(Ecofin Agency) - The climate risks and the rising blows to globalization in recent years will be blocking factors for investments in emerging markets, as they are already causing a slowdown in economic growth in most of the emerging countries.
According to the Institute of International Finance (IIF), another factor is the far going automation of production systems, which significantly drops job creation. While a few African countries are presented as strong growth drivers, the entire region is often considered by investors as being part of a pool that includes other economies, such as China, India, South Africa, Turkey, Asia, and Latin America. According to IIF, when China and India are excluded, the overall average growth of emerging countries falls behind that of developed countries, over the last 5 years.
Investment (equity or loan) is indeed an important element in the production of value-added products. However, for investors to be present, they must have the guarantee of obtaining returns on their investments.
In 2019, the equity market in sub-Saharan Africa only raised $1.6 billion, according to figures provided by the Reuters data service. This performance is down 66% compared to 2018. It is also the lowest level of resources mobilized in African financial markets since 2005. Even the debt market was sluggish over the period. Only $27.2 billion was mobilized by African borrowers, 19% less than in 2018.
Developments on the black continent are likely to be difficult. According to the most recent economic growth forecasts published by the World Bank, the increase in gross domestic product per capita in sub-Saharan Africa will be the lowest in the world over the period 2020/2022, while the average poverty rate, at 50% of the population, will be the highest of any region in the world.