EZULWINI, Eswatini — The global economy has entered a new financial era, and businesses, governments, and investors can no longer rely on the cheap money that defined the past decade. This was the central message from renowned economist Chris Hart during a keynote address at a recent financial summit.
“The era of zero-interest rates is over,” Hart warned. “We are in an environment where the cost of capital is real and significant. This means that capital allocation must be more disciplined than ever before.”
The End of Easy Money
For years, investors were rewarded for taking risk because the cost of borrowing was essentially zero. This led to a boom in speculative assets. Now, as central banks keep interest rates elevated to combat inflation, the reality is setting in.
Hart advised African investors to focus on fundamentals. “We need to see real value being created. Businesses cannot survive on cheap debt or continuous rounds of funding; they must demonstrate a path to profitability and sustainable cash flow.”
Opportunities in Africa
Despite the grim global outlook, Hart pointed to specific opportunities within the African continent. The demand for infrastructure, the growth of the tech sector, and the vast natural resources provide a solid foundation. However, he cautioned that political stability and policy consistency are crucial to attracting the right kind of capital.
“Investors are not scared of risk; they are scared of uncertainty. If you can provide a predictable regulatory environment, the capital will flow.”
