Investing in Africa, Good News, Bad News and Faux Pars

As people around the world look to Africa for potential investment and South Africans head north, there are encouraging news to fuel those ambitions, disturbing reports to temper our enthusiasm, and a few missteps. lessons to be learned from.

Accra, the capital of Ghana, is full of educated, well-dressed young people who drive high-end cars and live in posh houses. This is indicative of Ghana’s economic growth, 14.4% last year. Topping the list are the Democratic Republic of Congo, Nigeria, Ghana, Liberia and Ethiopia.

US-based business consultancy Ernst & Young reports: “A new story is emerging from Africa: a story of growth, progress, potential and profitability. US Secretary of State for African Affairs Johnnie Carson has reportedly said that Africa represents the next global economic frontier. China’s trade with Africa reached $160 billion in 2011, making the continent one of its biggest trading partners.

External debt was reduced by 25% and foreign direct investment (FDI) increased by 27% in 2011 alone.

The International Monetary Fund (IMF) expects Sub-Saharan African economies to grow by more than 5%.

Greater political stability oil the continent’s economic engine. In 2005, the United Nations Economic Commission for Africa (ECA) linked democracy to economic growth.

Then there is the more disturbing news. “A sustained slowdown in advanced countries will reduce demand for Africa’s exports,” wrote Christine Lagarde, Managing Director of the IMF. Europe accounts for more than half of Africa’s foreign trade. Tourism could also suffer as fewer Europeans come to Africa, hitting tourism-dependent economies like Kenya, Tanzania and Egypt.

Negative effects in South Africa could have serious consequences for neighboring economies.

Another concern is the resurgence of political crises. Due to the so-called Arab Spring, economic growth in North Africa fell to just 0.5% in 2011. Recent coups in Mali and Guinea-Bissau could have wider economic repercussions. “Mali was performing very well, now we are back to square one,” says Mthuli Ncube, chief economist at the AfDB. Ethiopia, Kenya, Uganda and other countries have engaged militarily in Somalia, which could slow down their economies. And Nigeria is dealing with Boko Haram, a terrorist sect from the north of this country.

One source of concern is what many are calling Africa’s “jobless recovery”. Investors are focusing on the extractive sector, especially gold and diamonds, as well as oil, which generates fewer employment opportunities. 60% of the unemployed in Africa are between 15 and 24 years old and about half are women.

But none of this discourages South African commercial interests north of the border. One could wonder why ? South Africa’s domestic market does not offer sufficient growth opportunities for local businesses, leading many to look to the rest of the continent. Ernst & Young’s Head of Business Center for Africa, Michael Lalor, told an online press conference recently: “While South Africa is still seeing good growth compared to advanced economies , it certainly doesn’t follow some of the other fast-growing markets, says Lalor.

Analysts point out that many other emerging markets, such as China and South America, are difficult to break into, so the rest of Africa is the obvious choice. Latin American companies mean dealing with a very strong and ever-present Brazil. Africa, given its history of sustainable growth and potential, is therefore an obvious region for the growth of South African businesses.

Quoted by howemadeitinafica.com Lalor says that most companies listed on the Johannesburg Stock Exchange are developing strategies for the rest of the continent. Ernst & Young is experiencing great interest from foreign companies to invest in the continent.

With that in mind, it’s worth turning to Raymond Booyse, founder of consultancy firm Expand into Africa, who identified four common mistakes made by South African companies venturing into the rest of the continent.

Now that I’ve finished stating the obvious, it’s time to start digging into some of the recent numbers the National Association of Realtors (NAR) has thrown around about the future of our industry. What they mean for the industry is sometimes not so obvious.

Let me start by noting that recent letters from NAR indicate an increase in residential and commercial property sales. While that’s certainly good news, it’s also that time of year.

While we can all expect the trend to continue upwards, it currently looks like it will do so slowly and given the excess inventory currently on the market, it could be some time before we were starting to hear good numbers about new housing starts.

That said, getting better is better than getting worse. Unfortunately, what these trends mean for real estate professionals currently in the trenches is uncertain.

Some of the good news is that the competition between real estate agents buying and selling homes has improved a lot due to a sharp drop in the number of licensed real estate agents talking about them.

According to various figures published by the NAR and others, in 2006 there were approximately 1.4 million NAR members. I have also seen estimates of up to 2.6 million licensed real estate agents for this period. Today, again according to the NAR, this number is less than 1 million.

In fact, the median income of an average real estate agent fell 4.5% last year to $34,100. This was preceded by a 3% drop in 2009.