Economic experts from across the African continent say this may be an exciting year for African economies, which could be ready to move out of their traditional roles and into new sectors.
African nations have struggled for decades to go beyond their role as providers of basic raw materials, like oil, gas, minerals and agricultural products.
Their efforts have had mixed success. While nations like South Africa and Kenya have managed to diversify their economies, others, like Angola and Nigeria, are largely known to investors as energy sources.
But then oil prices fell. And fell. And continue to fall. And while that trend is clearly alarming to those energy producers, economists say this might represent an opportunity for resource-poor African nations, which have struggled to be heard in the resource-packed African market.
Experts gathered in this month in Johannesburg -- still the continent’s economic hub, home to Africa’s strongest banking sector, and the headquarters of many international mining giants -- to discuss this new trend.
Analyst Martyn Davies said change is afoot.
“Africa has predominantly been this commodity-driven economy where growth is allied to commodity prices. We now see the headwinds of rapidly declining oil prices. What future does that hold out for continental growth? What implications does that have for business? And I think arguably, is Africa then rebalancing away from traditional commodity-driven growth to one that is more balanced, more consumer-driven and new wealth, new value being created, beyond the simplistic business model of non-beneficiated raw materials?” asked Davies.
That move away from the simple export of raw materials, said analyst Gareth Newham, could also prompt wider improvements in governance and in society. After all, diversified economies spread wealth in more ways than one, and also add much-needed jobs to the economy.
Newham is the head of the Governance, Crime and Justice Division at the Pretoria-based Institute of Security Studies.
“In commodity-driven economic growth, where a very small portion of the population benefits, while very high levels of inequality and poverty do lead to higher levels of instability, making it more difficult to pull together a stable environment for business. And so there’s a very close connection between good governance and the possibility and opportunities for business going forward -- and the opposite when there’s not stability,” said Newham.
Davies predicts a geographic move as well, from the traditional West African powerhouses to their East African competitors.
“So I think we’re going to start to see the interests of business, the interest of capital, move away from what has traditionally been oil-propelled economies in West Africa, think Nigeria, think Angola, amongst others, to more sort of East Africa, Ethiopia, Kenya, Tanzania. Yes, Tanzania, is going to be a natural gas story going forward as well. And also Mozambique. So I think the center of interest will shift from West Africa increasingly to East,” said Davies.
Gas prices are expected to stay low for much of the year, and will be closely watched by investors -- and consumers -- around the world. For many consumers, the low prices present a welcome opportunity to save money.
But for African economies, low commodities prices might be a chance to grow in new directions.