One would think that on seeing the economic scenario across the developing nations in Africa, investors could not be thinking about zeroing down on Africa as their next destination to strike a deal on investment or trade. Analysts tends to believe that people would rather wait for nations to stabilise before investment or trade will follow. This is a complete misrepresentation of the majority of African states. There are plenty of stable African states that are able to be dealt in straight away and our Gravis Global Invest team are here to help!
Immediately there are 5 major types of trade and investment opportunities on the continent.
Agriculture: ranking among the business opportunities available to investors and entrepreneurs in Africa, the continent is home to 60% of the world's total uncultivated arable land. As the world's population is now above 7 billion, there must be a systematic approach for producing enough food to feed that many mouths. The challenge in this case has to do with poor connecting infrastructure to facilitate product making it to exit points to enter into markets. There are also moves with a number of nations to remove trade barriers as well. This allows for agricultural development to support other 'flow on' industries such as fertilisers, pesticides, seeds production and processing and refining businesses.
Infrastructure: this sector is second in importance only to agriculture for investment. Though successive African governments have made efforts to improve infrastructure, a huge deficit in this sector still looms thereby creating bottlenecks in the smooth delivery of trade and investment deals. The World Bank in 2008 estimated that the continent needed US$80Billion annually to cover the infrastructure deficit on the continent. This provides an opportunity for private investors to invest in Build Own Operate and Transfer (BOOT) or Public-Private Partnerships (PPP) deals with governments, especially for infrastructure such as airports, electricity networks, railway networks, roads and airport facilities.
Tourism: Kenya, Mauritius and Tanzania have become some of the worlds favourite tourism spots. There have been estimates that up to 50 million tourists per year coming through the continent since 2012 with that number rising year to year. This creates side markets that become investment ready in hotels, resorts, airline business, transport businesses and tourism related tour activities.
Mining: This is a sector that has been developed in some parts already and has large amounts of Chinese investment. Chinese companies have been buying the world's major miners out of their interests on the continent which is freeing them up to make new investment elsewhere. It also therefore means that there are large Chinese slabs of influence in this sector. There are however nations in the continent with under-developed mining industries where skills shortages and infrastructure shortages have lead to this underdevelopment.
Fast Moving Consumer Goods (FMCG): For the first time 2012 saw African consumer spending go past the one trillion dollars (US$1 trillion). With a population that is one of the fastest growing in the world, a middle class of over three hundred million (300 Million) people, the FMCG sector promises to very profitable in the years ahead. Food, beverages, home and personal care products provide an ample opportunity for new profits as the African middle class grows and expands in more countries on the continent. This is a market though that will work on a 'first come, first serve' basis and will lead to long term market dominance if done properly with a good market entry plan.