Ethel Hazelhurst
Ghana’s capital, Accra, offers investors the most opportunities among 19 selected cities in sub-Saharan Africa.
This is the finding of a MasterCard study released yesterday at the Gordon Institute of Business Science in Johannesburg. The cities were selected to represent all regions of the subcontinent.
Research by George Angelopulo of Unisa showed Accra had “the highest potential for growth over the next five years”. Johannesburg was eighth on the list, Durban 10th and Cape Town 11th.
The report noted: “Johannesburg achieved lower scores in certain categories as a result of lower growth expectations due to its relative maturity compared to other African cities. For example, the expected growth of the middle class population is higher in cities such as Accra and Luanda than in Johannesburg, which has seen the middle class grow since the change of government in 1994.”
Middle-class households make up nearly 30 percent of the total in Johannesburg, 18 percent in Accra and 11 percent in Luanda. Annual average growth in private consumption expenditure, between 2010 and 2012, in Luanda and Accra was about 22 percent, while in Johannesburg private spending growth averaged just over 4 percent.
Angelopulo’s findings were used to construct an index and cities were ranked, based on historical and projected data on typical factors that influence cities’ growth rates. These include growth in gross domestic product per capita and in household consumption, governance, ease of doing business, population growth, national urbanisation and growth in middle class households.
Projected data for 2012 to 2017 were also used. These included health and education, infrastructure, including access to water, electricity and sanitation, cellphone subscriptions and inbound travel.
Of the 19 cities, only Accra was described as high growth, while Lusaka and Luanda, which followed it in the rankings, were described as medium growth. South Africa’s cities fell into the category medium to low growth.
Cities with the least growth potential were Harare in Zimbabwe, Kano in Nigeria, Abidjan in Ivory Coast and Khartoum in Sudan.
“Although these cities scored well in some categories, such as the overall health index and levels of foreign direct investment, their potential for growth was negatively impacted by low scores in areas such as their political and regulatory environments, lower historical economic growth and the challenges of doing business,” the report said.
The importance of inclusive growth was stressed by several speakers in a panel discussion yesterday – because without strong domestic demand, economies cannot sustain high growth. Yuwa Hedrick-Wong, a global economic adviser to MasterCard, said cities were a national platform for creating inclusive growth.
The opportunities in Africa have attracted the attention of many local corporates.
Azar Jammine, the chief economist at Econometrix, said more of South African firms’ outward foreign direct investment was going to the continent than to the rest of the world.
The investors included the major mining companies; manufacturers Sasol, Nampak and SA Breweries; agro processor Illovo; and a long list of retailers, telecoms companies, banks and insurers.