In part two of this look at Africa we’d might as well check out the sometimes fertile and always beautiful central and eastern region of Africa. So, today, lets take a look at Ethiopia, Kenya and Tanzania.
First lets apply the GDP lens to our analysis. From 2004 until the present, Kenya’s GDP growth rate is following; 2004 +1.5%, 2005 +2.2%, 2006 +5.8%, 2007 +5.7%, 2008 +7.0%, 2009 +1.7%, and for 2010 a projected +1.8%. Hence we see that Kenya has potentially really been affected by the global economic downturn whereas before, its future was looking rosier by the minute.
For Ethiopia’s GDP, we have a leaps and bounds picture, with an overall positive look, like the story for Kenya. For 2004 we have a GDP growth rate of -3.8%, for 2005 +11.6%, for 2006 +8.9%, for 2007 +10.6%, for 2008 a whopping +11.1%, for 2009 similar gain of +11.6%, and as projected for 2010 a +6.8%, which isn’t as good as previous years, but arguably isn’t too shabby on the other hand either.
Last but not least, we have the GDP growth rate of Tanzania. For Tanzania we’re looking at a 2004 with a growth rate of +5.2%, 2005 had a growth rate of +5.8%, 2006 had a growth rate of +6.8%, 2007 witnessed a +5.8% growth rate, 2008 +7.3%, 2009 +7.1%, and 2010 with a projected +4.5% growth rate. Clearly this is somewhat of an under-performer relative to our big boys listed above, however there’s something to be said for stability. The tortoise won the race, and perhaps one can never count a nation out of the 'race for a brighter future'.
“So what does it all mean man” you may be asking, “where’s the stuffing“, well here it is, a GDP break down for each country by sector. Ethiopia isn’t looking at the trifecta of equilibrium we saw in the countries examined in last week's piece, but they are looking at a GDP composition of 44% Agriculture, 13% industrial, and 43% services. Ethiopia is also home to a very modern and western coffee exchange, not unlike at least in aspect what we have here in the US.
Kenya has a GDP breakdown whereby their economic picture is also a little skewed. They have a 21% agricultural component, a 16% industrial component, and a 62% service sector component.
Lets round out this perspective with the make up of Tanzania’s economy. They have a somewhat less skewed economy with a 26% Agricultural component, a 22% industrial component, and a 50% service sector component.
When looking at these large service sector components of some of these nations economies, its key to remember that Tourism is somewhat of a big deal in these countries, for example, in Kenya we’re look at a Tourism industry that is a major part of the countries revenues in general. Kenya is also a financial hub for the region.
Tanzania could have more tourism focused enterprises however, it hasn’t been as ‘stable’ as Kenya has been recently and thus is not as well capitalized in this sector as is Kenya. Perhaps therein lies an area of potential in regards to this region; potential for investment in the tourism sector in Tanzania. 80% of Tanzania’s ‘workforce’ is employed in the agricultural sector too, so hence if one were to start a small resort there, it surely wouldn’t be too hard to delve into this deep trough of workers who are presumably only somewhat satisfied with their livelihoods in order to find potential employees.
Ethiopia believe it or not, despite war and famine actually receives a fair amount of tourism related revenue. The nation is also witness to several mining operations even if not of a large scale, and is beholden to hydro-power for its energy needs. As the country potentially becomes wealthier this thus opens up the possibility of what will undoubtedly have to be foreign investment in potentially developing sources of energy for the country as a whole. One last thing that should be noted about Ethiopia is that it has recently been at war with Eritrea. Prior to this war Ethiopia received much of its import and export traffic from Eritrean ports. This situation has been remedied by Ethiopians finding other neighboring countries such as Djibouti through which this traffic can be redirected. However, since the country is stable but only marginally so this could serve as some what of a hindrance if say for example one needed to get physical capital out as quickly as possible in that this could probably require numerous bribes and a touch of diplomacy. However, maybe this was exactly the barrier holding others back in wait of the brave entrepreneurs and investors who are to come and get a good deal for some heightened risk in the future. In truth, who can see the future, but surely if these GDP figures are legitimate, which one must presume to be true, then the future for these countries at least won’t be horrible, and the three countries which define this region have potential if in some cases little else.
All the best with your investing and in life in general, and I hope to have some more growth percentages and GDP breakdowns for you next time.
Sincerely,
David Stafford
Disclosure: None