29 April 2011

Africa: Confidence in African Economic Growth Augurs Well for Professional Services - KPMG

A number of factors continue to lead to the growth in confidence in the African economy. In turn, this has led to an increased need for professional service providers to play a facilitating role for businesses which are entering new and often unfamiliar markets.

In understanding the context of the professional services sector across Africa, it is useful to look at the building blocks of what is fast becoming a confident economy. "One has to think of Africa as a group of regional markets, not as 52 independent countries," says Robert Araeb, a Partner of KPMG in Namibia.

"When viewed as a single continental market, or even as large regional markets, Africa reveals itself as an extremely attractive emerging market. There have been projections made that by 2020 Africa will be a market with a GDP of US$2.6 trillion and African consumer spending of US$1.4 trillion in the same year," he says.

Recent announcements by Finance Minister, Saara Kuugongelwa-Amadhila, suggest that the Namibian economy is expected to grow by about 4.3% in 2011, largely due to expansionary measures adopted by government. While there are some concerns about rising inflation in the country, these are tempered by rising global world commodity prices. This augurs well for diamond and uranium production and foreign prospectors.

Araeb also points out that economic indicators show that when comparing Africa by way of GDP in US dollars to the BRIC countries, the continent's GDP exceeds those of India and Russia and falls marginally short of that of Brazil.

Similarly the GDP growth forecast for Africa at 4.9% exceeds that of Brazil and Russia, as well as most of the traditional or mature Western or Asian markets. The geographic size of the African market is also more than three times that of Brazil, almost double that of Russia, ten times that of India and three times that of China. Within five years, African national economies will be dominating the table of the top ten fastest growing economies in the world.

Moses Kgosana, chairman and senior partner of KPMG Africa Limited, is firm about the commitment of KPMG to Africa.

"KPMG is very excited about the business opportunities in Africa. While the continent contains more than 12 overlapping economic unions, intra-regional trade currently accounts for only 10% to 12% of Africa's economic activity.

"This points to massive opportunities for growth in trade across borders in Africa. If we look at the statistics, we find that there are more middle income households (greater than US$20 000 per annum) in Africa than there are in India. The growth in African economies is not solely the result of resource demand, with resources making up approximately one third of Africa's growth."

In addition, potential in the fast-growing telecoms sector extends beyond mere business opportunities.

Johan Smith (KPMG director and head of KPMG's Africa Telecoms Group) says "there are potentially about 500 million new mobile phone users across the continent. This presents a huge opportunity to mobile operators, but it also can bring benefits to users that go way beyond simply their access to telephony.

"Mobile technology brings improvements to the lives of people; it gives them access to the internet, education leveraged through technology, access to health services and to governments, market information, and even access to job opportunities."

He adds that the compound annual growth rate of the telecom industry over the last few years has been 40% and there are now over 400 million subscribers in Africa. These are largely voice services subscribers, with the data market still waiting to be tapped.

KPMG attributes current African, including Namibian, economic growth to the end of many regional conflicts, improved macro economic conditions, reformed business and regulatory climates, increasing privatisation and increasingly open trade.

"We are constantly exploring opportunities and structures which will enable us to work together as cohesively as possible and to be as responsive as we can be to the needs of our clients," says Kgosana.

Copyright © 2011 Namibia Economist. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.