5 Reasons Why African Americans Should Start Investing In Africa

June 28, 2020

I believe this is Africa’s moment, for the very important reason that Africa is showing signs of real progress and renewal.
- Myles Wickstead (Head of the Secretariat to the UK Commission for Africa)

Just two years ago, Marvel’s “Black Panther” generated an unprecedented enthusiasm about the prospects of Africa. The fictitious, prosperous, futuristic, powerful, and proud African nation “Wakanda” salutes black culture by shedding light on black excellence and stimulating our imaginations of what success can look like for Africa. Not to forget that enthusiastic “Wakanda Forever” greeting when you crossed paths with another Black person. I loved the feeling of enthusiasm and hope that such a little act exuded for Black people around the world.

Wakanda Image

Although Africa is yet to attain the state of Wakanda, Africa’s journey over the last two decades has been nothing short of incredible. Africa went from being called “The Hopeless Continent” on the cover of The Economist in 2000 to “Africa Rising” a decade later and then “Aspiring Africa” three years later. And today, the term “African Century” is used as Africa is experiencing such a rapid economic growth that it is becoming hard to ignore. Needless to say that in history, Britain, America and China have all received the “Century” title when similar economic and cultural trends began to emerge.

If you are still not bought on the idea to start investing in Africa, here are a few reasons why you should start paying attention:

  1. Africa is the most profitable region in the world

    A report by the UN Conference on Trade and Development states that between 2006 and 2011, Africa had the highest rate of return on inflows of Foreign Direct Investment: 11.4%. This is compared to 9.1% in Asia, 8.9% in Latin America and the Caribbean. The global figure is 7.1%.

    Multinational companies continue to expand their activities in Africa but investors from the US, China and other Western countries remain the key players. And it is expected that growing demand and a corresponding rise in the price of commodities where Africa is a key producer, will continue to prop up Foreign Direct Investment to the African continent for years to come.

  2. Africa is home to the world’s fastest-growing economies

    Despite the current COVID-19 pandemic, eight African countries will be among this year’s top 10 global performers in terms of economic growth, according to forecasts by the IMF.

    Also, this year, Africa is home to six of the world’s 10 fastest-growing economies, with growth forecasts between 6.7% - 8.2%, well above the global growth rate of 3.5% and, only 1.7% for advanced economies like the US and China. These are really strong numbers and Africa’s fast-growing economies are expected to continue to outperform the global growth rate over the next five years.

  3. Africa’s population is exploding and urbanizing

    Africa’s population is the fastest growing in the world. It is expected to increase by roughly 50% over the next 15 years, growing from 1.3 billion people today to over 1.8 billion in 2035. In fact, Africa will account for nearly half of global population growth over the next two decades, and by 2035, sub-Saharan Africa’s population will still be the youngest in the world. Having a youthful population will contribute to an abundance of labour which will fuel industrialization in the continent and lower production costs for businesses. It won’t be far-fetched to imagine that Africa will eventually replace China as the world’s biggest manufacturing center.

    Also, more than 80% of Africa’s population growth over the next few decades will occur in cities, making it the fastest-urbanizing region in the world. By 2030, Africa will have at least 17 cities with more than 5 million inhabitants. At the same time, incomes are rising across much of the continent, generating new business opportunities in the consumer market. In total, annual spending by African consumers and businesses is expected to reach $6.66 trillion by 2030, up from $4 trillion in 2015. These trends are spurring growing markets in a range of sectors where Africans have unmet needs, like food and housing.

  4. Africa holds a huge portion of the world’s natural resources

    Africa is rich in natural resources ranging from arable land, water, oil, natural gas, minerals, forests and wildlife. The largest reserves of gold, diamond, cobalt, chromium, platinum and uranium in the world are in Africa. Fun fact: Africa holds 65% of the world’s arable land, with 60% of it still uncultivated. That’s mind blowing when you think of the growth potential of the agricultural sector, which is only one sector among a dozen others that will shape the economic growth of Africa in the coming decades.

  5. Africa is home to the largest free trade zone in the world

    In 2019, All 54 African countries (except Eritrea) came together to establish the largest free trade zone in the world, creating a single market of more than 1.3 billion people with over $3 trillion in GDP. The free trade agreement comes at a critical moment for Africa and aims to unlock Africa’s economic potential by dismantling the colonial-era infrastructures that made it easier for African countries to export to the US or Europe, than to neighbouring African countries. Today, only 15% of African exports go to other African countries, compared to 58% in Asia and 67% in Europe. Thanks to the free trade zone implementation, this number is expected to rise to 23% in 2022 alone.

    Another huge benefit of having an African free trade zone is that Africa’s economy will become even more resilient to economic hits like COVID-19, which means safer investment opportunities for investors.

It is clear that the conversation about Africa has shifted from one of “deficits” and “gaps” to one about opportunities, prospects, ventures and creativity. Actually, that’s not news to entrepreneurs, companies and investors that have been paying close attention to the continent and seizing investment opportunities across Africa. A few known entrepreneurs like Jack Dorsey (Co-founder of Twitter) and Jack Ma (Co-founder of Alibaba Group) have created strategies to ensure that they stay connected to the African continent, with some of them going as far as relocating to Africa.

It seems daunting to know where to start and that’s totally normal, but just as everything, you need to start somewhere and over time you will become more knowledgeable about investing in Africa. At Fundayo, we aim to lower the barrier to entry for you to easily invest in real estate in Africa. Leave your email address below and be one of the few to get access to our platform before we open it up to everyone. Also, don’t forget to hit the share button below :)

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