by Chris Paizis, Managing Principal, Barclays Africa
The African continent, much like any emerging market, faces a unique set of challenges particularly in the financial sector, which will concern investors, corporations and market participants. But these challenges aren’t new and can often have positive outcomes. For example, the electricity supply has been a huge issue in many Sub-Saharan Africa (SSA) countries and electrification levels have been very low, but I would see this as a long-term positive because investment in electricity can then lead to very fast growth.
These issues are part and parcel of dealing with frontier and emerging markets and it should be remembered that in Africa one has to look through financial cycles. We might have low growth now, but in two years’ time, that could be a very different story. While there are political and other risks, external factors like the drop in commodity prices are more likely to have an impact on markets as this reduces the credit quality of our commodity producing countries and associated clients.
In SSA, we have to live with volatility, and our clients, who have been on the ground for a long time, understand this and they are able to conduct business through the cycles to still make healthy profits and to service their own clients.