This the right time to invest in Africa

July 25, 2013

Africa’s growth and development has had its proponent and opponents. I have evaluated both sides and have realized attracting investment varies in each country. Tanzania’s huge foreign direct investments are a result of peace and tranquility that enabled the country to enjoy unmatched stability for more than half a century and not the new found mineral wealth as some would want us to believe. This factor is often taken for granted by many governments in Africa but investors I have worked with shares my opinion that stable environment is sole responsibility of state and is worth mentioning among private sector players. At least half of African countries are proud that stability is now a reality. Countries like Mauritius, Uganda, South Africa, Zambia, Botswana, Ghana, Tanzania and Kenya have recently been described as possessing all characteristics of modern, productive and expanding democracies.

There is no doubt Eastern and Southern African countries have widespread economic, social and political autonomies, which has shielded them from global economic recession. This stability being experienced across the continent is a direct reward from the western government funded reforms that started in late 80s and early 1990s. I dare anyone to show me one country China has funded reform and democratic institutions and that’s why blue thinkers know that Africa rise is largely because of western and Scandinavian countries taxpayer money. Take a case of South Africa a country that was literally swallowed painfully by apartheid until 1994, and in the ensuing years of transformation it endured consistently thereafter like Black Economic Empowerment project. In the last fifteen years whereby stability has been followed by rapid and widespread growth.

African countries average gross domestic product and some of them being among the fastest growing economies has immensely and consistently been placed as the second fastest growing continent in the world in the few years. In Angola, a $100 billion economy, prosperity building, hugely driven by stability since the end of civil war in 2002 coupled with deep penetration of consumer technology, modern banking and consumer finance, as well as increased civilian purchasing power, has been adding new middle class Angolans annually. Various World bank reports have indicated that this kind of prosperity has scaled up given the fact that out of Africa’s 1 billion people, only less than a quarter are categorized as middle class, half are low living in abject poverty while a less than a quarter are global standards middle upper class. Countries in East Africa namely Uganda, Rwanda, Burundi Tanzania and Kenya, have an average age of less than 20 years as per the end of 2012 and this shows that the next generation of well off middle class offers investors the scalability and expansion for almost all sectors of the economy that are expected to grow bigger, faster and better in the next few decades and by the turn of next century the continent will be home to more than 2 billion people according to recent studies hence doubling the market.

As I was researching for this article, it is clear that some sectors that will offer better returns for investors and they involve the consumer related sectors. They include banking, food and beverages, telecommunications, finance, technology, energy, transport, property and infrastructure developments that has been boosted by majority of African governments adoption of public and private investment partnerships. Despite the ignorance of some African affairs commentators, I personally credit the massive growth of African continent to democratization process that western powers have played an unmatched role in funding and training of Africans in embracing democracy. Despite half-baked critics and isolated protests against western government’s attachment of foreign aid with democratic processes, it has hugely contributed to the kind of stability, prosperity that most African countries have attained. All indicators point to a right timing vital for successfully investing in Africa and to me, that time is now and two regions of East and Southern Africa stand out most in terms of scalability, stability and consumer driven markets.

Contador Harrison