March 21, 2013 at 7:00 AM
Microsoft’s investments in Africa
Not for everyone
Africa may be a land of opportunity for Microsoft, but for many smaller companies the time frame for profitability and the risk of losses will make it a land of non-opportunity. [“A land of opportunity,” Business, March 17.]
The political situation in many Africa countries is becoming more stable, but it is hardly stable. According to Foreign Policy’s 2012 Failed States Index, every country in Africa is listed with a status of critical, in danger, or on the borderline of becoming a failed state.
Indeed, the middle class in Africa is growing and quickly. But, according to the World Bank, someone in Africa’s middle class earns between $2 and $20 per day. In 2011 66 percent fell within the $2-4 range.
The bet is that this will change, but this requires economic development and this is a slow process. This is reflected in the projected African daily income in 2050 of $15.78.
Foreign direct investment (FDI) will advance this development. But Africa grabbed just 3.4 percent of worldwide FDI in 2012. Securing a bigger share requires political stability — less danger of becoming a failed state. This too takes time.
Africa’s IT spending is growing by 12 to 15 percent, but according to IDC in 2012 Africa represented 1.5 percent of global IT spending. In 2016 it is expected to be 1.6 percent.
Looking for a land of opportunity? China and India are hardly plateauing. Between 2010 and 2050 developing Asia is expected to increase its share of global GDP by 32 percentage points versus Africa’s 8.
– Kathleen Brush, Seattle
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