10 reasons why you should invest in Africa now
African countries with growing economies are integral to global economic development. Are you searching for reasons to invest in the African continent? Consider the reasons below, including flexible policies, availability of raw materials, and unsaturated markets in Africa.
1. High Investment Rate
According to the United Nations, Africa is a prosperous region. And now is the best time to invest here. The United Nations report disclosed that the region recorded 11.4% growth in foreign investment returns between 2006 and 2011. But available data show that Africa’s foreign direct investment (FDI) flows dropped 16% in 2020 due to the effects of the pandemic.
But things are gradually looking good again. DW reported that Africa’s economic output recorded a 3.5% growth in 2021. The ease of Covid-19 restrictions and commodity price rebound are factors behind the recovery. With many African countries recovering from the global pandemic, the region is ripe for investments.
2. Availability of Raw Materials
A report by the United Nations Environment Programme show that Africa is rich in natural resources and raw materials. The report further disclosed that the continent is home to 40% of the world’s gold and 30% of mineral reserves. According to Aljazeera, Africa holds a strategic position with oil and natural resources on the global map.
Africa has also been described as the fastest-growing continent for foreign direct investment, ideal for investors. With raw materials like uranium, diamonds, petroleum, iron, and gold in Africa, investors can benefit from it.
3. Flexible Government Policies
In light of the steady inflow of foreign direct investment into the continent, African governments are making flexible policies to encourage more inflows. For example, the Egyptian Government recently adopted a new investment law to facilitate private investment growth in the country.
4. Poor Infrastructure in Africa presents opportunities for investors
According to Brookings Institute, Africa’s poor infrastructure has adverse effects on economic stability and growth. Investors can benefit from the region with inadequate power supply, poor roads, and undependable airports. And they can do this by leveraging private and public partnerships in poor infrastructural areas.
5. Relative Political Stability
According to a recent report by The Global Economy, the political stability index in Africa stands at -2.5 weak and 2.5 strong. The report revealed an average based on 53 countries at -0.68 points, making the region’s political environment relative.
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With countries like Mauritius, Botswana, Cape Verde, Namibia, and Seychelles taking the lead, investors can leverage the relative political stability in Africa to make fortunes. While many African countries need to improve their political environment and leadership, the region indeed remains a hotspot for investments.
6. Flourishing Entertainment Industry
Available data on Billboard indicates that the African entertainment industry is now on the world stage. The report further regarded Africa as a significant player in the entertainment industry globally. Investors can benefit from a host of entertainment industry power players traveling to Africa for December festivals. Africa has renowned artists with credibility from cinema to music, making the continent ideal for a wise and strategic investor.
7. Consumer Increased Demand
Available report by World Data Lab describes Africa as a growing middle class. Data from the European Commission’s knowledge for policy also discussed the importance of the middle class in emerging economies such as Africa. The data disclosed that business models targeting consumers at the bottom of the income pyramid should consider emerging economies.
Investors with consumer-oriented business models should consider Africa in order to benefit from the growing middle class. According to Brookings Institute, the continent presents exciting retail and distribution businesses opportunities.
8. Untapped Markets
According to The Guardian Nigeria, Africa’s untapped resources has the potential to turn around its economy. The business world can therefore benefit from Africa’s unsaturated markets and underused human and natural resources.
The continent has over 800 trillion cubic feet of natural gas, with Nigeria, Algeria, and Senegal taking the lead. The report predicted the continent natural gas expansion by 80% in 2035. Data made available by Energy, Capital & Power show that Africa is richly endowed with natural resources.
9. Potential Workforce
According to Cities Alliance, Africa has a large population of youths, making it a potential workforce benefit for investors. The report further disclosed that over 60% of the continent’s population is below 25. The World Economic Forum describes Africa’s youthful population as an opportunity for significant economic transformation and growth. For example, Worldometer ranks Nigeria as the most populous African country with over 206 million population. Investors can benefit from the population to build a large workforce for rewarding opportunities.
10. Digital Acceptance
A recent digital adoption analysis by Intelligent CIO revealed that Africa has the highest adoption rate than other regions globally. Higher digital adoption rates unlock enormous economic potential for investors in the continent. Africa offers rewarding opportunities for digital software and hardware businesses.
The continent is home to bright minds skilled in data analytics, programming, content, mobile, and search engine marketing. Emerging technology businesses can improve the stability and security of many African countries.
Conclusion
Now that you know the reasons to invest in Africa consider the Government and laws of the land. Never assume that countries in Africa are the same as they differ in values, ethics, and orientation. Instead of investing with uncertainty, gather knowledge and develop strategies with realistic goals. Beware of corruption, policies, governance, and regional trade issues.
About the author
Olayinka Sodiq is a qualified writer with technical, analytical and copywriting experience gained from 5 years of both in-house and freelancing gigs. He is versed in finance, investments, technology, blockchain, mergers & acquisitions, bankruptcy, etc.
