Does the African continent hold great investment potential for both domestic and international investors? The answer is a resounding yes.
Rumour has it that international media depicts Africa as that gloomy continent, with a bare-footed infant on the dusty street of Klipgat and wild animals in the vicinity. In short Africa is seen by many as a dark continent with no potential to anything great-be it investment opportunities or human capital. They normally do so because they are detractors who neither understand nor interested in the historic objectives that Africa has.
I feel very proud that Africa’s economic power house, South Africa has been invited to join the prestigious club of rapidly developing economies, The BRIC (now BRICS). Brazil, Russia, India, China and South Africa – together are worth an estimated $12 trillion and still growing, have the potential of overtaking the United State of America which is reportedly valued at about $15 trillion as an economy. The question of interest is how such membership will benefit Africa at large? You see, South is the gateway into Africa, I am hoping that South Africa by virtue of its membership will be able, to a larger extent, expose Africa to potential Investors.
Perhaps, (I stand to be corrected) it is a wise decision to do business with Africa, since it is apparent that Africa is rising from the ashes. No one dare contest me when I say that Africa is an investment destination of choice. We have seen recently companies investing by large-and-far in Africa. Industrial and Commercial Bank of China investing in Standard Bank is a case in point.
Furthermore things on this side of the world look pretty rosy because, according to IMF (international Monetary Fund) growth forecasts for the African continent for 2010 and 2011 are 4.3% and 5.3 % respectively, while advanced countries are expected to achieve 2.1% and 2.4% respectively. I repeat, I think that doing business with Africa makes economic sense, given the fact that the number of middle-class consumers is on the rise. Interestingly enough, business factors that hindered investment in Africa are also cooling off, such as political instability (North Africa excluded of course), chronic corruption, infrastructure bottlenecks, and poor health and weak rule of law.
Africa is by far a continent with many target consumers, estimated to be 1 billion, and most of this people’s disposable income is rising gradually. Against this background, the opportunity for retail business and other businesses exists.
C’mon, let’s have a conversation what do you think of Africa as an investment destination? I personally think that the opportunity cost of not investing in Africa is becoming too significant to ignore.
Source: ASA, African Business Review and Moneyweb.