Africa is not that gloomy after all…..

02 Jun

Does the African continent hold great investment potential for both domestic and international investors? The answer is a resounding yes.

#Johannesburg, Africa's city of note (Source: thebesttraveldestinations)

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.

The Opportunity

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.


Posted by on June 2, 2011 in Economics


Tags: , , ,

5 responses to “Africa is not that gloomy after all…..

  1. Nkosinathi

    June 2, 2011 at 4:51 pm

    Lol the opportunity cost of not Investing in Africa is way insignificant. look at it this way..all people from other countries when they come to Africa they see wealth of course we African`s we don`t but the point is we can still grow trees while countries like China they cant…an their the biggest exporter to Africa. above all I like your article it correlate with what I have been studying last year in Industrial Sociology.

    • Dumi-rocks

      June 3, 2011 at 3:17 pm

      Thanks buddy. I am a firm believer of African renaissance, hence I said that the opportunity cost of not investing in Africa is significant to ignore. It is good that this countries come here in Africa to invest because that will improve the standard of living of many Africans.

  2. Markusman

    June 4, 2011 at 6:19 pm

    Nice article bud and very true, however we need to be very careful how we (africans) accept investment.
    We must remember that foreign companies will only invest in Africa if there are substantial gains for themselves. we also need to remember that investment is pointless if all the assets and labour are owned by foreign companies.

    for instance, the Namibian government has awarded Chinese companies tenders to build infrastructure. they brought in their own labour and once complete, the assets will be managed by the chinese who will take the profits home. Whats the point in that?

    So yes, international companies this is your opportunity to plunder africa for everything its worth before we get back on our feet and start doing it ourselves. properly.
    I believe that South Africa has the responsibility to ensure that BRIC doesnt take advantage of our continent and that our natural resources need to be processed as much as possible here before being exported and at least 51% of all NEW holdings in Africa need to be owned by Africans.
    I could write pages and pages on this topic but thats not what a comment section is for. we can discuss it in the eetsaal.

    • Dumi-rocks

      June 4, 2011 at 7:47 pm

      I agree with you in every sense of the word. Not too long ago we saw the strike by South Africans at the Medupe Power station( The new Eskom Project). Their argument was that the people who won the tender, from China ofcourse, brought in their personnel, and this does not benefit the larger community in which Eskom operates. Many people in the area remain unemployed whilst the jobs are offered to internatiomals.

      Furthermore, you brought up something of importance when you said that atleast 51% must be owned by Africans. A new bill is needed in this regard, that will seek to regulate new investments in th e country.

      Thanks Buddy.

  3. miltanskosana

    March 28, 2012 at 12:45 pm

    Your mentioned something about the, ” BRICS…potential of overtaking the United State of America which is reportedly valued at about $15 trillion as an economy”

    I strongly agree with you on that matter as this might be sooner than expected. Copy and paste the link below in to your browser.

    And again, I fully agree with Markusman on the issue of ensuring that 51% of the “NEW Holdings” being owned by Africans. As long as its “NEW” Holdings.

    Come to think about it, I think uncle Bob is a very intelligent old man even though the execution of his strategies proved to be costly to the Zimbabweans. I think there is such a policy in Zimbabwe ensuring that 51% of the wealth of the country is owned by the citizens. I`m talking about the gazette publised last year in March that complements Zimbabwe’s Indigenisation and Economic Empowerment Regulations that were published in February 2010, which make it compulsory for existing foreign-run businesses to surrender 51% of their shareholdings to local business people.

    Indeed the opportunity cost of not investing in Africa is becoming too significant to ignore!


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