Africa is still on the rise but gaps in key areas are putting the continent's economic boom to question, the World Economic Forum in Cape Town has warned. About 1,000 participants including world leaders are taking part.
South Africa's President Jacob Zuma is playing host to global and business leaders in what has been dubbed as "Africa's Davos". The annual gathering which runs until Friday (10.05.2013) is hoping to capitalize on the continent's economic revolution. The meeting which started on Wednesday is discussing a continent long-defined by poverty, disease and war, but one that is expected to grow at more than five percent this year.
According to the World Bank, almost half of the countries in Africa have attained middle income status.
Six of the world's 10 fastest growing economies are in Africa. Sub-Saharan Africa is projected to move from being a developing region to a hub of global growth, economic observers say.
Speaking to the French news agency AFP, Mark Otty, a manager at Ernst & Young, said greater stability, good governance and high returns are fueling interest in the continent. "Investment into Africa has grown significantly over the last few years. We have a very positive expectation around the years to come. Are there risks in Africa? Yes, but certainly I would argue there are some tremendous risks in Europe as well," Otty added.
Challenges and pitfalls
Despite the rosy forecast, a myriad of problems and potential pitfalls remain. Social inequality and unemployment are also on the increase. "Good economic growth has not really made a difference to the livelihoods of millions of Africans," Mwangi Kimenyi who works with the Brookings Institution noted. According to Kimenyi, this is perhaps Africa's biggest challenge.
And as if to illustrate this challenge, Jennifer Blanker, chief economist at the World Economic Forum, warned that Africa's growth has been marked by gaps. "If you look at Africa, you really do see a story of gaps in a sense," Blanke told journalists on Thursday.
She noted that though things had generally improved in Africa, “the fact that these gaps still remain do raise questions about whether the improvements that we've seen, the incredible growth that we've seen over the last 10 to 15 years, will be sustainable over the next decade."
Blanke who was speaking at the launch of a report, on competitiveness on the continent, said African economies were lagging behind other emerging markets, when it came to education, technology, infrastructure and governance.
Africa's changing role
However the mood in Cape Town is upbeat as delegates debate on how to ease dependence on natural resources, how to build infrastructure and how to improve trade between African economies.
"The narrative around the continent is now dominated by business, rather than the traditional development issues," Frontier Advisory, a consultancy firm for investments in developing markets said.
"But for Africa to deliver on its growth promise, its governments must create environments of opportunity," the consultancy group warned.
Ahead of Wednesday's formal opening of the forum, President Jacob Zuma and his Nigerian counterpart, Goodluck Jonathan, signed several pacts. "I am happy that we have prioritized economic cooperation during this visit," Zuma said. Jonathan's trip is the first state visit by any Nigerian leader to South Africa since 2009. It follows a visit by Zuma to Nigeria last month. According to economists, Nigeria's growth rate stands at 7 percent, almost twice that of South Africa.