The African continent has immense untapped economic potential that presents innumerable opportunities for investors. The continent is also emerging as one of the preferred destinations for investments.
According to data released in 2020 by the United Nations Population Division, 56.2% of the global population now lives in urban areas. This figure is projected to increase to 75 percent by 2050, at a growing rate of 65 million urban dwellers annually. This fact illustrates the degree to which demography will shape the future of Africa. The increase in the population combined with the effects of urbanisation and rising levels of affluence are likely to attract investors into most of Africa`s frontier markets.
This phenomenon is being supported by activities such as AIM-AFRICA; an event organised by the Annual Investment Meeting scheduled on the 29th and 30th of June 2021 via Events10x Virtual Platform under the theme “AFRICA Unlocked: Innovation & Sustainability as the Drivers of Economic Growth”. This event will focus on a number of economic development-related issues such as Africa’s digital economy which is becoming one of the primary drivers of the region’s development and the opportunities of the African Continental Free Trade Area (AfCFTA), the world’s largest free trade area connecting 55 African countries.
Digitalization is deemed as one of the most powerful instruments in the effective implementation of 2030 Agenda for Sustainable Development and Africa’s Agenda 2063 and is expected to open up income generation opportunities for millions of people in the region. Africa is one of the world’s fastest-growing economy and with this vast potential, AIM-AFRICA will be a powerful impetus in strengthening the region’s economic stability, sustainability, and growth.
Interestingly, business experts across the globe have regarded this region as the future economic growth engine of the world. South Africa is one of the countries that is leading foreign direct investments in Africa, concentrating mainly in manufacturing and retail. Statistics also show that Nigerian, Kenyan and Rwandan companies have increased their African investments by a greater margin. These trends highlight the growing confidence that Africans have in Africa and this has buoyed intra-Africa trade.
With the African economy emerging relatively unscathed from the Covid-19 pandemic and offering a more attractive investment destination, it is apparent, that there is a greater opportunity for investing in Africa. Historically, there has always been an infrastructure deficit in Africa. Vast investments in essential infrastructure like rail-road transport networks, cost-effective electricity supply, healthcare facilities, technology, and digital infrastructure are of paramount importance in plugging in these infrastructure deficits, which have continued to restrict economic development on the continent.
Currently, there are approximately 850 million mobile phone subscriptions in Africa and it is expected that 27% of the mobile subscribers will be on 4G and 5G by 2025. This shows the huge potential of Africa`s telecommunications industry as there is room for growth in the mobile penetration rates to levels similar to most developed economies. Mobile money transfer platforms like Zimbabwe’s highly successful Ecocash and Kenya`s M-Pesa will credibly be in line to benefit from this trend. Investment in Africa`s telecommunications sector remains crucial in improving the business environment and will go a long way in minimising business inefficiencies.
African governments, business leaders, and global decision-makers are putting more effort into funding agribusiness in the region. Only 7% of the 39 million hectares of land suitable for irrigation is currently irrigated, while the continent holds 60% of the world’s uncultivated arable lands, which leaves an incredible opportunity for investors willing to capitalize on agriculture.
With an ever-increasing informal sector full of capital-hungry businesses well placed to attain rapid growth and large scales of unexploited resources; Africa has naturally been attracting investors. Therefore, investors have a pivotal role to play in transforming African economies into industrialised high growth economies that can create jobs, and in so doing, maintain the continent`s sustainable and equitable development.
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