African markets are the new frontier of growth in the global economy, and South Africa  requires a coherent long-term strategy  for its engagement with the continent. This was the message from three of the World Economic forum ’s Young Global Leaders at the Gordon Institute of Business Science (GIBS) last night. The strengthening of South-South trade relationships and the emergence of China has the potential to dramatically transform Africa’s economies in the coming years.

Leslie Maasdorp, Managing Principal and Vice Chairman at Absa Capital and Barclays Capital, observed that SA ’s self-perception as a nation “vacillated between excessive optimism and needless pessimism.” It was important, he noted, to have an open discussion about what we can learn from successful economies.

Left to Right, Abdullah Verachia and Dr. Martyn Davies, Frontier Advisory; Leslie Maasdorp, Absa Capital; Acha Leke, McKinsey & Company.

Pointing to middle-income countries such as Indonesia and Malaysia, Maasdorp observed that, “the notion of an economic miracle is a misnomer. There were very specific targeted interventions that these countries took that lead them on a path to economic growth. There is no formula for success, but they did have a very specific vision,” he argued, “In South Africa  there is no such single coherent vision, nor is there a growth strategy  that can take us to that.”

Maasdorp called for far-sighted leadership , noting that “people and countries are responsible for their own destinies.” He speculated that the National Planning Commission, the cabinet portfolio headed by former Finance Minister Trevor Manuel, “could emerge as the single most important initiative of this government, provided that it challenges current paradigms and takes note of global forces shaping the 21st century.”

Dr. Acha Leke, a Director in McKinsey & Company’s Sub-Saharan African office, took a sweeping view of Africa’s remarkable upward trajectory over the last decade. Fundamental changes had occurred throughout the continent: political and macroeconomic stability, combined with microeconomic reforms had effectively loosened the fetters to growth, he said.

Leke added that many markets had liberalized and diversified into key areas, especially user-facing industries such as retail, banking, and telecommunications, thus bolstering growth during a time of recession in the industrialised world. He cited the little-known fact that Africa’s commodities exports only accounted for 24% of GDP (from 2002-07), illustrating the plural nature of its economies.

Considering Africa’s combined Real GDP growth of 4,9% from 2000-08, Leke believed the continent now offered the highest return on investment on capital in the world. He gave the example of Nigeria, which suffered from an image of being a high investment liability. In fact, the scale of profits generated by international companies such as MTN showed the extent of the potential in the Nigerian market and the gulf between perceived and actual risk.