Africa is gradually becoming the investment destination of the world. In the last few years, African economies have continued to perform and rank among the most resilient in the world.
For instance, in the midst of the global economic recession, especially in 2009, Africa was the only region apart from Asia that grew positively, at about 2%. The continent’s growth has continued to show an upward trend ever since.
Delightfully, as an endorsement of the far-reaching reforms sweeping across the continent, resulting in a more open business environment well-disposed to foreign direct investments, Africa is becoming an attractive investment hub for foreign investments. Additionally, many African governments are becoming accountable to their people and in a show of commitment in delivering the sociopolitical goods, they invest in the development of critical social and physical infrastructure as seen from Ghana to South Africa and from Nigeria to Algeria. Besides, African labor is cheap and made of well-educated, very skilled and enterprising workers who can drive the industrial or manufacturing concerns put up by investors in different parts of Africa.
Interestingly, too, the rise of a strong middle class with a sizeable discretionary income has become a positive factor for investment inflows. As the African Development Bank observed, Africa’s fast-rising middle class is now well over 300 million people, and analysts from the McKinsey Global Institute predicted that general consumer spending will hover past the $1 trillion mark in 2012 alone. With all these indices, Africa is poised to accommodate more foreign investments in the years to come. But the earlier investors take a position in their preferred markets, the better and more profitable they will enjoy their first-comer advantages. Below are 5 top five investment opportunities in Africa for 2014:
Tourism
Several African countries like Kenya, Mauritius, Seychelles and Tanzania have become some of the world’s favorite tourism destinations — for obvious reasons. According to the United Nations World Tourism Organization, tourist arrivals into Africa in the year 2010 exceeded 49 million and are likely to pass the 50 million mark in 2012. Those are the kind of numbers you should be taking advantage of. Next year, billionaire Richard Branson will be opening his luxury safari lodge in Masai Mara, Kenya while Italian tycoon Flavio Briatore already owns Lion In The Sun, a luxury retreat on the coastal resort of Malindi, Kenya. But apart from luxury lodges and retreats, several other opportunities are available in Africa’s tourism sector. For example, Lake Victoria in Uganda has a substantial number of bodies of water that are still unexploited. A luxury boat cruise or tour operatorship could be a great idea. Balloon flights are also a relatively new experience for millions of Africans- which could be explored as a viable opportunity. There is also room for foreign investors to partner with governments on National Park Concessions.
Agriculture
Africa is ripe for a green revolution. According to the McKinsey Global Institute, the continent is currently home to 60% of the world’s total uncultivated, arable land. There’s your opportunity.
As the world’s population increases rapidly (recently exceeding the 7 billion mark), global agricultural production must rise to feed these growing numbers. Much of that increased agricultural production will come from Africa. While the traditional obstacles to boosting agricultural output in Africa have been well documented (including a deficit of distribution infrastructure and trade barriers among others), several African governments are making substantial and successful efforts in surmounting these shortcomings. As these barriers are overcome and agricultural output is increased, there’ll be a business opportunity for the manufacture and marketing of products such as fertilizers, pesticides and seeds as well as a demand for food processing services such as grain refining. Already, a growing number of private equity funds are springing up to finance agricultural production in Africa. Join the train.
Mining of Solid Minerals
Several African countries have vast deposits of mineral resources that have been left largely unexploited because of a lack of technical know-how, as well as the financial incapacity to embark on capital-intensive mining projects. A case study is Nigeria’s hugely underdeveloped mining industry. The country also has a wide array of mineral resources which include iron ore, coal, bauxite, gold, tin, lead and zinc which have been neglected because of the country’s preoccupation with its massive oil deposits. The Democratic Republic of Congo, Tanzania, Namibia, and Zambia are other examples of African countries that also have unexploited high-value reserves of diamond, cobalt, gold, copper and other resources. Venture in.
Infrastructure Provision
Investing in infrastructure is critical to Africa’s growth. While there have been significant improvements in the development and quality of infrastructure across the continent, there is still a clear-cut deficit. Needless to say, this shortfall has its consequences, including bottlenecks in the smooth running of trade and export activities. But funding infrastructural development in Africa is not cheap. According to the World Bank’s 2008 Africa Country Infrastructure Diagnostic study, the continent requires about $80 billion annually to cover infrastructure needs. Of course, the financing capacity of individual country governments is limited; hence there are opportunities for private investors to partner with African governments in the development of under-performing infrastructure—such as investing in reliable power supply, water resources, roads and railway systems.
Manufacturing
According to the McKinsey Global Institute, Africa’s consumer spending next year will be in the region of $1 trillion. With Africa’s exploding middle class (over 300 million people) always looking to be serviced with new products, Africa’s manufacturing sector looks promising. There is a huge and ever-growing opportunity for manufacturers and retailers of fast moving consumer goods like food, beverages, home care and personal care products. But speed is critical. Investors who can quickly step in and get a grip on the market will be the dominant players in the years to come.
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