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Africa: Innovation and Ethiopia

This brief note takes a look at innovation and emerging economics in Africa.

Kenya, if I am not wrong, is the development hub in Africa. Rockefeller Foundation is situated in Nairobi, Kenya and serves as the focal point for its work esp. in the sub Saharan region. Kenyan stock market is very vibrant and in 2019 Africa would be a good bet for growth in stock markets. M-Pesa, an avatar (not to be confused with James Cameroon’s movie)  for mobile money transfer and micro-finance, is a riveting success in Africa and chiefly responsible for financial inclusion in the country.

# Africa & Innovation

Africa is expected to grow at 4% (3.7% according to WTO estimates) this year with consumption and investment as key pillars of growth. Innovation is fast becoming an enabler for economic development. The major macro problem for Africa apart from political instability and extreme weather is the rise in the dollar which hurts its external financing option. The ongoing US-China trade risk is already affecting Africa in many ways further denting growth to a bit less than 4%. A continent which is a harbinger for high inflation has seen some respite recently. ADB estimates from a high of 12.6% in 2017, inflation to curtail to 8.1% in 2020. The continent has the fastest growing working-age population which will result in one of the largest if not the largest unemployment rates globally in the years to come. Innovation e.g. M-Pesa and sustained economic development could bridge the gap but how Africa tunes to the cyclical commodity wave remains a challenge ahead.

Ethiopia, the Queen of Africa, plans to launch a domestic stock market by 2020 and privatize telecoms by end of this year. Ethiopia’s GDP is bigger than Kenya, a feat shared by only two countries, Nigeria and South Africa in the continent but remains without an organised capital markets. Ethiopian stock market could become a star in the next few years if the cards are properly dealt…

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