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Top Five Reasons Why You Should Invest In Africa

April 06, 2016 at 06:51 am | Money Moves

Fredrick Ngugi

Fredrick Ngugi | Contributor

April 06, 2016 at 06:51 am | Money Moves

Kenyan farmers picking tea, one of Africa's abundant natural resources. (Photo: www.businessdaily.com)

Ever wondered why they say Africa is the next business frontier? Do you believe Africa offers the next big investment opportunity? Many respected observers including Bloomberg, World Bank and Forbes have unanimously agreed that Africa has a promising future. Certainly a lot still needs to be done to ensure the continent achieves its full potential, but it shouldn’t be a surprise that investors around the world have started paying attention to the continent’s emerging markets. Anyone looking to start or expand their portfolio should consider these five reasons to invest in Africa.

#5 Affordable Raw Materials

Africa is blessed with vast quantities of natural resources, most of which are yet to be exploited. Investors in the manufacturing sector are eyeing these resources with bated appetite as they are readily available and cost very little to procure. Moreover, Africa has some of the largest chunks of unexploited land, which are ideal for large-scale farming. Manufacturers therefore don’t have to import raw materials as they have enough fertile land to grow them. Farmers in many African countries are being forced to dispose of their farm produce or sell them at throwaway prices because the local market is already saturated. This creates a perfect opportunity for investors looking for affordable raw materials.

#4 Affordable Labor

Judging by the ever-growing number of graduates leaving institutions of higher learning in Africa every year and the ever-diminishing job opportunities, it’s clear the labor market is near its breaking point. This explains why thousands of Africans are migrating to the West and other continents in search of greener pastures. It also means the cost of labor in Africa is significantly lower compared to other continents. It’s therefore time entrepreneurs and other investors considered Africa as a place to set up shop.

#3 Enormous Potential for Growth

With advancements in technology, Africa has started to realize its potential with more investment opportunities in key sectors. Telecommunications, internet and general ICT are wide open with unmet business needs. For example, many African countries are yet to migrate from analogue to digital television signal dissemination. In addition, most government institutions are still trying to figure out best ways to automate their operations. It’s up to smart investors to identify and tap into opportunities that promise the greatest returns.

#2 Demand for Better Infrastructure

The need to invest in good infrastructure is driving African governments to partner with advanced economies such as China and Western nations. What’s more, Africans are quickly developing a huge appetite for infrastructure, as demand for more sophisticated commercial and residential real estate properties continues to grow with each passing day. Real estate is a lucrative opportunity for Africa-focused investors.  Many countries on the continent also need quality roads, railroads, schools and medical facilities. These are unique business opportunities to be exploited.

#1 Growing Market

A report published by the World Bank in June 2015 outlining steps that Africa needs to take to attract more investors indicated a significant growth in Africa’s middle class. It also pointed to increased intra-African investment, which it claimed creates a virtuous circle that encourages greater foreign investment. With over 1 billion people, the African market is steadily growing, giving global investors yet another reason to invest in the world’s richest continent.

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