1. QNB Economics
economics@qnb.com.qa
04 May 2013
Sub-Saharan Africa boom creates opportunities for GCC investors
Sub-Saharan Africa has been experiencing strong
growth in recent years, which is expected to
continue. This boom creates an opportunity for
GCC corporations and investors, according to
QNB Group, as the region is well endowed with
resources and people, but largely lacks the capital
needed to fund its development.
The IMF’s latest World Economic Outlook
forecasts that Sub-Saharan Africa will grow at a
rate of 5.7% in 2013-18, which would make it the
second fastest growing region after Developing
Asia (largely driven by China). This compares with
the 4.2% rate forecast for the MENA region.
Growth prospects are also broad based across
Africa—two thirds of the countries are forecast to
grow faster than 5.0% in 2013-18 and all but two
above 3.0%.
Africa’s growth is mainly driven by a youthful
population, which is growing at a rapid rate of
2.5% and becoming increasingly urban and middle
class. Economic growth is also being supported by
the expansion of mobile communications (nearing
a 70% penetration rate) and improving transport
infrastructure, much of it built with Chinese
support. This is helping to harness Africa’s
resources which include metals and minerals, oil
and agricultural products. The continent is also
benefiting from the lowest level of conflict in
decades and improving governance in several
countries.
Out of the 45 countries in Sub-Saharan Africa,
three—South Africa, Nigeria and Angola—
represent about 60% of the region’s US$1.3trn
GDP, and so attract much of the attention from
foreign investors. Also companies in South Africa
and in the Maghreb, which have regional
operations, can serve as routes for investment in
the continent. The GCC has long established links
with countries in the Horn of Africa and the Sahel,
and is also increasingly connected with other parts
of the continent.
Some of the countries experiencing the strongest
growth in Africa are benefiting from the
exploitation of their natural resources or are
rebounding from a low base after a period of
conflict. Both factors contributed to Angola’s rise
over the last decade and for similar reasons South
Sudan, the newest and one of the poorest country
on the continent, is expected to see 21% growth in
2013-18, as it restarts oil exports.
However, many of the continent’s most dynamic
economies have been driven by other factors. For
example, Rwanda, one of the top 3 performers
over the last six years with an 8.1% growth rate,
has no oil resources and instead has attracted
investment due to efforts at improving its business
environment, which is now ranked third in the
region and 52nd
internationally by the World Bank.
Some GCC companies are already engaging in
parts of Africa in sectors such as transport
infrastructure, telecoms, real estate, banking and
agriculture. The major GCC airlines operate flights
across Africa, serving as a natural hub linking it
with Asia. DP World has port operations in
Senegal, Mozambique and Djibouti. In telecoms,
Ooreedoo is bidding for a controlling stake in
Maroc Telecom, which would also give it exposure
to 13m customers across four Sub-Saharan
countries where the firm operates. Etisalat already
Real GDP Growth Forecast (2013-18)
(% change for selected countries, 2012 GDP shown)
Source: IMF, QNB Group analysis
6.9
3.2
4.2
5.7
6.0
6.2
6.3
6.5
7.0
7.0
8.0
South Africa(US$384bn)
MENA (US$3.2trn)
Sub-Saharan Africa (US$1.3trn)
An gola(US$119bn)
Kenya (US$41bn)
Ghana (US$39bn)
Ethiopia (US$42bn)
Tanzania (US$28bn)
Nigeria (US$269bn)
Rwanda (US$7bn)
Mozambique (US$15bn)
South Sudan (US$12bn) 21.1

2. QNB Economics
economics@qnb.com.qa
04 May 2013
owns stakes in operators in Tanzania, Nigeria and
other parts of West Africa. In real estate, Kingdom
Holdings of Saudi Arabia, for example, owns
hotels in Kenya, Zambia and Ghana.
In banking, QNB Group has branches in two Sub-
Saharan countries, South Sudan and Mauritania
(aside from its extensive presence in North Africa.
Gulf investors have also taken stakes in various
local banks, such as Istithmar in Kenya’s shariah-
compliant Gulf African Bank. The 250m Muslims in
Sub-Saharan Africa, 30% of the total population,
are potential customers for both conventional and
Islamic banking.
Agriculture is a particular area of interest to GCC
investors, to support the Gulf’s food security. The
continent has large amounts of underutilised land,
substantial water resources, and low yields on
much of the land that is cultivated. In this context,
well placed and socially responsible capital
investment could boost productivity. At the same
time research and cooperation on suitable crop
varieties and cultivation techniques, such as that
planned under the Qatari-led Global Dry Lands
Alliance, could help farmers working marginal
land.
QNB Group expects that Africa will continue to
experience strong growth for many years ahead,
gradually closing the income gap with wealthier
regions. This will create further opportunities for
GCC companies and investors.
** Ends **