Does it make any sense
that Botswana has nearly half of the entire world’s diamonds, yet the
country make only about $2 billion? Israel, on the other hand, doesn’t
have a single diamond and they make $9 billion from the diamond
industry.You don’t need a PhD to find out why-It is a typical
third-world syndrome, raw material is extracted from the country and
sent out for processing just like Nigeria’s crude oil. The Europeans
polish and cut the diamonds and make the jewelry. They make the high-end
finished goods.The people of Botswana do the dirty and tedious work!
However, it is saddening that many
business leaders in the West and even Africans themselves are so
skeptical about Africa, their perceptions are outdated versions of the
continent’s new realities. Africa is now home to some of the world’s
fastest-growing economies and offers the highest risk-adjusted returns
on foreign direct investment among emerging economies.
While mining and oil remain big
businesses, agriculture, infrastructure investment and the consumer
market are major growth areas. Telecom, mobile banking, retail, and
clean-tech are only some sectors that are equally promising.
Fast forward, as worldwide investors vie
for a piece of the action, the expectations of African stakeholders have
risen. To succeed, investors will have to look beyond dazzling returns
and one-off projects, and sign on as participating partners in Africa’s
long-term growth and development.
According to Forbes,”African economies
easily rank among the most resilient in the world. In the middle of the
2009 global economic recession, Africa was the only region apart from
Asia that grew positively, at about 2%. The continent’s growth has been
on an upward trajectory ever since then- 4.5% in 2010 and 5.0% in 2011.”
Now more than ever before Africa is
poised to become the 2nd fastest growing region in the world, and true
to the International Monetary Fund (IMF), economic growth across the 54
countries of the continent is hovering around 6%.
Africa is becoming an increasingly
attractive hub for foreign investors in light of various economic,
political and social reforms that are sweeping through the continent,
resulting in a much improved business environment conducive for foreign
direct investment. Apart from that, there is widespread development of
critical social and physical infrastructure, and there is an increasing
pool of well-educated, English-speaking, enterprising workers in most
countries across the continent.
There is also a significant boost in the
spending power of Africans. According to the African Development Bank,”
Africa’s fast-emerging middle class is now comprised of over 300 million
people”, and analysts from the McKinsey Global Institute estimate that
general consumer spending across the continent will hover past the $1
trillion.
If you’re an African in the diaspora or
foreign investor who hasn’t yet made a foray into Africa, now is the
time to step in and capture a share of Africa’s more than $1 trillion
opportunity. There are 6 lucrative sectors you should consider investing
in:
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.”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
Like Botswana,Ghana,Nigeria,Rwanda,
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.
Technology
Currently, forty percent of African-born
scientists live in OECD countries, predominantly NATO and EU countries.
This has been described as an African brain drain.
Although technology parks have a long
history in the US and Europe, their presence across Africa is still
limited, as the continent currently lags behind other regions of the
world in terms of funding technological development and
innovation,technology is a fast growing industry in Africa that any
investor with an eagle eye would want to invest in,the millions of
mobile phone subscribers and internet presence in more than half of the
countries that make up the continent is a promising area to look.
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. Billionaire Richard Branson has opened 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.
Infrastructure
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.
Fast Moving Consumer Goods
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 fast
moving consumer goods sector looks promising. There is a huge and
ever-growing opportunity for manufacturers and retailers of FMCGs 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.
Thank you for reading through.We would
like to guide you further on the pitfalls to avoid even as you make and
implement your investment decisions.
Email:lanrecreativeinnovation@yahoo.com
This report is researched by,Olanrewaju
Daodu,a Former Managing Partner of Sustainable Hills Limited and a
former Financial Data Marketing Executive at SBA Interactive
Data(Africa’s Largest Financial and Investment Data Services
Hub,Nigeria).
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