If Africa were a stock, it would be a value play. Africa’s strong fundamentals point to real momentum in coming years. It’s true that the investment landscape has changed and there have been both economic and political hits in recent years, but this has not derailed the continent’s growth story.
Here are positive indicators that favor investment in Africa.
Young and growing population: With a population of more than 1 billion people, expected to double by mid-century, Africa offers an enormous potential market. And while the rest of the world is aging, Africa is young. According to
Deloitte , some 200 million Africans, about 20% of the population, are between the ages of 15 and 24, a figure expected to rise to 321 million by 2030.
The global workforce may be shrinking, but in a few years Africa’s workforce will number some 1.1 billion, surpassing that of China and India. Africa’s young demographics point to economic strength, in that a working-age population is associated with favorable rates of GDP growth. Moreover, young Africans are also consumers who want the latest products, services and technology just like anyone else does.
According to a recent Harvard University study, two major factors will determine Africa’s future economic growth prospects: growth in the working-age share of the population and institutional quality. While many African countries will see the youth workforce rise, only a few, such as Ghana and Namibia, have strong institutions and economies to take advantage of the bulge in workers.
Money to spend and a love for brands: Both quality and brand matter to African consumers when they are making buying decisions. Some 58% of consumers are brand loyal and many are willing to pay a higher price for well-known brands, a McKinsey consumer report says. More Africans live in urban centers, which drive economic activity. Urban consumers in Africa, similar to those in cities across the globe, want a modern and quality shopping experience.
Cities are key to capturing African’s consumer opportunity. In Nairobi, Kenya, and in the Nigerian cities of Abuja, Ibadan, Lagos, and Port Harcourt, per-capita consumption is more than double the national average. Also, the top three cities in Angola and Ghana account for more than 65% of national consumption.
African Economy getting stronger and more diverse: While growth has slowed among oil exporters, the rest of Africa is continuing to move forward with positive growth rates. Countries not dependent on resources for growth, typically smaller economies, are progressing with economic reform and increasing their competitiveness. These countries, which include Botswana, Cote d’Ivoire, Ethiopia, Kenya, Mauritius, Morocco, Rwanda, Senegal, Tanzania, and Uganda.
African countries are beginning to diversify beyond commodities and working to attract investment. Two countries in particular are showing positive growth based on ambitious diversification strategies: Morocco, with its initiative to accelerate global innovations exports, and Ethiopia, with its industrialization strategy.
The World Economic Forum notes that every African country has an “investment promotion agency” that acts as a one-stop shop for investors, assisting with registration, taxes and other steps to establish companies locally. Energy, technology, health care, and tourism are just a few of the sectors that hold great potential for investors.