Africa holds vast opportunities in its human and natural resources, with a market of 1.2 billion people and the largest free trade area in the world – by number of participating countries. However, the continent needs more investments in infrastructure to harness the available opportunities and manage challenges such as poverty and inequality.
Regrettably, foreign investors are not moving into the continent as quickly as expected due to some perceived uncertainties, including unfavorable economic policies and the age-old myths about Africa.
Recently, renowned Cameroonian investor and entrepreneur, Eunice Ajim, debunked some myths about investing in Africa, setting records straight and shedding light on the continent’s potential.
In a recent tweet, Eunice Ajim dispelled the myths surrounding investment opportunities in Africa. According to her, the continent’s rapid economic growth, political stability, skilled labor, and diverse sectors beyond natural resources present attractive investment prospects.
Below are the 10 myths highlighted by Ajim, who also clarified what is or isn’t true:
Myth 1: Africa is underdeveloped
Against the general belief, Africa is home to some of the world’s fastest-growing economies. Urbanization rates are increasing, and technology is rapidly transforming the continent through emerging scalable startups. Expectedly, intra-African trade is projected to grow significantly, making Africa a leading investment destination.
Myth 2: Political instability is rampant in Africa
While there are pockets of instability, many African countries enjoy political stability. Two-thirds of African nations have embraced democracy, with peaceful transfers of political power becoming increasingly prevalent. These positive developments create a conducive environment for attracting investments.
Myth 3: Africa is a country
Africa comprises 54 independent nations with distinct economies, cultures, and languages. It is pertinent to recognize the continent’s diversity and understand each country’s unique opportunities and challenges.
Myth 4: Africa is only suitable for natural resources
It is ideal to note that while Africa is rich in natural resources, it also boasts a growing middle class with increasing consumer power. The services, manufacturing, and technology sectors are experiencing rapid development, presenting diverse investment opportunities beyond the traditional resource-based economy.
Myth 5: Africa is too risky to invest in
Risk is prevalent in all global markets, and Africa is no exception. However, African economies have become more open than ever, with improved risk mitigation practices and effective policies enacted by the African Union to foster regional integration and growth.
Myth 6: Corruption is rampant in Africa
Corruption isn’t unique to Africa, and while it does exist in the continent, many African nations have established robust legal frameworks and anti-corruption agencies to stem the tide. Additionally, Investors should protect themselves by implementing strong corporate governance and compliance policies.
Myth 7: Africa lacks skilled labor
Africa is home to a young, growing workforce. Many African countries rank highly on the World Economic Forum’s Human Capital Index. Interestingly, Africa is inching towards having the largest working-age population in the world.
According to the World Bank, Sub-Saharan Africa is home to over 1 billion people, more than 50% of whom will be younger than 25 by 2050.
Myth 8: Infrastructure in Africa is inadequate
Infrastructure development is necessary, but it’s not a deal-breaker. While the continent is experiencing an infrastructure deficit, it is recording significant improvements in roads and airports. Additionally, innovative solutions, such as mobile money, mini-grids, and ride-sharing, are developing rapidly.
Myth 9: Africa only receives aid
While developed countries that provide aid continue to play a role in Africa’s development, it is no longer the sole funding source. Private investment and trade are increasingly driving economic growth. Sustainable business models are replacing traditional aid approaches, providing a more sustainable, prosperous, and self-sufficient future.
Myth 10: Africa is not for everyone
Investing in Africa is not a one-size-fits-all approach. It requires a tailored approach with a deep understanding of one’s investment objectives and risk tolerance. While Investing in Africa may not be for everyone, it may be worth considering as part of a diversified portfolio that offers unique advantages and potential returns.