2012 the year of emerging economies

While competitiveness in advanced economies has stagnated over the past few years, it has improved in many emerging markets, placing their growth on a more stable footing and mirroring the shift in economic activity from advanced to emerging economies. All indicators point to continuing growth in emerging markets as the developed world fights its way out of the biggest recession in history, providing opportunity for businesses looking for clever investments.

This may point to opportunities for South Africa as the gateway to Africa, but the complexity of today’s global economic environment means that while the opportunities are available, there is increasing competition.

Louise Robinson, sales director at Database 360, points out that parts of emerging Asia, the Middle East and Eastern Europe are as attractive to investors as Africa – if not more so in some cases – and that taking advantage of the opportunities will require adding value as well as providing a compelling offering.

“There are so many acronyms that analysts and investors use when they talk about emerging markets: BRICS, CIVETS, BEM, etc. This is an indication of how many countries are competing for the same business; competition that will only increase as a recovery from the economic crisis emerges,” she says. “Traditionally investors have seen emerging economies as markets that have a great potential for profit, although the downside is that there is typically more risk than investing in developed nations. So with this much choice, factors like political and economic stability become even more important in investment decisions.”

For this reason, Africa is not the final frontier we think it is, she adds. “The big emerging markets competing with Africa are Russia, Brazil, and Turkey, and all three are more stable than most African countries. In addition, their growing infrastructures and business-friendly legislation make them good investment destinations. The US, for example, would look to Brazil first for investment opportunities as a result of a combination of these factors and geographic proximity.” In addition, the Middle East is providing less US-centric alternative investment opportunities.

Robinson says it’s all about realising that there are other markets that  international businesses want to get into, and adding value to ensure the business comes Africa’s way instead. “Like in every other area of business, good investment decisions are reliant on having all of the right information at your disposal; having your finger on the pulse. The same applies for companies looking for investment into their business. It therefore becomes essential for all parties to provide added value.”

What this means is that Africa will need to work a little harder to get its slice of the pie in 2012. “Africa’s growth is still a long-haul project, and if you want to play with the big boys, you have to play like the big boys,” Robinson says. Her advice for companies looking to attract investors is to work hard at providing that extra value; and for companies looking to invest, she says it’s imperative for them to understand their potential marketplaces. “Do the research. Do the homework. The easiest way to do this is to get an expert in to do it for you.”

The overriding message for 2012, then, is to grab the opportunities when they present themselves. “Much of the developing world will continue to see relatively strong growth, providing an opportunity for forward-looking African enterprises,” Robinson concludes.