Amram Petrosian: Africa Becomes a Driver of Global Economic Growth

"The African continent is one of the most promising economic spaces compared to traditionally successful business activity centers in the world," told EADaily Amram Petrosian, President of the Foundation for the Development of Modern Diplomacy and Managing Partner of Mozambique Mining Mineral Group.

The European economy, in particular, is experiencing stagnation. According to IMF forecasts, the EU economy will grow by only 0.8% in 2024. Germany, the core of the EU, is not expected to grow at all this year, a fact confirmed by data from the German government, which "does not expect any growth this year." This is due to a number of reasons.

Long-term trends include a dramatic decline in birth rates and continuous population aging; a painful restructuring of European energy, including a radical reduction in access to Russian oil and gas; the policy of carbon neutrality ("green growth"); long-term underinvestment in industry and infrastructure; depletion of many types of its own natural resources; excessive strengthening of bureaucratic barriers and tax burden for many European producers, and much more.

In the short and medium term, there is a higher inflationary background with simultaneous stagnation of consumption, a decline in business activity, and low efficiency of the banking and financial sector. Overall, world GDP growth in 2024 is expected at 3.2%, in developed countries it will be 1.8%, in developing countries (with all the conventionality of this term, since it includes China, Russia, and advanced Southeast Asian countries) – 4.2%, and Asian economies will demonstrate growth of 5.3%.

"We see that the Old World not only does not give impetus to the development of the world economy, but its contribution to it is rapidly decreasing. Given this trend, it makes sense for the international business community to focus on new economic spaces as directions for intensifying economic activity. Namely, we must pay close attention to the African continent," believes the President of the Foundation for the Development of Modern Diplomacy.

Africa is one of the most promising destinations for international investors for several reasons. Firstly, this concerns the potential for development and economic growth. Almost half of the world's fastest-growing economies are African. For example, in IMF forecasts for 2024, the leaders of expected economic growth are Niger (9.9%), Rwanda (7%), Côte d'Ivoire (6.5%), Ethiopia (6.1%), Senegal (6%), Gambia (5.8%), Tanzania (5.4%), DR Congo (4.7%), Mozambique (4.3% - it should be taken into account that such relatively small growth is given even for the election year, which has been successfully completed), and Guinea (4.1%).

Secondly, for investors in the African region, there is a large selection of promising sectors: energy in general, and the oil and gas sector in particular; mining; infrastructure and construction; banking; agriculture; trade; telecommunications, and other areas.

Thirdly, the African continent in its different parts has extremely diverse economic and geographical specifics. For example, in the economy of East Africa, gold, diamonds, metals, and agriculture (coffee and tea, mainly in Kenya and Ethiopia) play a significant role. In Central Africa, the core of the regional economy is oil production, as well as base and rare-earth metals. In Southern Africa, the main sectors of the economy are associated with the extraction of diamonds; non-ferrous (including precious), base and rare-earth metals; coal; agriculture (cocoa beans, coffee, cotton, corn) makes a significant contribution.

Thus, we can talk about extraordinary economic diversity. This potential can and should be developed by international investors. It is worth noting that the above-mentioned resource and economic prospects of Africa still hold many opportunities, as they are not fully disclosed.

Here's the English translation of the text:

"This specificity of African countries and peoples is usually not fully understood by international investors. And this is one of the key factors to consider when launching business projects in a specific country, a specific province, and a specific community. The ability to find common ground and points of contact with local communities is an important competitive advantage for an entrepreneur in Africa," emphasizes the Managing Partner of Mozambique Mining Mineral Group.

In addition, international investors ignore such an important factor as establishing horizontal ties with various players and stakeholders in African countries, which is critically important for comprehensive support of almost any business project. This is also due to the unique specifics of local cultures, the peculiarities of the legal and economic regime in each country. "Interacting with representatives of the governments of African states, we have identified an important reason for the incompleteness of many projects of international investors, which lies in the insufficient implementation of the option of horizontal ties," the President of the Foundation for the Development of Modern Diplomacy is sure.

Petrosyan noted an important feature of the business environment of African countries and their elites. In particular, large capital is represented in the business community of almost every state on the continent, however, the segment of small and medium-sized enterprises is not represented as widely and effectively as it could be. This creates a certain imbalance in the development of the economic landscape, and this is taken into account by local governments when they begin serious work on de-monopolization of the economy, the establishment of transparent rules of the game, and a favorable tax and investment climate. The peculiarities of economic and social development have predetermined another equally interesting factor. In particular, because of the strip of political instability in which African countries were, their political elites do not have long-term strategic planning.

In this regard, the victory of Daniel Chapo in the presidential elections in Mozambique is indicative. According to Petrosyan, Chapo actually received a consolidated nationwide mandate of trust from the entire society. His program was supported by representatives of various social groups: the business community, various political and social groups, representatives of the middle class, and other members of Mozambican society. So, these elections turned out to be epoch-making for the country, Mozambican society rallied around a positive agenda aimed at changing and developing the country.

"For many African leaders, due to certain challenges of a political and social nature, it is difficult to build a vision and concept of long-term strategic planning. However, in our opinion, the inflow of foreign investment will be able to contribute to the stabilization of socio-economic and political processes and will create conditions for the development of precisely long-term approaches in the development of countries on the continent," concluded Amram Petrosian.