Contese Agency
Africa is brimming with opportunity. For much of the 21st century, it has been the world’s most profitable region for investment, according to the UN Conference on Trade and Development. With a higher rate of return on Foreign Direct Investment than any other region and six of the world’s 12 fastest-growing economies, the future of Africa looks bright.
Africa’s growth isn’t limited to just one particular region, which leads to exciting opportunities across the continent. The best countries to invest in Africa are spread from north to south, east to west, with demonstrable economic growth across a broad spectrum of economies and opportunities in manufacturing, mining, heavy industry, and more.
This reflects the pan-continental economic development of recent decades, as policymakers across the continent take steps to address structural issues and engage in reform. The aim is to create a more hospitable business climate to attract better investment, which includes encouraging intra-African trade with the same degree of profitability as European countries enjoy.
Despite the setbacks of the COVID-19 pandemic briefly halting Africa’s record growth and development, the right investments are putting the continent back on track. With the assets of a youthful population, an abundance of natural resources and resilient infrastructure development, there is a bright future for investors.
So why invest in Africa now?
Vast natural resources
The continent has an astonishing depth of natural resources ready to fuel the economy. Around 22 per cent of Africa’s land is covered by vegetation. It is home to 12 percent of the world’s oil and eight per cent of the world’s natural gas respectively, according to Acuity.
In the digital age, there is a world of minerals contained in modern devices, used in our everyday lives. As such, global reliance on various minerals that comprise Africa’s reserves has significantly increased in recent years.
Cobalt is an essential ingredient in batteries, especially for electric vehicles. According to the World Mining Congress, the Democratic Republic of the Congo (DRC) produced about 67 per cent of the world’s cobalt in 2020, with almost half of the world’s entire reserves in the country, as shown by the same Acuity study.
Tantalum holds similar significance for the digital economy, as a mineral frequently used in mobile phones, laptops, and automotive electronics. Together, the DRC and Rwanda produced almost 50 per cent of the world’s tantalum in 2020.
Beyond electronic products, global demand drives industries across Africa. Botswana ranks highly as a global producer of gem-quality diamonds. Ghana is the continent’s largest gold producer.
Population growth and a young demographic
Africa’s young population presents exciting opportunities. More than 60 per cent of the continent’s population is under the age of 25. It is a challenge to ensure the development of a young population, but they are anything but passive. Having lived through rapid advances in digital and tech, this is a dynamic and savvy generation of young people eager to shape their own future.
Across Africa’s major cities, from Accra to Nairobi, from Cairo to Lagos, the youth are taking on an active role. Fully fledged start-up scenes are creating innovations across all areas of society, changing how we think about African agriculture, heavy industry, IT and sustainability. The majority of these smart, tech-driven businesses are led by Africans under the age of 35.
With its population expected to nearly double to 2.5 billion by 2050, Africa has myriad opportunities to expand its working population, employ the power of rich natural resources and human potential in abundance for increased economic growth and prosperity.
Incredible renewable energy opportunities
Embracing sustainability and renewable energy, and meeting global targets including UN Sustainable Development Goals, present incredible economic opportunities. Renewable energy holds amazing potential for Africa’s green industrialization and supply chain development.
A strong foundation of investments in transmission and distribution grids and storage infrastructure is required to place Africa in line with the global energy transition, opening up new opportunities in markets around the world.
Already, the continent is on the right track. With greater investment and production, it’s believed that solar and wind power could increase by eight times to reach 27 per cent of the continent’s power generation by 2030.
Renewable energy is capable of sparking a new phase of industrial development across the continent, as the drive towards renewables leads to greater improvements across the board in infrastructure, investment and industrialization.
Digitalization and Innovation
The COVID-19 pandemic shone a light on the importance of digital technology to Africa’s least-developed countries. The digital economy is quicker, more agile and can improve a country’s skills development and supporting infrastructure. Africa’s digital economy, already providing a foundation for an array of exciting and innovative start-ups, is ready and waiting to support investment.
With the help of digitalization, national institutions have been strengthened with the ability to better mobilize domestic resources and secure greater tax revenue, in turn opening the way for infrastructural investment.
With a 206 per cent increase in investment in African tech startups from 2020 to 2021, the willingness to invest in digitalization is clear. Many new companies specialize in various forms of tech related to finance – such as enabling digital payments, crowdfunding, consumer financing, lending and invoice trading – as well as innovative ways to revolutionize existing sectors.
Any firm specialising in FinTech, AgriTech and HealthTech will look towards Africa with great interest. The continent has many nations still reliant on the innovations that develop in these primary and secondary industries, unlike the largely service-based economies of Europe. Digitalization has the power to augment these existing sectors and have a transformative effect on production and output.
Opportunity lies ahead
Africa presents a variety of exciting opportunities for economic growth and prosperity. The catalyzing force of investment, based on a strong foundation of intra-African cooperation, means that heady days are ahead for the continent.
The African Continental Free Trade Area (AfCFTA), ratified in 2020, involves the facilitation of trade for 55 countries, with the goal of bringing 30 million people out of extreme poverty and raising the incomes of 68 million more.
This is an empowering example of continental collaboration. More are needed, along with the ability to identify and utilize the vast raw materials and natural resources the continent possesses. Africa can be at the center of a new green energy revolution, given the tools it has at its disposal.
Recent years have seen a great increase in interest, with prominent companies and business figures looking to invest in Africa. There is a chance to re-enter the global market and witness economic growth while finding opportunities to create change.
We invite you to read Capmad African Business Magazine economic insights on African countries.
