The world is changing faster than ever, and nowhere is this truer than in emerging markets. With the rise of new technologies and shifting social norms, people are demanding a more sustainable way of living—something that extends far beyond reducing our carbon footprint or volunteering at the food bank once a month. The future belongs to those who see opportunities where others see risk. That’s why investing in Africa is the future of investing. Thanks to growing economies, young populations, and an increasing demand for commodities, Africa is poised to become one of the most important investment markets in the coming decades. In this blog post, we’ll explore five key reasons why investing in Africa is the future of investing as well as share insights into three African markets that have plenty of potential: Nigeria, Ghana, and Ethiopia.
Africa is the future of investing
Africa has the youngest population in the world. In fact, more than half the population in Sub-Saharan Africa is under the age of 25. This youthful population is one of the most important reasons to invest in Africa because it means there’s a strong supply of workers with skills that can create a sustainable and robust economy.
This really speaks to the investment potential of Africa. Why? Simply put, the more people there are, the more there is to invest in. And not only do African countries have a high fertility rate, but their young populations also happen to be much better educated than previous generations. Education is critical to the development of any country, and the African continent has seen an explosion in enrollment in recent years. A growing, educated workforce means more investors, more entrepreneurs, and more people with the skills necessary to propel the continent forward. That’s why the African youth bulge is an important factor to consider when investing in Africa.
As the world’s population becomes increasingly urbanized and affluent, investors will look towards Africa as a source of sustainable returns. In 2016, Africa’s GDP was $2.5 trillion — a number that is predicted to rise to $5.1 trillion by 2020. This growth has been driven by factors such as increased urbanization, a growing middle class, rising youth populations, and an increase in the number of countries experiencing political stability. In fact, if current trends hold, Africa will account for 20% of the world’s GDP by 2050—that’s up from just 2% in 1995.
Investing in Africa is a risk worth taking
As we’ve seen, the potential returns of investing in Africa are high—and growing. The risk is also growing, but that’s a good thing because it means the continent’s economies are growing. With more money flowing through the system, African governments have been implementing more economic reform, which in turn has been improving their business climates. The World Bank’s latest Doing Business Report shows that Ghana, Nigeria, and Ethiopia have all been making progress on key indicators such as ease of starting a business and resolving insolvency. In fact, between 2014 and 2017, Ethiopia moved up 44 spots to become the world’s most improved economy.
African economies have plenty of potential
It’s not just the population that’s set to thrive in the near future. African economies are expected to grow quickly, and this will likely result in more businesses and job opportunities. For example, the economies of Nigeria, Ethiopia, and Ghana are expected to grow quickly over the next few years. In fact, Nigeria’s GDP growth is expected to reach 3.5% by 2020. Ethiopia’s will grow at a similar rate. This means that the potential for profit is even higher in Africa than it is in Asia, where the economy’s growth is slower. So if Africa’s economy is growing quickly, why is it so important to invest there now? The simple answer is that if you wait to invest until after the economy has grown, you’ve missed the opportunity to profit from it. Investing in Africa now will put you ahead of the curve and allow you to profit from the growth of the continent’s economy.
The economies of African nations are poised to boom as they unlock the potential of their youth populations. Africa is home to the world’s largest youthful population, with almost half of the continent’s population being between the ages of 15 and 35. This is a huge advantage that African nations can tap into if they invest in the right sectors. The demand for tech, media, and telecom services is expected to grow exponentially over the next decade. And that’s just the tip of the iceberg. Healthcare, education, and finance are also booming industries that can help stimulate economic growth and create jobs for young Africans.
Commodities are in high demand
In addition to growing economies and a youthful population, Africa has plenty of natural resources.
The continent is rich in a variety of commodities such as oil, gold, diamonds, and more. These commodities are critical to our economy; they are necessary for a variety of things like generating electricity, manufacturing goods, and even providing clean drinking water. With so many commodities available in Africa, it’s important to remember that demand will always exist. The only thing that changes is the price at which a commodity is sold. As countries develop and more people become employed, they require different resources. This means that demand for commodities will increase, which will cause the price to go up. That’s why commodities are so important for investors considering investing in Africa. The continent has many commodities that will always be in high demand, including gold and other precious metals, oil, and diamonds.
Africa’s economies rely heavily on the export of commodities like oil, minerals, and agricultural products. This is particularly true of countries like Nigeria, Ghana, and Ethiopia. And while commodities are often associated with a high degree of risk, Africa’s commodities markets have been showing signs of stability and steady growth.
Emerging technologies will continue to transform Africa
With emerging technologies like artificial intelligence (AI), blockchain, and machine learning, many are wondering what the future might look like. While it’s impossible to give a definitive answer, we can explore some possibilities by looking at how these technologies are being used today. While AI and blockchain are still relatively new, they have already found success in Africa. For example, AI is being used in Africa to power autonomous vehicles. This technology is likely to disrupt many industries, including transportation, health, and more. Because of Africa’s unique environment, AI and blockchain have the potential to make even bigger strides in the future. Since telecommunications infrastructure is still being developed in Africa, it is easier for AI and blockchain to make inroads there than in more developed markets.
Africans have a unique point of view on investing
Investing isn’t something that just a select few do. While some investors may be more experienced than others, they all have their own strategies and ideas for making the best investment decisions. When it comes down to it, though, all investors seek the same thing: a strong return on their investment. What makes Africa such an appealing investment market is that it provides investors with a unique perspective on how to make money. Because Africa’s economy is developing, there is more risk involved. But by taking advantage of this risk, investors have the opportunity to profit in a big way. Investing in Africa gives you a completely different perspective than investing in more developed markets like the U.S. or Asia. It offers a chance to earn returns based on something other than a company’s bottom line.
Millennial populations grow and continue to grow
The number of Africans between the ages of 15 and 29 will increase from the current 100 million to nearly 400 million by 2050. In fact, the region’s youth population is expected to swell to 2.5 billion by 2040. This isn’t just a one-time surge in millennial populations—it’s an ongoing trend. As African economies continue to grow and expand, the number of people with the means to support themselves and their families will increase.
3Â Recommended African Markets to Watch in 2018
- Nigeria: the most promising market in Africa Nigeria is expected to become the largest economy in Africa in the next decade. This will make it one of the most important emerging markets in the world. To put this into perspective, Nigeria is already the continent’s largest economy with a GDP of $568 billion. Even though Nigeria currently faces many challenges, the country has an excellent long-term outlook. As a result, Nigeria offers investors plenty of opportunity. In fact, the country has the largest population in all of Africa and is expected to grow even more in the coming decades. Combined with the country’s low cost of living, Nigeria is an attractive investment opportunity.
- Ghana: a fast-growing market with plenty of opportunity Ghana’s economic growth has been steadily increasing since the turn of the century. In fact, the country has averaged a rate of 7% every year since 2000. This is a strong indicator that Ghana’s economy will continue to grow in the foreseeable future. What’s more, Ghana boasts a young and growing population. This will likely increase the demand for goods and services in the country. Investors interested in Ghana should note that the country’s stock exchange is still in its early stages. In fact, it only opened in 2016. This means that there are plenty of investment opportunities available.
- Ethiopia: an ancient civilization with a bright economic future Ethiopia has been an important trade route for thousands of years. In fact, ancient civilizations like the Romans and Chinese used the country as a vital trading link. This rich history is just one indication of the economic potential that lies in Ethiopia. Yet, Ethiopia has a lot more going for it than just a historical trading route. The country has a young and growing population, a strong agricultural sector, and is in the process of developing a modern economy. This is important because it means Ethiopia is a good long-term investment opportunity. In fact, the country has seen a lot of growth in recent years.
Conclusion
Investing in Africa is a risk worth taking. It will pay off in the long run, and it’s not just hype. The continent has all the building blocks to succeed: a growing economy; a young, educated population; a demand for commodities; and rich natural resources. With these factors in mind, it’s easy to see why investing in Africa is the future of investing. Whether you are a venture capitalist looking for a new market or a retail investor hoping for a strong return, Africa has what you need.
The future of investing lies in Africa, and it’s time to get in on the action.