiative it is funding in Mali to encourage the private sector.

The WASH in Schools Initiative aims to equip 726 schools with water wells, latrines and other sanitation facilities by the end of 2013.

"What we're doing is creating a demand within the academic environment for water, sanitisation and hygiene products," he said. "It sounds really simple but it's a strong relation with the private sector that ensures the sustainability in the longer term."