Why invest in Africa?
- Africa is the second-largest and second most populous continent on earth. With a population of more than a billion people, Africa has a growing middle class. While in 1980 just 28% of Africans lived in cities, today more than 40% do. This percentage is close to China’s and larger than India’s. In addition, according to McKinsey Global Institute, Africa’s imminent boom in consumer spending is set to rise from US$860 billion in 2008 to US$1.4 trillion in 2020;
- Africa is now open for business. Governments welcomes foreign company registration and to ensure they emerge, improvement were made in terms of political, macroeconomic stability and microeconomic reforms. Governments have lowered inflation, trimmed their foreign debt and adopted policies to energize markets. They have reduce trade barriers, cut corporate taxes and strengthened regulatory and legal systems;
- Europe offers low cost manufacturing in Hungary, Poland and Romania. This is why 12% of corporate America’s European workforce is based in Eastern Europe;
- Africa boasts and abundance and variety of resources, including an approximate of 10% of the world’s reserve of oil, 40% of gold and 82% of chromium and platinum metals. Africa also has a growing demand of raw materials such as fruits and different metals and minerals;
- According to an International Monetary Fund (IMF) forecast report, Africa will have seven of the top ten fastest-growing economies over the next years;
- International entrepreneurs easily obtain bank credit to establish their business. As an example, South Africa is ranked number 1 in the world in terms of ease of getting access to bank credit according to World Bank’s Ease of Doing Business 2013;
- Africa has cheap labour. On average, South Africa skilled labour costs US$1,000 per month and unskilled labour US$100 per month. Kenya average wage is only US$485 and Egypt’s is US$200.
African investment strategy
- Multinationals rush to gain access to Africa’s fast-growing markets, harvesting massive returns from unlimited oil and gas, commodities and technology demand. Consequently, Africa consistently boasts 7 of the top 10 fastest global economies;
- Did you know, Africa and India boast similar populations, yet Africans spent 35 percent more on goods and services in 2008 than Indians did? Similar to China, approximately 40% of Africans live in cities which increases national productivity. Furthermore, 70% of Africa’s population is under the age of 30. The middle class population is 300m;
- However, international entrepreneurs must remember Africa is a developing continent with much uncertainty, and lawless compared to western economies;
- To critically compare and contrast different African countries, refer to this webpage to determine the optimum country for your business.