Tim Harcourt

When South Africa emerged from the apartheid era in the mid-1990s it was a common plea for the world not to forget Africa simply because the apartheid battle had been seen to be won.

Back then, “not forgetting Africa” had an international aid connotation, strongly associated with events such as Sir Bob Geldof’s Live Aid concerts of 1985.

The inference was that these type of events, and aid programs, were the main way in which the west might interact with the African continent.

Fortunately, this post-colonial and slightly patronizing view is proving completely outmoded.

In 2012, sub-Saharan Africa is rapidly coming of age as an economic region and as an investment destination. The so-called “frontier” markets of today’s Africa will be the emerging markets of tomorrow.

According to the IMF, over the next five years seven economies in Sub-Saharan Africa are expected to be among the top ten economies measured by economic growth. In 2011 the Democratic Republic of the Congo grew by 6.5%, Zambia by 6.8%, Nigeria by 6.8%, Mozambique by 7.5%, Ethiopia by 8.5%, and Ghana by 13.7%.

In Australia, we are already understanding what this means, and the opportunity this presents. Perth is full of mining companies – around 20 or so – which are listed on the Australian Securities Exchange but have the majority of their operations in Africa.

There are around 200 Australian mining companies with operations in Africa, and they’re involved in projects worth in excess of A$45 billion. 

Outside of mining, there are 4000 or more Australian companies exporting to Africa.

There has been an estimated doubling of Australian companies doing business in Africa over the last five years. Australia has a strong presence in infrastructure professional services and education.

Australia’s involvement in Africa even extends to event management: the screens and associated attractions on the Cape Town waterfront during the 2010 FIFA World Cup were managed by an Australian entrepreneur.

As a young ACTU official working for our South African counterpart, COSATU, I remember attending a summit on Indian Ocean economic co-operation back in 1995, just after South Africa was welcomed back into the international fold.

It seemed all very idealistic, but not particularly real back then, to imagine the Indian Ocean as something that could unite, rather than divide, the people and economies of Africa and Australia.

But more than 15 years on, so much has happened and changed. There has been a strong flow of information, people, and money across the Indian Ocean. Its no longer a barrier, it’s a connection. Two-way trade is nudging A$5 million, and has been on an upward trajectory for some years.

At the heart of all this are people, and Australia has a particular affinity with South African people, from all races. As immigrant societies, many South Africans and Australia share family ties and South Africans are becoming an influential immigrant group in Australia. Both countries are small open economies, geographically isolated from major world markets, with large export-oriented resource sectors.

Both also love their sport, and the cricket and rugby rivalry between the two nations is famous, and has created some epic encounters. Less well known, perhaps, are the inroads the Australian Football League – the AFL – is making in Africa. This year, a Sudanese born player, Majak Daw, despite some off field dramas, could potentially make his debut with the North Melbourne.

Meanwhile, on the other side of the continent, the Fremantle Dockers have a fostered a development zone for young players North West of Pretoria. The number of AFL players in South Africa has gone from 2500 in 2006 to around 7000 today.  And it’s a two way street: a number of South African companies have even been Fremantle Docker corporate sponsors.

It all augurs well for the future, both for Africa and Australia. Austrade, the Federal Government’s trade agency, has recently expanded its African network by opening offices in Ghana and Kenya.

Sub-Saharan Africa has a number of key competitive advantages. It is predicted to have the youngest population in the world by 2050, the most arable land, and enjoy the world’s richest mineral and energy deposits. Africa is forecast to emerge as the fastest-growing region in the world over the next twenty years.

Australia’s current prosperity is due largely to its resources boom. By mid-century, that boom may well have extended to Africa, and be driving a huge wave of supplementary development, raising living and education standards throughout the continent.

Far from “forgetting Africa,” the continent will be looming large on the global investment radar in the coming decades. And if we can keep economies open for multi-lateral investment, this presents an opportunity for everyone.

Tim Harcourt is the J.W.Nevile Fellow in Economics at the Australian School of Business, UNSW and author of The Airport Economist.