By Kathleen O'Connor in collaboration with Marc Andre Hart.
There’s never been a better time to invest in Africa than now, according to a number of new reports exploring the massive changes taking place on the continent. Africa has experienced significant growth over the past couple of years. For example, the Sub-Saharan region experienced an impressive growth of 6.3% in 2009, according to the International Monetary Fund’s World Economic Outlook. And those percentages have almost doubled since then.
In fact, the World Bank puts Africa at the top of its economic growth projections, saying that nine out of the 15 countries experiencing rapid market growth in the world are African countries. This, of course, can only mean one thing: more opportunities for African investment. For those who are willing to take a chance on the continent, it also means the opportunity to get into a market that’s eager for global connections and venture capital.
Africa’s Stability Is Improving
Africa has always been marked by a number of turbulent social and financial issues, but that’s changing too. For example, in November 2013, the U.S. Department of State announced a series of new trade and economic partnerships with Algeria. And Nigeria has been taking major steps forward on its own by paying off international debts and rehabilitating its banking system.
Publicly traded companies have opened up new African investment opportunities. The Harvard Business Review points out that when compared to similar companies in Asia, African businesses are showing better annual returns – up to 70% higher, in fact. This is due in part to lower labor costs and gains in operational efficiency. Africa economic growth can only improve over time, as more investors take a chance on a continent that’s ready for change.
Business Opportunities in Africa: The Next Big Thing?
When it comes to business opportunities in Sub-Saharan Africa, IT services and construction companies lead the pack. This in part is due to the competitive rates local service providers offer. For example, African startups working with high-end computer technology may charge as little as $10 an hour for design and IT work. This makes it possible for many foreign investors to open up regional offices in Africa. These offices can then take on work that would be much more expensive to outsource in Europe or the US. The affordability of the African marketplace is an asset not only for foreign investors but also for local enterprises, which have a new way of connecting with foreign markets without large investments on their part. Call centers, which were originally outsourced to India, are also becoming an important part of Africa’s new economy.
One of the major challenges of launching business ventures in Africa may be growing accustomed to business practices on the continent. To somebody coming from the West, it might take some adjustment until they gain a full understanding of how the African marketplace works. Once overcoming that hurdle, however, the potential for growth is enormous and can only continue to expand in the coming years.
What do you think? Would you be open to the possibility of investing and doing business in Africa?
Africa Business Q&A: Ask a Question
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