Australia: Out of Africa … And Back In

When South Africa emerged from the apartheid era in the mid-1990s, it was common to hear a plea to the world not to forget Africa simply because the apartheid battle was finished. Back then, “not forgetting Africa” largely meant international aid. And not just from Western governments, but charitable endeavors such as Bob Geldof’s Live Aid concerts in 1985.

The implication was that these type of events and other aid programs were the main way in which the West could productively interact with the African continent. Fortunately, this postcolonial (and slightly patronizing) view is proving to be 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.

Over the next five years, according to the IMF, seven economies in sub-Saharan Africa are expected to be among the ten fastest growing economies in the world. In 2011, the economy of Ghana grew by 13.7%, while Ethiopia’s grew by 8.5%. Elsewhere, the Mozambique economy grew by 7.5%, Nigeria and Zambia by 6.8%, and the Democratic Republic of Congo by 6.5%.

Australia is one country that understands what this means, and the opportunity it presents. Perth is full of mining companies — around 20 or so — that 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 are involved in projects valued in excess of $45 billion.

Outside of mining, there are 4,000 or more Australian companies exporting to Africa. Over the last five years, there has been an estimated doubling of Australian companies doing business in Africa, and Australia has a strong presence there in infrastructure, professional services and education.

When I was a young official at the Australian Council of Trade Unions, I remember attending a summit in South Africa on economic cooperation among Indian Ocean countries. This was in 1995, just after South Africa had been welcomed back into the international fold. It all seemed very idealistic, but not particularly real, to imagine the Indian Ocean as something that could unite rather than divide the people and economies of Africa and Australia.

Resource booms

But now, more than a decade and a half later, so much has happened and changed. There has been a strong flow of information, people and money across the Indian Ocean. Despite its expanse, the Indian Ocean is no longer a barrier — it’s a connection. Two-way trade is reaching $5 billion a year, and has been on an upward trajectory for several years.

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

Both also share a love of sports. The cricket and rugby rivalries between the two nations are famous, and have produced some epic encounters. Less well known, perhaps, are the inroads the Australian Football League 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 Kangaroos.

A team from the western side of the continent, the Fremantle Dockers, have created a development zone for young players in South Africa’s North West Province. (They are one of four AFL teams to start South African development programs.) The number of AFL players in South Africa has grown from 2,500 in 2006 to around 7,000 today. A number of South African companies, in turn, have even been corporate sponsors of the Dockers.

This augurs well for the future, both for Africa and Australia. Africa is forecast to emerge as the fastest-growing region in the world over the next 20 years. To realize this growth, it will have to nurture a number of key competitive advantages: the world’s richest mineral and energy deposits, the most arable land, and what is predicted to be the youngest population in the world by 2050.

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

Austrade, the federal government’s agency for international trade, has recently expanded its African network by opening offices in Ghana and Kenya. Far from “forgetting Africa,” the continent will be looming large on more than just Australia’s investment radar in the coming decades. And if we can keep economies open for multilateral investment, this will present an opportunity for everyone.