10 reasons why you should invest in Africa
10 reasons why you should invest in Africa
Africa is a land of opportunities in the 21st century. Global investors should not be bogged down by the continent’slong dark history. Africa is shining at present. They should be able to seize the portfolio of opportunities thecontinent is offering. Persistent and high economic growth, the commodity price boom, macroeconomic stability,reduction in political instability and internal strife, conducive macroeconomic policies, and deepening regionaleconomic integrations anchor growth and maturity of opportunities in the continent.
, economist, financial strategistJuly 2010
or years Africa has been known as the continent with beautiful landscapes, exotic animals and rich naturalresources. As a region to invest money in, Africa was mostly seen as unexplored territory.Only in therecent past, has the second
largest continent in the world begun to move into investors focus due to itsinteresting investment opportunities. Undeniably, Africa has witnessed, since the beginning of the newmillennium, significant economic growth, strongly outperforming OECD (Organization for Economic Cooperationand Development) members, for example. This improvement is largely attributable to high commodity prices,better economic policies and political reforms implemented by the African governments, a growing middle classand the end of hostilities in a number of countries. It comes as no surprise that experts from the InternationalMonetary Fund (IMF) state that Africa is now “at its best period of sustainable development and low inflation”.Here below we present 10 reasons why global investors should be interested to invest in the continent.
A continent in the move
frica, indeed, is a vital region of the world. With close to a billion people (15% of global world population)and vast natural resources, the region’s opportunities and accomplishments are frequently overshadowedby crises, conflicts, and chronic poverty. More than one in eight people on earth live in Africa. More thanhalf of these men, women, and children live in abject poverty. The continent attracts less than 1% of global capitalflows and accounts for less than 2% of world merchandise trade (exports and imports), 3% of world exports of commercial services, 4% of global gross domestic production (GDP), and 5% of net capital inflows to developingregions. As a result, Africa is not a primary destination for global capital. But without significant amounts of capital, Africa’s development objectives will not be achieved. While these challenges are daunting, recent datashow that global capital flows into Africa can be enhanced significantly. This potential reaffirms that Africa’schallenges do indeed have solutions.Yes, Africa is a continent with great challenges, tremendous opportunities, and unappreciated accomplishments.Since 1990, for example, 42 of the 48 countries in sub-Saharan Africa have held multi-party elections, and most Africans today have the right to choose their leaders at the ballot box. But on the other hand, Africa has fallenbehind the rest of the developing world in many dimensions of development. Life expectancy has decreased withthe rise of the HIV/AIDS pandemic. The average African is poorer today than he or she was two decades ago,and the number of people living in poverty has increased steadily during the past 20 years (although the share of Africa’s population living in poverty has remained largely unchanged). These broad trends, nevertheless, masksignificant differences across the continent.Nevertheless,while some countries remain mired in conflict and economic stagnation, nearly a dozen haveachieved economic growth rates of 5% or more in the last ten years. An increasing number of these countrieshave successful, profitable, and export-oriented private investments.These successful investments suggest that Africa provides many opportunities for external capital to generate attractive returns and for some Africancountries to emerge as examples-both political and economic-for the rest of the continent to follow. Despite thisimportant progress in some parts of Africa,the continent is still perceived as risky, and that perception in manycases is higher than warranted. As a result,even those African countries that have significantly improved their investment climates experience difficulty in attracting substantial new investment.