Why invest in Africa?
Africa has strong prospects for profitability due to its strengths. It is the cradle of humanity and is as diverse in peoples and nations as anywhere else in the world.
The vegetation is rich and the continent has areas not yet explored but cultivable thanks to the favorable climate. The basement is full of raw materials, materials and metals and precious stones.
The population in general is young, voluntary and hardworking. With a high birth rate, declining infant mortality and a rather long lifespan, Africa’s demographics have exploded in less than a century. 1.2 billion people currently live in Africa. The United Nations projects according to an average scenario, that the world population will be 10 billion inhabitants including 2.4 in Africa in 2050, and in 2100 it should number 4.4 billion or approximately 40% of the world population. The youth of the population represents a value called the “demographic dividend”, defined as “the surplus of economic growth resulting from the superiority of the number of working people over those not working”. This variant opens up quite a few investment opportunities in the field of industrialization.
What are the most promising sectors in Africa?
Thanks to abundant and secure natural resources, the energy and agrifood sectors are quite buoyant. However, many countries are still developing and need civil engineering infrastructure.
The telecommunications sector has evolved considerably in Africa, with the phenomenon of globalization, Africa increasingly permeates the Western way of life. Also, the Smartphone is now an integral part of the life of many Africans. According to the firm Deloitte, Africa will have 660 million inhabitants with a so-called smart phone in 2020. The evolution of the internet is also opening up opportunities for e-commerce.
In order to ensure a continuous or even permanent performance, the actors of the different sectors must be to the best of their ability and this requires good health. As long as human beings subsist on earth, the world in general and Africa in particular will always need a substantial health system. In the majority of African countries, the health infrastructures are not sufficiently equipped, the personnel in need of improvement. Investing in the training of qualified personnel, in medical schools, the construction of hospital infrastructure and medical equipment is also an idea to be explored.
The young population is certainly an asset for investment in Africa but if it does not enjoy a good and adequate education, the expected profitability cannot be achieved. Training in ICT, health, finance is essential.
The development of online payment services and methods (which are becoming more and more attractive and are starting to take hold in the African economic environment) is also an avenue to be explored.
What financial means should I have to make a success of my investment in Africa?
The success of an investment depends on the sector of activity (carrier or not, competitive or not), on the type of financing (equity, foreign capital, government or other funding body (banks, development banks, microfinance institutions, etc. .) and the financing strategy (schedule and profitability).
Investments are generally based on the financing of projects. For the search for funding, the project must therefore be well developed, including a successful business plan, which will make it interesting. As an entrepreneur, you can look for associates, turn to Islamic financing, to investors, to financiers (these are usually individuals), to financing platforms like Afrikwity, FADEV, Jamaafunding, FIATOPE , or search for competitions and seed grants.
Is Africa a free zone for foreign investors?
The United Nations issued a report from the conference on trade and development noting that between 2006 and 2011, the highest rate of return on foreign direct investment was recorded by Africa at 14% compared to the rates of 9 , 1% for Asia and 8.9% for the Latin America and the Caribbean region. For example, the turnover achieved by the MTN group in 2017 was 10 billion dollars; SONATRACH posted a turnover of US $ 33.2 including only oil and gas activities.
The International Monetary Fund (IMF) presents the most promising prospects for global economic growth between 2018 and 2023. Six of the twelve countries with the highest growth are in Africa. Those are
- Ethiopia,
- the Ivory Coast,
- Mozambique,
- Tanzania,
- Rwanda and
- the DRC (Democratic Republic of Congo).
On the other hand, according to Havas-Horizons studies, the most promising countries for investors are
- South Africa,
- Ghana,
- the Ivory Coast,
- Kenya and
- Nigerian
The banking, infrastructure and telecommunications sectors, which are currently the engines of economic growth in Africa, offer serious investment opportunities.
Between 1980 and 2012, production of oil and natural gas increased remarkably (from 53.4 billion barrels to 130.3 and from 6 trillion cubic meters of gas to 14.5). In 2015, Africa produced 13% of the world’s oil. At the end of 2012, Africa held 53.9% of the world’s diamond resources. In 2017, the DRC had 58% of the world’s cobalt, a very important material for the production of electronic components. The valuation of the subsoil and extractive activities will be decisive for the next five decades of the world’s economic activities.
In view of these few non-exhaustive statistics, Africa happens to be the most profitable area in the world.
What are the promising sectors for long-term investment in Africa?
The health sector, by virtue of its needs (access to care and provision of medicines, remote medical assistance) represents a pole of investment for the long term. It is above all a matter of setting up a strategic financing system in order to guarantee a stable investment.
Social security, like social real estate, are sectors in which there are still very few investors. Providing affordable health care and affordable housing is an asset for the development of a state economy.
The improvement in the standard of living of the African middle class gives rise to certain housing requirements, which opens the way to great investment opportunities in the real estate sector.
Africa has a deficit in banks specializing in medium-sized enterprises, which nevertheless constitute the bulk of the continent’s entrepreneurial field. As well as in almost non-existent investment banks on the continent. The role of the latter is not to provide funding but to help find it.
In a non-exhaustive way, here are briefly some opportunities for long-term investing. When do you plan to start? ^ _ ^
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