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Investment - October 14, 2022

5 Reasons Africa is a Great Place to Do Business

Africa is the second-largest continent, with 54 countries and more than 1.4 billion people, which makes it a viable place for business.

However, the continent continues to be undervalued and misunderstood, as does the opportunity for any industry to play a game-changing role in addressing the continent’s most pressing problems.

The continent is peculiar as many now prefer to travel to other parts of the globe despite its rich resources.

Africa is a top option and a great place for any business venture because it’s also the most lucrative continent in the globe.

Without much ado, here are 5 good reasons why Africa is a great place to do business.

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1. A huge market 

By 2030, Africa’s population of approximately 1.2 billion is expected to increase to 1.7 billion.

Africa will have the fastest urbanisation rate in the world in the coming decades, with more than 80% of its population expansion taking place in urban areas.

The consumer market is experiencing new business opportunities as incomes are increasing across much of the continent.

By 2030, we anticipate that yearly expenditure by consumers and businesses in Africa will equal $6.66 trillion, up from $4 trillion in 2015.

In a variety of industries where Africans have unmet needs, such as food, drinks, pharmaceuticals, financial services, healthcare, and education, these trends are fostering growing markets.

2. Young workforce

For companies looking to invest in the continent, Africa boasts of a young, expanding workforce that is ideal. 

Africa is the continent with the fastest population increase, and at the turn of the century, only this region will experience population growth.

It is also the youngest continent, with about 60% of the population being under 25. 

There are more workers than there are jobs to go around. Africa, in contrast to other regions of the world, is an employer market, which allows businesses to acquire the greatest talent without having to contend with an intense rivalry.

3. Resource rich 

The continent of Africa is resource-rich. In many regions, oil, precious metals, and jewels are among the biggest exports.

For instance, in Egypt, mineral fuels make up 19.5% of all exports while precious metals and gemstones make up 8.2%. Mineral fuels account for 96% of all exports from Nigeria. 

The value of South Africa’s gems and minerals industry is $14.9 billion, or 16.7% of all exports.

Rich resources in Africa have gone undeveloped due to a lack of infrastructure and funding, which has allowed businesses to flourish there.

The Algerian corporation Sontrach, which generated $33.2 billion in revenue from oil and gas alone in 2017, is a prime example of this. Clearly, there is great opportunity for foreign investment in Africa.

4. High return on foreign direct investment 

Africa has the best return on foreign direct investment (FDI) globally, according to the Overseas Private Investment Corporation (OPIC).

In fact, between 2006 and 2011, Africa’s return on foreign investment reached 11.4%, much higher than the global average of 7.1%, according to the UN Conference on Trade and Development.

Egypt, the Republic of the Congo, and South Africa are currently the top three recipients of FDI in Africa for the year 2020. 

The African Continental Free Trade Area, which includes 54 countries from Africa, went into force on 1 January 2021 and established the largest free-trade region in the world.

With the help of this agreement, international companies can now easily access markets that were previously challenging to penetrate.

5. Fast adopters

High adopters are widely available in the continent, which is crucial for any organisation. In comparison to other continents, Africa has the fastest adoption rate in the globe.

In Africa, disposable income is also increasing. Together with the fact that the middle class makes up a third of Africa’s population, this gives excellent business potential.

For instance, the Internet Economy in Africa is expanding and has the potential to account for $180 billion, or 5.2%, of the continent’s GDP.

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