If you think that Africa is still a place of austerity, corruption and slim prospects of economic growth, you are terribly mistaken. The continent has for the most part come a long way since the era of racial issues, social turmoil, humanitarian disasters and political upheavals, and has over the past decade managed to build a reputation as one of the best investment destinations and a place of steady economic development. Ample mineral resources, uncultivated arable land, constantly growing market and hard-working workforce are only some of the qualities that make Africa an ideal foreign investment destination and a growing business hub for a range of industries.
1. Steady High Economic Growth
Research carried out by World Bank in 2013 shows that African countries account for 9 out of 15 countries with highest economic growth rate. Thanks to favourable investment incentive policies, growing demand for products and services and steady GDP growth, the scope of direct foreign investments in Africa has been on the rise in the past decade (compound FDI growth rate totalled approximately 20% in the past five-year period), impacting further GDP increase, which is why the continent’s appeal as a lucrative investment hub is likely to persist in the time to come.
2. Huge Mineral Reserves
Another benefit that makes Africa an attractive investment destination is found in the continent’s plentiful natural resources such as mineral reserves and fertile land. The continent takes pride in abundant reserves of gold, copper, platinum, diamonds, cobalt and iron ore, and the recent discovery of impressive deposits of natural gas and oil in Mozambique, Kenya and off the Tanzanian shore are another reason why major international companies in the mining, petroleum processing and electricity production industry are starting to regard Africa as a good investment site.
3. Uncultivated fertile land
According to the McKinsey Global Institute report entitled “Lions on the move – The progress and potential of African economies”, arable plots in Africa accounts for 60% of the world’s total uncultivated fertile land. This makes Africa one of the world’s key areas with the potential for massive agricultural development, and the steadily growing local and international demand for food is also another driving engine behind the continent’s stable economic growth. With a substantial share in the global raw food market, Africa still needs complex food processing infrastructure, which makes it a perfect investment location for multinational companies seeking opportunities for expansion of production capacities and favourable terms for conduct of business.
4. High demand of consumable goods
With over one billion people, Africa accounts of 15% of the total world population, so it is also an excellent target area for businesses looking to market consumables. The purchasing power on the continent is increasing due to fast-paced urbanisation and the tendency of demand growth is expected to persist in the decades to come. All of this makes Africa a highly attractive destination for retail and fast food sector investments, especially since the population below the age of 35 has a strong propensity to consume and the middle class is emerging fast as an important factor in aggregate demand.
5. Growing Population
The population in Africa is steadily growing, with a third of the continent’s citizens situated in cities and large towns. Due to high birth rates Africa has been recording in the past few decades, the working age population is also increasing and the labour supply is ample enough to meet the requirements of further industrial development. With over 70% of people aged under 30 and almost a half of work-age citizens still unemployed, the continent holds major potential for development of labour-intensive industries such as agriculture, manufacturing and mining. In addition to that, Africa is also an excellent market for engineering and construction companies seeking contract opportunities due to the steadily increasing need for civil infrastructure and housing construction, as well as multitude of real estate agencies doing business offline and online, such as propertymaputo.com from Mozambique.
Africa is gradually gaining appeal on the global investment market for a number of reasons. From the growing consumables market and increasing work-age population to ample natural resources such as arable land and mineral reserves, slowly developing housing industry and still underdeveloped retail sector, what used to be the Dark Continent now seems to be an ideal window for business expansion in a wide range of industrial branches, granted due attention to country-specific differences in terms of economic environment and government policies.
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